http://ijfr.sciedupress.com International Journal of Financial Research Vol. 10, No. 4; 2019 Published by Sciedu Press 172 ISSN 1923-4023 E-ISSN 1923-4031 Effect of Apportioned Federal Revenue on Economic Growth: The Nigerian Experience Cordelia Onyinyechi Omodero 1 1 Department of Accounting, College of Management Sciences, Michael Okpara University of Agriculture, Umudike, Umuahia, Abia State, Nigeria Correspondence: Cordelia Onyinyechi Omodero, Department of Accounting, College of Management Sciences, Michael Okpara University of Agriculture, Umudike, Umuahia, Abia State, Nigeria. Received: June 4, 2019 Accepted: July 23, 2019 Online Published: July 24, 2019 doi:10.5430/ijfr.v10n4p172 URL: https://doi.org/10.5430/ijfr.v10n4p172 Abstract The major objective of income distribution to the federal, state and local governments in Nigeria is to achieve economic growth which leads to economic development. This ultimate aim of governance in Nigeria appears not to have been achieved due to alleged corruption and mismanagement of the monthly allocated funds. Thus, this study investigates the effect of revenue apportioned to the three levels of government on economic growth in Nigeria. The study employs annual time series data which cover a period from 1981-2016 and have been collected from CBN Statistical Bulletin, 2016 edition. Ordinary Least Square (OLS) method is used to perform the multi-regression analysis with the aid of e-views version 9. The findings of the study reveal that the federally apportioned revenue to the federal government (FAFG) has a significant positive impact on RGDP while FALG has a robust significant positive impact on RGDP. The result also indicates that FASG has a significant negative influence on RGDP. This leads to a conclusion that mismanagement of funds by the state governments is a cause for concern. Therefore, the study suggests, among others, that revenue sharing formula in the country should be based more on impact of expenditure incurred on executed projects (long term and short term) by each tier of government than on any other parameter to achieve fairness and efficiency in public service delivery at all levels of governance. Keywords: federation account, revenue, allocation, economic growth, three tiers of government JEL Classification: JEL CODE: H71, H77, H79 1. Introduction The federation account is an exceptional account that is required to be maintained by the federation of Nigeria as specified by section 162(1) of the 1999 constitution. All government proceeds in Nigeria are lodged into this account excluding the revenues from the Nigerian Armed Forces, Police Force, Foreign Service Officers and Federal Capital Territory (FCT) Residents. The constitution states that proceed from the Armed Forces, Police Force, Foreign Affairs officers and FCT residents should be paid into the Consolidated Revenue Account (CRF) (Adams, 2006; Ohiomu & Oluyemi, 2017). The official revenue allocation formula is used to apportion resources from the federation account to the three levels (federal, state and local governments) of government in Nigeria (ATSWA, 2009). It is also described as a distributable pool account whereby funds are allotted to the federal government, state governments and the local government councils by the Federation Account Allocation Committee on a monthly basis, based on the prevailing revenue sharing formula in the country (Ani & Obara, 2002). However, realization of economic growth in all parts and facets of the Nigerian economy has been the focus and the underlying reasons behind revenue apportionment in Nigeria. It is believed that economic growth is a major determinant and pointer of an economy that is robust in all ramifications. A strong economy is characterized by progress in the national income, availability of jobs and enhancement of people’s wellbeing (Prateek, 2017). The growth of the ratio of GDP to population (GDP Per Capita), which is also called Per Capita Income is the most important aspect of economic growth (Sciencedaily, 2018). As the country’s GDP is increasing, it becomes productive and leads to more people being employed. This increases the wealth of the country and its population.