Fiscal Federalism and Local Government Finance in Nigeria

Abstract

Fiscal federalism deals with the sharing of resources in a federated nation. Over the years problems about local
government finance have become an important aspect of intergovernmental relations. Constitutionally, local
government is the third tier of government which exists as an independent entity, possessing some degree of
autonomy and sovereignty. However, its capability to perform its constitutionally mandated functions is beleaguered
by the problem of inadequate revenue. In Nigeria, a number of factors have contributed to the financial setback
experienced by most local governments and these include: overdependence on allocations from state and federal
governments which in most cases are withheld by the same federal and state governments; lack of fiscal autonomy;
creation of non-viable local governments, among others. The aim of this paper is to examine the problems of the
local government in Nigeria, especially concerning its financial limitations, necessitated by the unequal share of
resources, imbalance revenue-sharing formulae and lack of fiscal autonomy in the operations of the local government
in Nigeria.