Balancing Revenue Allocation: A Comparative Analysis of Vertical and Horizontal Distribution Mechanisms in Public Finance – Evidence from Nigeria, South Africa, and Mexico
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- February 5, 2025
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Prof. Aliyu Idris1 & Haruna Dzugwahi PhD2*
1Revenue Mobilisation Allocation and Fiscal Commission, Abuja, Nigeria
2Office of the Accountant General of the Federation, Abuja, Nigeria
ABSTRACT
Revenue allocation is a fundamental pillar of public finance, aimed at ensuring the equitable distribution of financial resources among different levels of government to promote economic stability, governance efficiency, and social equity. This study provides a comparative analysis of the vertical and horizontal revenue distribution mechanisms in Nigeria, South Africa, and Mexico, three federations with distinct yet comparable revenue-sharing frameworks. By employing a qualitative research approach, this study examines policy documents, legal frameworks, government reports, and academic literature to analyse the principles guiding revenue allocation across federal, state, and local governments in these countries. Despite the existence of structured frameworks, persistent disparities in fiscal capacity, governance effectiveness, and service delivery highlight significant inefficiencies in these systems. The study identifies gaps in current allocation models, particularly in balancing fiscal autonomy with financial sustainability. The findings underscore the need for governance reforms, improved fiscal transparency, and enhanced financial independence at subnational levels to strengthen economic development and public service delivery. Ultimately, this study serves as a valuable resource for policymakers, researchers, and stakeholders interested in optimizing revenue allocation to enhance national and subnational governance effectiveness.
Keywords: Revenue Allocation; Horizontal Distribution Mechanisms; Public Finance; Economic Stability
Citation: Idris, A. & Dzugwahi, H. (2025). Balancing Revenue Allocation: A Comparative Analysis of Vertical and Horizontal Distribution Mechanisms in Public Finance – Evidence from Nigeria, South Africa, and Mexico. European Review in Accounting and Finance, 9(1), 1-10. DOI: https://doi.org/10.5281/zenodo.14810891
Copyright: ©2025 The Authors. This is an open-access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.