The paper examined one of the most contentious issues in the political economy of Nigeria: ‘the politics of fiscal federalism and resources control in Nigeria’. It argued that in spite of different commissions established from pre-colonial to post colonial era to give the country an acceptable revenue sharing formula, the country is yet to get one that will be generally acceptable to all groups that come together to form the federation. The main objective of the study was to find out the factors responsible for the financial subordination of the components units. Overlapping authority model of Intergovernmental Relations was adopted as theoretical framework. Secondary sources which included text books, journal articles, newspapers, etc., were used for data collection and the research design adopted was exploratory research design. The paper revealed, among other things, that the financial subordination of the state government is not unconnected to the fact that the state governments are not allowed to control their resources thereby making mockery of Nigerian federalism. It was recommended among other things that the component units should be granted financial autonomy by allowing them to harness their resources needed for developmental needs and also the Nigerian Constitution should be amended to ensure devolution of power to the component units.
Finance remains the bedrock of every organic system. This covers revenue and expenditure of government in public settings. Governments at federal, state and local levels owe citizens certain duties and responsibilities; prominent among them is to provide welfare and security for the citizens. This is provided in Chapter 2, section 13-23, of the 1999 Constitution of the Federal Republic of Nigeria which is referred to as ‘Fundamental Objectives and Directive Principles of State Policy’. Apparently, for government to fulfill her contractual agreement with her subject (citizens), government needs financial resources. Nigeria as a country is heterogeneous in nature and a system of government that is adopted to accommodate this pluralism is federal system. Considering this heterogeneity, a system of revenue allocation, generation and re-distribution is instituted, known as fiscal federalism. It is imperative to know that an understanding of the concept of federalism is a prerequisite to understanding fiscal federalism.
According to Wheare (1953) federalism as a federal principle is “the method of dividing powers so that the general and regional governments are each, within a sphere, coordinate and independent” (p.11). Therefore, federalism is said to exist when the centre and the components units can exercise power within their jurisdiction as allocated to them by the constitution without any form of interference. In understanding fiscal federalism, Ekpo & Daniel (2016) observed that fiscal federalism is a controversial issue in Nigeria that defiles various solutions. They stated further that Nigeria cannot have a perfect fiscal federalism in a faulty federalism. Fiscal federalism remains the most contentious issues in Nigerian federalism because of the sensitive nature of the subject matter, ‘finance’. Williams & Ogbole (2014) referred to fiscal federalism as the financial relationships existing among tiers of government.
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