Revenue Allocation and Gross Domestic Product (GDP) Growth in Nigeria 2001-2019

There is obviously an uneasy calm about issues surrounding revenue allocation in Nigeria and the extent to which it impacts on economic growth. This study is to determine the impact of revenue allocation on economic growth using gross domestic products (GDP) as proxy. The study examined the impact of revenue allocation on economic growth represented by Gross Domestic Product (at current basic prices) for the period between 2001 to 2019. The study applied regression analysis with the help of SPSS version 25. The statistical analysis revealed that there is a positive relationship between revenue allocation and GDP at 5% level of significance. It was recommended amongst others that: Government must be deliberate in harmonizing all dissenting voices against especially the formula for allocating the said revenue, it was further suggested that revenue so allocated should be accounted for by the managers (i.e. President, Governors and Chairmen of local government areas) through feasible growth and developmental projects that have direct bearing to stimulate the economy and better the lives of the target citizenry. Therefore, the authors are advocating for ‘Derivative’ approach to revenue sharing, where regions and states are allocated revenue based on what they contribute to the central purse. Better still regions and states should be allowed to control their resources and pay taxes to the Federal Government.

Keywords: economic growth, gross domestic product, revenue allocation