Fiscal Federalism a Solution to Nigeria’s Economic Woes By Oludaisi Omokungbe

NATIONS ARE NOW TURNING TO TRUE FISCAL FEDERALISM TO ENHANCE THE DEVOLUTION OF RESPONSIBILITIES AND POWERS SO AS TO IMPROVE AND STRENGTHEN THE PERFORMANCE OF THEIR PUBLIC SECTORS AND INSTITUTIONS.
 The scope of true fiscal federalism is majorly centred on the allocation of government resources and spending activities of various tiers of government to enhance shared responsibilities, good governance, public sector performance, and sustainable and competitive growth and development amongst the federating units.


 The critical outputs of this will not only place the citizens on good note but will promote the realization of their full potentials in economic, educational and political endeavours. In Nigeria, the general clamour for true fiscal federalism, regional autonomy, resource control and power devolution will continue to be on the increase as people desire to be more involved in governance as a result of the practical inability of the central government to provide and deliver quality services for the masses. According to the revenue sharing formula, the central government takes more than 50% of the total revenue generated over time at the expense of the federating units that are closer to the people at the grassroots.

 The same central government have little or no effects on the people and their communities. To confirm this, check your primary community to identify or locate one functioning federal project. This will help you understand the extent to which the central government has abandoned the masses. On the other hand, the central government has placed some affairs of the nation on exclusive list thereby rendering the states and local governments powerless to diversify, explore, exploit and make use of the resources in their domain to create jobs, employments and wealth for the people.

This has reduced the chances of the states and local governments to pursue self initiated projects, programmes and policies for growth and development and as encouraged them to rely solely on the imbalance and ineffective feeding bottle called ‘FEDERAL ALLOCATION’ on monthly basis.
No wonder, many of the states and local governments can now not pay salaries of their workers as at when due let alone creating jobs, wealth, championing empowerment for the youth and executing capital projects for the people. The over reliance of the state and local government on the central government is the major factor for the abysmal performance of public institutions and sectors at all levels of governments; central government inclusive. This over reliance has also prevented massive creation of opportunities for productive and sustainable growth and development of the economy of Nigeria which rather should be the products of a working true fiscal federalism.

I think we should be learning our lessons now that our national income is drastically reducing as a result of decline of crude oil prices, which has been the major source of revenue. The states are now seeking ‘bailout’ from the central government that is already experiencing a drastic characteristic cash crunch in its income.

Then, from the above, the central government will run to the international setups and establishments to seek loans and bailout to satisfy the demands from the federating units? We are already witnessing this phenomenon now that we are seeking international loans to finance and implement the 2016 budget.  Do not be surprised if at any time soon the governors demand for bailout again!

You will agree with me that if this phenomenon continues, creation of jobs and employments will become a taboo, provision of social infrastructures and amenities will be a no go area, establishment of public institutions to deliver dividends of democracy will cease to exist, funding of education will go on hibernation, security and peace will become a thing of the past, provision of government responsibilities will be put on hold, some government agencies will go on permanent recess, unemployment rate will explode and hunger will loom exponentially. Borrowing to finance some aspects of the budget is a bad signal to our dear nation and its economy.