Designing a Fiscal Decentralisation Reform Framework for Nigerian States

Fiscal decentralisation reform would enable Nigerian states to exercise greater revenue autonomy and expenditure authority, and designing a professional framework for reform provides a structured approach to improving subnational fiscal governance. This study designed a fiscal decentralisation reform framework applicable to the Nigerian federal system, drawing on assessments of current fiscal allocation arrangements, consultations with 25 state government finance officials and 10 fiscal federalism economists, and benchmarking against Brazil, India, and South Africa fiscal decentralisation experiences. Assessment confirmed that states derive 68 percent of revenue from federal statutory allocations, significantly exceeding the fiscal autonomy thresholds found in high-performing federations. The reform framework developed specifies four reform dimensions: constitutional revenue allocation revision, state tax assignment expansion, subnational borrowing framework reform, and intergovernmental transfer equalisation mechanisms. Implementation sequencing, political economy considerations, and transitional fiscal risk management provisions are detailed. Expert review by 12 fiscal federalism specialists confirmed the framework's technical soundness and constitutional feasibility. Recommendations include National Assembly adoption of the framework as the basis for a Fiscal Decentralisation Act, RMAFC incorporation of the framework into its constitutional review recommendations, and donor-funded technical assistance for state fiscal capacity building as a preparatory measure.

Keywords: fiscal decentralisation, Nigerian federalism, revenue allocation, subnational finance, fiscal reform