The term fiscal federalism is rooted in a political arrangement called federalism. Federalism in nigeria refers to the devolution of selfgovernance by the west african nation of nigeria to its federated states, who share sovereignty with the federal government. Fiscal federalism, good governance, fiscal autonomy, nigeria. In order to appreciate how, for example, total grants to local governments compare with states deficits, it is crucial to examine this study side by side with our previous work ekpo and ndebbio, 1991. Examining weak subnational finances in nigerian states chukwuma agu african institute for applied economics,enugu, nigeria abstract one of the most crucial challenges to nigeria s ailing fiscal federalism is the inability of states to raise, retain and manage revenue. Fiscal federalism is characterized by fiscal relations between central and lower levels of government. Fiscal federalism, governance and internally generated.
Fiscal federalism in nigeria in any federal system, there must be an arrangement on how the revenue of the state will be shared among the component parts. It is important to realize that this historic and presentday contradiction exists due to the consequences of. This is followed by a discussion of public financial management and fiscal federalism in nigeria, and subsequently, an analysis of the national fra and the subnational fras adopted in several states in nigeria. Resource allocation and management as well as fiscal federalism decentralization have remained contentious issues in a federal state such as nigeria. The challenge of federalism, democracy and development. The analysis highlights the important role of the central. A comparative introduction is a concise introduction to the ways in which the worlds federations manage their finances. Federalism is a political concept in which power to govern is shared between national, and subnational governments creating what is often called a federation arowolo. Policy fiscal federalism and nigeria s development. The problem confronting fiscal federalism in nigeria fiscal federalism has always been a matter of argument in nigeria since its inception. Applicants should not limit themselves to these topics, which are just suggestions.
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. According to chris attah, such practice is the panacea to the problems plaguing nigeria and its development. Major emerging challenges to fiscal federalism shifting sands in division of fiscal powers globalization and information revolution and their discontents towards an hour glass model of federalism new vision of local governance widening economic and fiscal divide within nations. Akindele and olaopa2002 held that fiscal federalism was deeply rooted in the federal system of government. Since it is fundamentally true that the challenges of fiscal federalism are. Fiscal discipline and service delivery in nigeria festus o. Federalism is to this day still a highly loaded and contested political concept in the south african context. The role of states and local governments prepared for the nigerian per steering committee by stuti khemani july 24, 2001 introduction 1. In fact, fiscal federalism is a general normative framework for assignment of functions to the different levels of government and appropriate fiscal instruments for carrying out these functions in 2017, governor of rivers state of nigeria, ezenwo nyesom wike said that he believes true fiscal federalism will strengthen the economy of his. Topics covered include the distribution of taxation powers among different levels of government. Derivation principle of revenue allocation in nigeria. Submissions can relate to topics such as asymmetrical federalism, fiscal federalism, distribution of competences, multilevel governance, centralization versus decentralization, or theories of secession. It dates back to 1946, when the richards constitution was introduced.
Conceptual issues fiscal federalism is a byproduct of federalism. It is therefore, imperative to start with an explanation of the concept of federalism. Fiscal federalism and good governance in nigeria since. Literature and theoretical framework of fiscal federalism 2. Consistent with its mission, vision ethiopia creates unhindered forums for scholars, professionals and concerned ethiopians to present their carefully thought policy alternatives for ethiopia. Longterm fiscal challenges the population in oecd countries is ageing rapidly, which will have significant macroeconomic impacts, including on public expenditure and tax revenues.
Federalism can be seen as a system of government in which governmental powers that exist in a country are shared between central government and other component units i. The politics of revenue allocation and resource control have been a dingdung affair for a very long time in nigeria. Buchan fiscal residuum theory was used to explain and analyze issues that relate to federalism, fiscal federalism and the challenges therein. In nigeria for instance, the federal system comprises federal, state and local governments while in the united states, federal system includes the federal. Finally, the study shall be concluded with alternatives for remediationpolicy options.
