Fiscal Federalism and the Challenges of Sustainable Development in Nigeria

Abstract

Fiscal imbalance is undoubtedly a prevalent characteristic of all federations; nevertheless, this tendency is exacerbated in federations with significant disparities in natural resources, such as Nigeria. A series of measures have been implemented to address the crisis of fiscal imbalance, including a revenue allocation system that integrates several principles for distributing natural resource proceeds among the federating units, which has not resulted in sustainable development. With heavy reliance on secondary data supported by analytical approach, the paper x-rayed the effects of fiscal policies on sustainable development in Nigeria’s Fourth Republic. In addition, the paper identified the challenges plaguing sustainable development since the commencement of the fourth republic which include: issue of subsidy regime and removal, dollar dominated economy, inefficient management of local government, and oil theft. Nigeria cannot be said to have thrived positively in the area of sustainable development. It is therefore suggested that for fiscal policy to achieve the aim of sustainable development, there is need for component units to imbibe and inculcate efficient management of resources, increase its productive capacity, enhance organizational capacity and effective leadership of local government and take more responsibility on security.