American International Journal of Social Science

ISSN 2325-4149(Print), ISSN 2325-4165(Online) DIO: 10.30845/aijss

Federal Government Statutory Fund Allocation to States in Nigeria, West Africa: Any Reasonable Story to Tell?
Olowolaju Philip Segun, Ajibola Olusegun, Ishola Rufus Akintoye, Falayi Ibukun

Abstract
One of the characteristics of Nigeria’s federal system of government is its revenue allocation system wherein the federal government allocates funds to each State of the federation based on certain predetermined percentages. This statutory allocation has been the major stream of income for most States in Nigeria for many years while Internally Generated Revenue by the States has been significantly low. As a result, this paper seeks to analyse the effects of statutory allocation on the economic performance of a States, using one of the well endowed States, Ekiti as a case study. In order to achieve this, we collected data from secondary sources of actual Federal allocations overtime and Gross Domestic Products with the Internally generated revenue (IGR). We then adopted a regression analysis model to test the effects of both the Statutory allocation and IGR on the economic development(GDP) of the State, to confirm the read driver of the economy. Our findings showed that the variables Statutory Allocation (SA) and Internally Generated Revenue (IGR) were jointly having a positive correlation with Gross Domestic Product. However, despite the huge natural endowment of Ekiti State, only Statutory Allocation had a significant positive effect on Gross Domestic Product while the contribution of IGR is insignificant. Considering the dwindling federal allocations and the controversial allocation measures, it is therefore recommended (among others) that the States should widen its net for the Internally Generated Revenue to achieve meaningful economic development in the very near future.

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