Balancing Revenue Allocation: A Comparative Analysis of Vertical and Horizontal Distribution Mechanisms in Public Finance – Evidence from Nigeria, South Africa, and Mexico

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.