FISCAL FEDERALISM AND LOCAL GOVERNMENT AUTONOMY IN NIGERIA A CASE STUDY OF AKWA IBOM STATE 1999 2015

FISCAL FEDERALISM AND LOCAL GOVERNMENT AUTONOMY IN NIGERIA A CASE STUDY OF AKWA IBOM STATE 1999 2015

ABSTRACT

This research study was designed to investigate fiscal federalism and local government autonomy. Among other relevant literature that were reviewed to validate the study, two basic research hypothesis were raised and these were that, there is a significant relationship between local government autonomy and the ability of local government to attains its set goals. Also, revenue allocation to local government affects the level of its goals attainment. To generate information and test the hypothesis, a research questionnaire was developed to test the level of response given by respondents. From a sample size of one hundred and twenty (120), the questionnaire was developed and administered. The response from the questionnaire was tested using chi-square statistical tool at .05 level of significant. From the result of analysis obtained, major research findings were made and this was that, there is a significant relationship between the local government autonomy and the ability of local government to attain its set goals. From the findings relevant recommendations were made from the study among which included the need   for the state government to allow free flow of funds from its coffers and federal coffers and the need to check the infringement of the revenue rights of local government by the state government.

TABLE OF CONTENTS

    PAGE

Declaration – – – – – – – – i

Certification – – – – – – – – ii

Dedication – – – – – – – – – iii

Acknowledgement – – – – – – – iv

Abstract – – – – – – – – – v

Table of Contents – – – – – – – vi

CHAPTER ONE:  INTRODUCTION

1.1 Background of the Study – – – – – 1

1.2 Statement of Problem – – – – – – 5

1.3 Research Question – – – – – – 6

1.4 Objectives of the study – – – – – 7

1.5 Research Hypothesis – – – – – – 7

1.6 Significance of the Study – – – – – 8

1.7 Scope/Limitation of the Study – – – – 8

1.8 Definition of Key Concepts – – – – – 9

CHAPTER TWO: REVIEW OF RELATED LITERATURE

2.1 Review of Related Literature – – – – – 10

2.2 Theoretical Framework – – – – – 22

CHAPTER THREE: RESEARCH METHODOLOGY

3.1 Research Design – – – – – – – 26

3.2 The study Area – – – – – – – 27

3.3 Population and Sample Size – – – – – 28

3.4 Sample Techniques – – – – – – 28

3.5 Instrument for Data Collection – – – – 30

3.6 Validity and Liability Research Instrument – – 30

3.7 Method of Data Analysis – – – – – 30

CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS

4.1 Analysis of Responses from the Respondent – – 32

4.2 Test of hypothesis – – – – – – 34

4.3 Discussion of Findings – – – – – – 38

CHAPTER FIVE: SUMMARY, CONCLUSION AND

 RECOMMENDATIONS

5.1 Summary – – – – – – – – 41

5.2 Conclusion – – – – – – – – 42

5.3 Recommendation – – – – – – 42

References

Research questionnaire

CHAPTER ONE

 INTRODUCTION

1.1 Background of the Study

Fiscal federalism presupposes that the national and states/regional governments should stand to each other in a relation of meaningful autonomy resting upon a balance division of power and resources. Each state or region must have power and resources sufficient to support the structure of a functioning government, able to stand and compete on its own against the other. It is in a sense, the system of transfer payments or grants by which a federal government shares its revenues with lower levels of power to enforce national rules and standards. In other types of political structure, it is known as inter-governmental fiscal relations.

Conceptually, fiscal operations of any economy can be viewed from two extreme forms of public sector. On one hand, there exists a highly decentralized fiscal structure in which the government at the centre has no economic responsibilities. The other tiers of government perform virtually all economic functions. The other extreme is case of total centralization where the central government take total responsibility for economic activities of the public sector and therefore no tiers of government participates in the economic life of the nation Antai, (1999).  In practice, there exists some degree of decentralization in all economic. Decentralization here refers to the portion of total revenue collected and expenditure allocated to both state and local governments. The degree of decentralization is the extent of independent decision-making by the various arms of the government in the provision of social and economic services. It connotes the degree of autonomy of state and local government in carrying our various economic tasks. Therefore, fiscal federalism refers to the relationship between and among units of government in the allocation of finances.

Nigeria has operated the three-tier structure of government for many years. The determination of appropriate fiscal jurisdiction and inter-tier distribution of the nation’s revenue within the existing structure has witnessed considerable controversy and conflict which remain unresolved till date. Nigeria’s fiscal federalism is exceptional in its degree of centralization of power and access to the resources and wealth of the nation. As rightly observed by Philips (1997), the fiscal policy system in tends to be synonymous than that of a unitary government where inter-tier revenue allocation follows a unidirectional process from top to bottom. The system is beset with widespread imbalance, both vertically and horizontally. In a federation, vertical fiscal imbalance refers to the mismatch between revenue means and expenditure need at various levels.

Till date, fiscal operation in Nigeria have tended to undermine the autonomy of lower tiers of government and have adversely affected the attainment of their objectives. Through this revenue allocation procedure, the federal government has widened the scope of its activities by getting involved in the provision of virtually everything. Despite this level of involvement, there seems to be a very low level of federal government presence even at the grassroots level. Lower tiers of government consider such involvement as a usurpation of power, and the people seem to have derived little direct benefit from it. There is a general feeling that resources are being distributed inequitably within the federation and the impact of fiscal federalism is far from being fully satisfactory (Antai, 1999).

With the current situation there is risk that Nigeria may continue as quasi-federal country, but not as a complete federal state with the full autonomy for the component units. According to Wheare (1946) “federal government is an association of states, which has been formed for certain common purposes, but in which the member state retain a large measure of their original independence”. Under the current federal government in Nigeria all power is centralized and the states or region do not have any control over their resources. This problem has been provoked by a number of factors, including over dependence on statutory allocations from both the state and federal governments, deliberate tax evasion by the local citizenry, creation of non-viable local government areas, differences in the status of local government in terms of the rural-urban dimension, and inadequate revenue and restricted fiscal jurisdiction.

Nigeria’s economic development, political stability, security and peace depend on extending the freedom, benefits and choice of autonomy to each ethnic nationality within the country. The constitutional provision that recognizes local government power in this regard must give them full freedom to operate and this must be well guaranteed and adequately protected. These measures coupled with a review of the revenue sharing formula, the granting of fiscal autonomy and fiscal discipline as well as making local governments free from the control of federal and state governments. Stressing these points and the appropriate strategy to be adopted from the focus of this protect.

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