Resource abundance and the dilemma of fiscal federalism in Nigeria

Abstract

This article examines the complexities around fiscal federalism in Nigeria within the framework of the resource curse thesis. Nigeria is an oil-rich federation yet governments at all levels perform poorly. State governments continually experience fiscal gap and deficiency in service delivery. Not only that, but the vast majority of the citizens also live under the twin burden of poverty and unemployment. The inability of the Nigerian state to address these challenges, despite the huge oil revenue, contributes to the continuous debates over the value of the country's fiscal system. The article contributes to the understanding of how Nigeria's oil-centric economy shapes the fiscal system. It argues that the failure of oil resources to generate economic prosperity in the states is rooted in the flawed fiscal system that encourages the sharing of the oil wealth rather than economic production at the state level. The article recommends a more functional fiscal federalism that would recognise the fiscal autonomy of the tiers of government. That is, a fiscal system with less reliance on the centrally generated oil revenue.