by Olaitan Babatunde

Nigeria is officially a federation of 36 states and the Federal Capital Territory. Each state has a governor, a House of Assembly, ministries, commissioners and a constitutional responsibility to govern its territory. Yet, when major national decisions are made, the Federal Government in Abuja often occupies the centre of attention. States depend heavily on allocations from the Federation Account, compete for access to federal resources and sometimes have limited control over matters that directly affect their residents. This raises an important constitutional question: how much power do Nigerian states actually have, and how much of the country’s federal structure exists in practice?

Federalism is a system of government in which constitutional powers are divided between a central government and constituent units, such as states. The idea is that neither level should simply exist at the pleasure of the other. Each has areas of responsibility protected by the Constitution. Nigeria’s Constitution recognises this arrangement. Section 4 distributes legislative powers between the National Assembly and State Houses of Assembly through the Exclusive and Concurrent Legislative Lists. The National Assembly has the power to legislate on matters in the Exclusive List, including defence, currency, immigration and external affairs. Both federal and state legislatures can make laws on matters in the Concurrent List, subject to constitutional rules governing conflicts between their laws. Matters outside these lists generally fall within the residual legislative powers of the states.

This division is supposed to give states meaningful room to make decisions based on their own circumstances. Education, healthcare, agriculture, roads and other areas involve different levels of government, depending on the specific function and constitutional allocation. A state government should not need to wait for Abuja to decide every matter within its constitutional authority. However, having legal responsibility does not always mean having sufficient financial capacity to perform it. This is where Nigeria’s revenue allocation system becomes important.

Section 162 of the Constitution establishes the Federation Account, into which specified federally collected revenues are paid before distribution under the constitutional framework. The revenue allocation process involves the federal government, states and local government councils. The Constitution requires the revenue allocation formula to consider principles including population, equality of states, internal revenue generation, land mass, terrain and population density. It also provides that the principle of derivation must be reflected in the formula at not less than 13 per cent of revenue accruing directly to the Federation Account from natural resources. This provision is particularly significant for states from which natural resources are derived.

The difficulty is that many states depend substantially on revenue distributed from the Federation Account rather than generating enough internally to finance their responsibilities. This creates a relationship in which states may have constitutional responsibilities but limited independent revenue. When a state government relies heavily on monthly allocations, its ability to plan, invest and sustain public services can be affected by fluctuations in national revenue. It can also create political and administrative dependence on decisions made at the centre. This does not mean that every state is equally dependent or that federal transfers are inherently incompatible with federalism. Revenue sharing is common in federations. The important issue is whether states have adequate fiscal capacity and genuine authority to discharge their constitutional responsibilities.

The question of resource control makes this tension even more visible. Oil-producing states have long argued over the relationship between natural resources, derivation and the distribution of national revenue. Section 162 provides a minimum derivation principle of 13 per cent, but it does not give each state unrestricted ownership of every natural resource found within its territory. The constitutional arrangement places mineral resources within the Federation’s legal framework, including the Exclusive Legislative List. This means that resource ownership, control, revenue allocation and the responsibilities of producing states are separate legal questions. They are often discussed together in political debates, but they should not be treated as if they mean the same thing.

Nigeria’s federal structure also raises questions about local government autonomy. Local governments are constitutionally recognised, and Section 7 guarantees a system of democratically elected local government councils. Yet, for years, state governments have exercised significant influence over local government finances and administration. In July 2024, the Supreme Court delivered judgment in Attorney-General of the Federation v Attorney-General of Abia State and 35 Others, affirming the constitutional status and autonomy of local government councils. Among other things, the Court ruled against the continued use of caretaker committees in place of democratically elected councils and addressed the handling of local government allocations. The judgment was significant because it challenged the practice of treating local councils as if they were simply administrative departments of state governments. It also showed that federalism is not only about the relationship between Abuja and the state capitals. It includes the constitutional position of government at the grassroots.

There are also practical reasons why states sometimes look towards the Federal Government for direction. National security, infrastructure financing, economic coordination and large development projects can require cooperation across several states. Federal intervention is not automatically evidence of an attack on state autonomy. In a federation, different levels of government must work together. The challenge arises when cooperation becomes dependence, or when the central government exercises influence in areas where the Constitution gives states authority. The constitutional question should always be whether a particular action falls within the powers assigned to the institution taking it.

So, is Nigeria a federal system only on paper? The Constitution clearly establishes a federal system, and state governments have real legislative, executive and administrative powers. But the extent to which those powers translate into practical autonomy depends on revenue, constitutional interpretation, institutional capacity and the relationship between the different levels of government. A federation cannot be assessed simply by counting the number of states or the number of governors. Citizens should examine whether states can make lawful decisions within their jurisdiction, raise and manage sufficient revenue, deliver services and exercise their constitutional responsibilities without unnecessary interference. Federalism is not about every state doing everything independently. It is about ensuring that power is genuinely shared, responsibilities are clear and each level of government is accountable for the duties assigned to it.