LINKAGE BETWEEN FINANCES OF STATES GOVERNMENT AND REVENUE ALLOCATION IN FEDERAL SYSTEM OF GOVERNMENT: EVIDENCE FROM NIGERIA

This study examined linkage between finances of states government and revenue allocation in federal system of government in sub-Sahara African: Evidence from Nigeria. The study has twin objectives namely; to examine the relationship between states budget and revenue allocation to states and the association between states budget and internally generated revenue by states. Regression analysis was carried out on the data taken from secondary source. The regression results show that there exist positive and significant relationship between State budget and Federation allocation. State budget and internally generated revenue are also related positively and significantly. Further, it was discovered that there exists relationship between state budget and federation allocation which explained the reason why the state government usually waits for the federal government to present her budget to the National Assembly before the states present their budget to the State Assembly. The main policy prescription of this analysis is that the states should try as much as possible to improve internally generated revenue as the State budget and internally generated revenue are linked positively with each other.