Fiscal Federalism in Nigeria: Empirical Review

Abstract

Fiscal federalism is the distribution of financial resources and responsibilities between different levels of government, such as the federal government and state governments. This paper reviewed the empirical literature on fiscal federalism in Nigeria. In Nigeria, fiscal federalism is established in the constitution, with the federal government having primary responsibility for defense, foreign affairs, and other national issues, while state governments are responsible for issues such as education and health. The distribution of revenue in Nigeria is governed by the Revenue Allocation Formula, which divides the country's revenue between the federal, state, and local governments. Despite the constitutional provisions, fiscal federalism in Nigeria has faced challenges, such as unequal distribution of resources, inadequate revenue generation by state governments, and limited autonomy for states. Improving fiscal federalism in Nigeria requires addressing these challenges and promoting a more equitable distribution of resources and responsibilities among the different levels of government. In order to effectively manage fiscal federalism in Nigeria, it is important for the federal, state, and local governments to work together, adhere to the provisions of the Constitution, and engage in constructive dialogue and negotiation. The main recommendation for managing fiscal federalism in Nigeria would be to implement a clear and transparent system for revenue sharing and allocation of resources between the federal and state governments. This can be achieved through the establishment of a well-defined revenue-sharing formula and clear guidelines for the distribution of funds to different levels of government. Additionally, strengthening fiscal accountability and oversight mechanisms, such as auditing and budget tracking, can help to ensure that resources are being used efficiently and effectively.

Keywords: Federalism, fiscal, Nigeria, government, revenue