Fiscal Federalism in Nigeria: An Analysis of Issues and Challenges

Abstract

The paper posits that fiscal federalism is a particular pattern of constitutional division of revenue powers and responsibilities among levels of government. The federal government however has occupied a very strong position vis-à-vis the State and Local government since the 1970’s in Nigeria. This is because most of the power (financial and legislative) relating to economic development has been explicitly centralized at the federal level. It is the position of the paper that a high level of fiscal decentralization is required in Nigeria because of the unfair revenue sharing formula and the need to resolve the controversial issues surrounding the contentious fiscal federalism in Nigeria. Apart from recommending a substantial review of the fiscal system, it draws attention to the political imperatives of a constitutional modification of the fiscal arrangement and adequate compensation for those who produce the ‘commonwealth’ among others.