Oecd ilibrary population ageing and subcentral governments. Taxation, revenue allocation and fiscal federalism in. Challenges of fiscal federalism in nigeria and solutions. Attah said that if the government accepts fiscal federalism, most of nigeria s problems would be solved. The politics of fiscal federalism and the challenges of development. Politics, fiscal federalism, challenges, development, nigeria. Fiscal federalism in the nigerian context involves the allocation of expenditure and taxation powers shared among the federal, state and local governments. He says that the practice of fiscal federalism is the panacea to the problems plaguing nigeria. Some of the issues with the practice of fiscal federalism in nigeria include the centralist system of fiscal relations, conflict over sharing principle, over dependence on oil revenue. Over the years fiscal commissions were appointed to work out. Nigeria and challenges of fiscal federalism politics. In fulfilment of the requirements for the degree of. Today we want to find out the main problems of nigerian federalism.
This is an eternal problems of the government which affect every citizen in nigeria. This report an outcome of an expert group meeting held on the challenge of local government financing in developing countries documents both the challenges and solutions related to the ability of local governments to. It has created a scenario whereby the states have become economic extensions of the federal government and has eroded the fiscal autonomy of the federating units. Despite the number of changes nigeria has made to its tax system in the past, there is still a very long way to go and the current situation of things is a nono. In view of the above, it is pertinent to ask some fundamental questions. It is important to realize that this historic and presentday contradiction exists due to the consequences of the development of any principle of income acquisition. Fiscal federalism, governance and internally generated revenue. Against this background, the parties tacitly agreed to drop the fword from the constitution. Pdf taxation, revenue allocation and fiscal federalism in.
A search for remediation nkwede, joseph okwesili, ph. Theory and dimensions dare arowolo lecturer, department of political science and public administration, adekunle ajasin university, nigeria abstract the dynamism and complexity of nigerias federalism has attracted academic scrutiny. An overview of core issues by kayode oladele according to professor akpan ekpo, a onetime vice chancellor of university of uyo, during his 2004. Taxation, revenue allocation, and fiscal federalism in nigeria 31 total nigerian government revenues were collected by the federal government. It also provides a comparison of subnational debt management practices of selected nigerian and indian states. The paper posits that fiscal federalism is a particular pattern of constitutional division of revenue powers and responsibilities among levels of government. It is the thinking of most nigerians that with fiscal decentralization, economic welfare of nigerians will be automatic. Pdf taxation, revenue allocation and fiscal federalism. The ordinary least square ols technique is adopted. The challenges of internally generated revenue of state in nigeria. Comparative perspectives from canadian fiscal federalism olumide victor ekanade 0 1 2 recommended citation 0 redeemers university, ogun state nigeria 1 commons, other international and area studies commons, and the political economy commons 2 part of the african studies. Resource allocation and management as well as fiscal federalismdecentralization have remained contentious issues in a federal state such as nigeria.
It is not a secret at all that nigeria is declining. The report also identifies successful governance mechanisms for efficient. Therefore, the problem with federalism in nigeria is the mixapplication or nonapplication of this clause especially as it has to do with power distribution awa, 1977. This work will adopt the use of secondary source of data as the main method of data collection. Federalism and its challenges in nigeria request pdf. Taxation, revenue allocation and fiscal federalism in nigeria. The principle of fiscal federalism is that the states should control what they have and pay certain percentages to the center. Budget, budgeting process, corruption, federalism, fiscal federalism. The fifth conference is a continuation of the dialogue on peace, democracy, unity and transition. Before we start discussing federalism in nigeria, it is pertinent to know what federalism really is. Read more about fiscal federalism and how it works in this. It argues that there is the need to find a revenue base in order to maintain the important function of governments at all levels.
That is, it is manifest by the financial aspects of the devolvement of authority from the national to the regional and local levels. In this article, we identify the challenges of fiscal federalism in nigeria. Therefore, the problem with federalism in nigeria is the mixapplication or nonapplication of this clause especially as it has to do with power distribution awa, 1976. This paper analyses the consequences of population ageing at the subcentral government scg levels and introduces the scg fiscal vulnerability to ageing. However, most literature on federalism focused on power relations between and among levels of government visavis fiscal federalism while issues relating to contextual dilemma and the pitfalls in the experiment have attracted few academic works. Revenue allocation in nigeria has been one of the most intractable and controversial issues. Introduction corruption as a term may mean different things to different scholars depending on the direction of the. Problems and challenges of fiscal federalism in nigeria. Issues, challenges and policy options, authoradeleke oluwole.
