The Problem with Nigerian Fiscal Federalism and How it Could be Overcome
Keywords:
Fiscal federalism (FF) Intergovernmental relations (IGR) Poverty Alleviation, Tax base, Formula, Revenue sharing, Constitution, Exclusive legislation list,, Corruption.Abstract
Every country in the world has to make a decision on the type of governmental structure to adopt and some may adopt the unitary, federation, quasi-federation, or confederation system, which is usually based on political, economic and social consideration. Over the years, decentralization has become the norm in most developing countries of the world and Nigeria is no exception, with its initial practice of fiscal federalism in 1946 that has continued since independence in 1960. Nigeria‘s fiscal federalism is saddled with many problems and attempts to put some of the problems right have seen many Committees and Commissions set up over the years to look into ways to enriching the system. This article is purely based on qualitative research and uses secondary sources of information to genre the necessary information needed for this article. This article seeks to redress the malaise and ills of Nigeria fiscal federalism practice by asserting a new possible direction for the country. Therefore, in order to achieve this aim this paper discusses the inherent problems in the Nigeria’s system of fiscal federalism and attempts to posit alternative paths. It specifically recognizes that Nigeria’s fiscal federalism is find wanton in many areas such as resources control, formula for sharing, monolithic resource, tax bases, constitution, and especially corruption in the system that need to be addressed to resolve the dilemma which Nigeria’s fiscal federalism currently inherent. This paper therefore feels a need to research Nigeria fiscal federalism with a view to add value to the on going debate on how to improve the fiscal federalism practice in Nigeria. The paper adopts descriptive and analytical methods relying on secondary sources of information to genre information on the lapses in Nigeria fiscal decentralization process. The author decries the centralist nature of financial resources, the constitution with its exclusive legislature, formula, tax bases, and the use of derivation rather than equalization and in particular corruption as the major problems that need to be addressed. The paper also posits
the need to discontinue with the present formula measure for sharing for State Gross Domestic Product (SGDP). It is recognized that these measures would energize states to develop other sources of finance and not to wait for the hand-outs from the central
government and if this was to be effective corruption must be wiped out from the system of revenue delimitation. This paper attempts to use the problems inherent in Nigeria’s current system to foster a new direction for Nigeria, which hopefully would lead to a more
harmonized practice than is currently the case.
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