Every month, the Federation Account Allocation Committee meets in Abuja. They sit in a room, examine the revenue that has been collected — from oil, from customs, from taxes — and they decide how much each state will receive. The states wait. The governors send their financial officers. The money is announced, the shares are wired, and the states begin another month of dependence.
This is not federalism. This is the opposite. In a true federal system, the constituent units — the states, the provinces, the cantons — raise their own revenue. They have their own tax authority. They own their natural resources. They are not waiting for allocations from a central government. They are partners in a federation, not subsidiaries of a unitary state.
Switzerland has twenty-six cantons. Each canton sets its own tax rates. A corporation operating in Zurich pays different taxes than a corporation operating in Geneva. The cantons compete. They offer different combinations of tax rates and public services. People and businesses choose where to locate based on these combinations. The federal government collects relatively little tax — most revenue stays at the cantonal and municipal levels.
Canada has ten provinces. Each province owns the natural resources within its borders. Alberta's oil belongs to Alberta. The provincial government decides how to develop it, how to tax it, how to save the revenue for future generations. The federal government cannot take it. If a province is resource-poor, there is an equalization system that transfers revenue from richer provinces to poorer ones — but the principle of provincial ownership is absolute.
Germany has sixteen Länder. They have extensive tax autonomy. They share some taxes with the federal government according to formulas that are transparent and fixed. They have their own borrowing authority, their own budgets, their own responsibility for the services that touch citizens' daily lives. The federal government handles defense, foreign policy, and the framework of law. Everything else belongs to the Länder.
Nigeria has thirty-six states. They raise almost no revenue of their own. They depend on monthly allocations from Abuja for roughly 80 percent of their budgets. They do not own the oil in their territories — the federal government does. They cannot set their own tax rates — the federal government controls the most productive taxes. They are, in fiscal terms, administrative units of the center, not sovereign components of a federation.
The result is visible in every Nigerian state. Governors spend more time in Abuja than in their own capitals. They lobby for federal projects, for appointments, for discretion in the allocation formula. They build their political machines on the distribution of federal money rather than on the development of local revenue. The incentive is not to build self-sustaining state economies but to capture a larger share of the national pie.
The pie is oil. And oil is controlled by the federal government. This creates a system where the states have no incentive to develop non-oil revenue, because oil revenue comes regardless. It creates a system where states are not accountable to their own citizens for revenue, because the money comes from Abuja, not from local taxpayers. It creates a system where every state is dependent, every state is weak, and the federal government is the only game in town.
What would true fiscal federalism look like in Nigeria? It would look like the regions owning the resources in their territories. The Niger Delta would own the oil. The North would own its agriculture. Each region would develop, tax, and manage its own resources. The federal government would receive a share — through a negotiated formula — for national functions like defense and foreign policy. But the states would be sovereign in their fiscal spheres.
This is not a fantasy. It is how the Independence Constitution of 1960 worked. The regions collected their own revenue. The North had its groundnut riches. The West had cocoa. The East had palm oil. Each region developed at its own pace, set its own priorities, competed and cooperated with the others. The federal government was dependent on the regions for its revenue, not the other way around.
The Civil War and the military governments that followed changed this. They centralized power. They broke the regions into smaller states. They took control of oil revenue. They created the system of monthly allocations that exists today. The justification was national unity — the fear that strong regions would tear the country apart. But the result has been a different kind of fragility: a country where every state is dependent, where no state can survive without the center, where the competition for federal favor replaces the competition for development.
Could Nigeria return to true fiscal federalism? The question is not whether it is technically possible. It is whether the political will exists. The current system benefits those who control the federal government. They have the power to reward friends and punish enemies through the allocation formula. They would not give this up willingly.
But the alternative — continued dependence, continued centralization, continued stasis — is not sustainable. The oil is running out. The federal government is borrowing to pay salaries. The states are trapped in a system that makes them weak. Something has to change.
True fiscal federalism would require constitutional amendment — to give states control over resources, to establish state tax autonomy, to create a transparent system of revenue sharing rather than allocation. It would require a period of transition — to allow states to build capacity for revenue collection, to adjust to new responsibilities. It would require a new political culture — where governors are elected for their ability to develop state resources, not for their connections in Abuja.
The examples are there. Switzerland, Canada, Germany, the United States — all federal systems where the states or provinces have genuine fiscal power. None of them is perfect. All struggle with issues of inequality between rich and poor regions. All require mechanisms for redistribution. But they have solved the basic problem: the states are real governments, not administrative units waiting for monthly handouts.
Nigeria's debate about restructuring is fundamentally about this. It is about whether Nigeria will remain a unitary state disguised as a federation, or whether it will become a true federation where power is distributed. The fiscal question is the heart of this debate. Everything else — state police, resource control, regional development — flows from who controls the money.
The money that belongs to the regions is currently in Abuja. It arrives there through oil that is pumped from regional territories. It leaves there through allocations that make every state a dependent. This is the framework Nigeria lives in. Changing it would require a different framework — one where the regions control what is theirs, where the federal government is a partner rather than a patron, where citizenship means membership in a state that has the power to shape its own destiny.
That framework exists. It exists in other federations. It existed in Nigeria's own past. The question is whether Nigerians will demand it, and whether those in power will allow it to be built.