Issues and challenges of nigerian fiscal federalism. Fiscal federalism and issues of resource control in nigeria. This paper examines the various issues and challenges confronting fiscal federalism in nigeria s fourth republic. Fiscal federalism in nigeria an analysis of issues and. Definition of fiscal federalism fiscal federalism is the scope and structure in which different government tiers define. Attah said that if government accepted fiscal federalism, most of nigeria s problems would be solved. T11c problems and prospects of fiscal federalism and nation building in nigeria, job c. Problems of nigerian federalism and solutions legit. If the government just accepts the principle of fiscal federalism, the states should control what they have and pay certain percentages to the. Attah said that if the government accepts fiscal federalism, most of nigerias problems would be solved. The paper noticed that the principle of fiscal autonomy and fiscal. This research is basically designed to ascertain and analyze the various problems of federalism and nationbuilding in nigeria. Ekpo and enamidem ubokudom eds, issues in fiscal federalism and revenue allocation in nigeria, ibadan.
This is not unexpected as the federal government is solely responsible for the collection of mining rights and royalties, petroleum profit tax nigerias major. Federalism can be seen as a system of government in which governmental powers that exist in a country are shared between central government. Sep 08, 2018 this has posed serious challenges to the issues of fiscal federalism in nigeria. Fiscal federalism and issues of resource control in nigeria nenyiaba, c. Fiscal federalism in nigeria an analysis of issues and challenges. An analysis of issues and challenges 40 research centre for management and social studies evolution of nigeria s fiscal federalism nigeria s fiscal federalism is anchored on economic, political, constitutional, social and cultural development. To discover if the operation of true federalism in nigeria could help in tackling the problems. Home special report the challenge of federalism, democracy and development the challenge of federalism, democracy and development on february 17, 2012 4. Presented to the faculty of economics and social science. It involves the financial relationship among the three tiers of government. This report an outcome of an expert group meeting held on the challenge of local government financing in developing countries documents both the challenges and solutions related to the ability of local governments to mobilize revenues from local resources. Taxes should be collected effectively and fairly, both in equitable and monetary terms, for our benefit, so as to ensure our desired growth and development.
It dates back to 1946 when the richards constitution was introduced. Federalism and its challenges in nigeria the chapter examined the position of federalism in the nigerian content since its independence in 1960. Dec 24, 2019 problems facing nigerias federalism a number of factors make the system so problematic in practice, and few of them will be discussed below. Fiscal federalism principles, practices and challenges. Fiscal federalism and local government finance in nigeria. The politics of fiscal federalism and the challenges of development in nigeria bolaji omitola okuku campus, osun state university, nigeria abstract in nigeria, the issue of fiscal arrangement that is generally acceptable to the varied and complex groups within the polity has remained a volatile and often combustible problem. Nigeria and challenges of fiscal federalism politics nigeria. Abiodun awolaja looks at some of the issues surrounding the concept in the country and some of the solutions proffered to tackle them. Since it is fundamentally true that the challenges of fiscal federalism are enormous in nigeria, the paper attempts to look into the importance of fiscal federalism for good governance in nigeria. The challenge of local government financing in developing countries.
Faculty of management sciences, nnamdi azikiwe university, awka, anambra state, nigeria. Nigeria can be said to be operating the federal system of government, whereas in actual practice, the country is tending towards a unitary system. The politics of fiscal federalism and the challenges of. Issues and challenges of nigerian fiscal federalism citeseerx. Fiscal federalism concerns the sharing of resources among federating units to enable them fulfill their constitutional obligations. Problems facing nigeria s federalism a number of factors make the system so problematic in practice, and few of them will be discussed below. An analysis of issues and challenges 38 research centre for management and social studies fiscal federalism has a long history in nigeria. This is done by examining the evolution of nigerias federalism. Nature and challenges of fiscal federalism in nigerian. Major emerging challenges to fiscal federalism shifting sands in division of fiscal powers globalization and information revolution and their discontents towards an hour glass model of federalism new vision of local governance widening economic and fiscal. These factors and their attendants problems, implications and effects are examined within the purview of fiscal federalism in this paper in line. This is not unexpected as the federal government is solely responsible for the collection of mining rights and royalties, petroleum profit tax nigeria s major. Examining weak subnational finances in nigerian states chukwuma agu african institute for applied economics,enugu, nigeria abstract one of the most crucial challenges to nigerias ailing fiscal federalism is the inability of states to raise, retain and manage revenue.
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