Fiscal Federalism in Nigeria: Implication to the Economy of States

International Journal of Research and Innovation in Social Science (IJRISS) | Volume II, Issue XI, November 2018 | ISSN 2454–6186

Fiscal Federalism in Nigeria: Implication to the Economy of States

Robinson Monday Olulu¹, Udeorah, Sylvester Alor F.²

^{1, 2}Ph.D, Department of Economics, University of Port Harcourt, Port Harcourt, Nigeria

Abstract:-The paper discusses fiscal federalism in Nigeria, and the implication to the economy of states. Federalism, fiscal federalism and inter-governmental relations were defined in the conceptual framework, while basic theories of fiscal federalism were reviewed. The empirical issues/opinions of experts on fiscal federalism concluded the literature review. The paper reviewed the evolution of fiscal federalism in Nigeria; Sir S. Philipson headed the first fiscal commission preparatory to the 1954 federal constitution. Other commissions/instruments of fiscal federalism include, the Hicks-Philipson, Louis Chick, Jeremy Raisman and R.C. Tress, the Bin, Decree 15 of 1967, the Dina Commission, the Aboyade committee, Pius Okigbo, T.Y. Danjuma Commission and the Constitution of the Federal Republic of Nigeria, 1999. The paper discovered that the Nigerian fiscal imbalance was to a large extent masterminded by the military governments. That the states in Nigeria are structurally constrained to perform their constitutional responsibilities because of appropriation of greater quantity of the national resources to the purview of the government at the centre. Taxes and Royalties that were hitherto paid to states have been directed to the federal purse. The Exclusive and Concurrent lists, in favour of the government at the centre negate the economic prosperity of states in Nigeria. It is important that the Exclusive and the Concurrent lists as contained in the 1999 Constitution be reviewed. States must be made to own and exploit resources in its territory to carryout their statutory responsibilities. The federal government should refund states that have repaired federal roads, and projects. While in the near future the federal government should hand-off certain responsibilities, such as Roads, Education, Agriculture, Sanitation, etc. The distributable funds for these projects should go to the states treasury. The restructure of the Nigerian federal system will strengthen the economy of states, and pave way for more equitable society and welfare of citizens.

Keywords: Fiscal Federalism, Federalism, Revenue Allocation, Inter-governmental Relations

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