An Examination of Relevant Issues in Nigeria’s Fiscal Federalism

Nigeria’s fiscal arrangement accommodates the interaction between the federal government and the federating units in addressing critical issues of revenue assignment from natural resources, expenditure assignment, regional disparities, and national unity. Fiscal federalism in Nigeria is characterized by extensive vertical and horizontal intergovernmental relations which have become very contentious and volatile because subnational governments lack financial autonomy in the current fiscal architecture. This paper examines such issues as principles of fiscal federalism, decentralization and assignment of revenue from natural resources, decentralization and corruption, decentralization, regional disparities and national unity. The practice of fiscal federalism has been contentious in Nigeria due to overbearing influence of the federal government, unevenly distribution of endowment of natural resources, the sharing of which often puts considerable strains on national unity, and also tends to generate rivalries between the constituent units of the Nigerian state. The paper concludes that if the country can establish the institutions that will make decentralization work with a reasonable degree of efficiency, then decentralization can be a good policy