In most federal countries of the world, intergovernmental relations have been contentious. Theirrevenue allocations have equally been reportedly contentious. The distribution of resourcesamong the various levels of government has never been easy and smooth, hence the contentionand Nigeria is no exception (Okeke, 2004). The determination of what constitutes the federalrevenue and how it should be shared among the component federating units in Nigeria lie at thecenter of most, if not all national conflicts. This is why scholars and researchers of NationalPolitical Issues have upheld that Revenue allocation in Nigeria has generated a lot of controversyin recent times. The issue had been the allocation between various tiers of government (verticalallocation) and between states (horizontal allocation) but recently, another dimension wasintroduced to the vertical allocation issues- revenue allocation pattern between the federalgovernment and the Oil-rich states, local government and communities. This third dimension iswhat made “Issues in Nigerian Fiscal Federalism” unique because the criteria used so far havenot enjoyed acceptability and therefore, it has been problematic. From the inception of the entitycalled Nigeria following the 1914 amalgamation, there has been schemes, schedules, modes,methods and patterns of relationship among the federating units in terms of administration(Intergovernmental relations) and finance (Intergovernmental fiscal relations), in which case,several principles have been expounded and adopted once in a while singularly or collectivelysuch as the principle of Derivation, Need, Population, Even Development, Equality of State,National Interest, Independent Revenues, continuity of Government Services, Financialcomparability, Fiscal Efficiency, Tax Efforts, Minimum National Standards, Equality of Accessto development Opportunity, out of which the principle of Derivation has been variouslyadvocated for and applied to equalize for the third dimensional sharing pattern referred to abovebut most recently, the derivation principle no longer seem to be favoured by these oil-rich statesand they call for “resource control”. This call for resource control, like the principle of derivationhas generated much heat in the Nigerian political scene of recent to the extent that a politicalsolution was sought for where some Governors entered into agreement with the then president toensure peace in Niger-delta region. The current president of the Federal Republic of Nigeria alsocreated a Niger Delta Ministry to take care of the yearnings and aspiration of the people ofNiger-Delta. But the question this paper wishes to address is, has the situation abated? If not,why? And what is the solution? This paper therefore examines the key issues in the Nigerianfiscal federalism with emphasis on the relationship between the derivation principle and resourcecontrol, and how a prudent application of derivation principle will quell the issues inherent inNigerian fiscal federalism generated by “resource control”
Keywords: Federalism, Nigerian Fiscal Federalism, Derivation Principle and Resource Control,Revenue Allocation