FISCAL FEDERALISM IN NIGERIA AND THE NEED FOR DECENTRALIZATION

Abstract

In Nigeria, lack of extant principles and features of fiscal federalism is no doubt the bane of development, growth and economic success in the country compared to other countries that practice federalism. The Constitution of the federal Republic of Nigeria 1999 (as amended) wielded so much revenue powers to the federal government of Nigeria with leaving the component units somewhat incapacitated. This is no doubt in variance with the tenets of fiscal federalism and decentralization. The absence of autonomy to the sub-nationals has negated the principle of partial self-government by the sub-nationals. The sub-nationals are therefore, handicapped and they cannot provide maximum degree of fiscal freedom and responsibility to their citizenry neither can they embark on meaningful economic development. This has adverse effects and consequences such as poor economic growth, unemployment, poor infrastructure and lack of stability. This article is of the view that the new order the world over is decentralization of power which entails a fiscal power that is not concentrated on a particular tier of government but should be constitutionally and fairly devolved to the tiers of government rather than wield so much power to the government at the center to the detriment of others. It is however, suggested among other things that the current sharing formula of the revenue accruing to the federal government account should be reviewed to the effect that the sub-nationals gets the lion shares. Again, that there should be a strong policy on diversification from the oil sector to agriculture and technology in Nigeria. Also, that each state of the federation should be allowed to control and manage the resources deposited in their domain and then pay royalties to the government at the center. A total adherence and implementation of the recommendations made would go a long way to salvaging the ugly fiscal situation in the country.