OIL DEPENDENCY, FISCAL FEDERALISM, AND REGIONAL INEQUALITY IN NIGERIA, 1970–2020

Abstract

This paper analyses the interplay among oil dependence, fiscal federalism, and regional inequality in Nigeria between 1970 and 2020. Its primary objective is to examine how the country's dependence on petroleum revenues has shaped its fiscal structure, influenced regional development, and contributed to socio-economic inequalities. The study adopts a qualitative analytical approach, employing content analysis of relevant documentary sources. A thematic approach is used to analyse the data. The findings reveal that although petroleum has remained Nigeria's principal source of national revenue and foreign exchange earnings, the centralisation of fiscal authority in the federal government has constrained the fiscal autonomy of sub-national governments and exacerbated regional inequalities, particularly in the Niger Delta. Despite substantial revenue inflows through the derivation principle and federal allocations, many oil-producing communities continue to experience underdevelopment, poor infrastructure, low human development indicators, environmental degradation, and widespread poverty. The study concludes that achieving sustainable and equitable development in Nigeria requires the diversification of the national economy, greater fiscal decentralisation, a more equitable revenue-sharing framework, enhanced transparency and accountability in resource governance, and meaningful participation of host communities in the management of petroleum resources.