Publications

December 10, 2010

Implementing The Fiscal Responsibility Act At The State Level In Nigeria

Fiscal responsibility acts have become increasingly common tools to enhance fiscal prudence and public expenditure transparency in many countries. In Nigeria, fiscal profligacy at the sub-national level has emerged as a major contributor to state corruption and macroeconomic instability.

Download Label
March 13, 2018 - 4:00 am
application/pdf
1.14 MB
v.1.7 (stable)
Read →

Author:Vanessa Ushie

Publication Date: October 2010

Document Size: 37 pages


While the federal government has enacted the Fiscal Responsibility Act (2007), the major challenge is reconciling the economic rationale for fiscal responsibility with the political demands of fiscal federalism. Although several states have recently ratified the FRA, this has not been matched with concrete policy reforms that enhance fiscal discipline and public expenditure transparency. Likewise, the federal government has been unable to persuade state governments to rein in public spending and centrally co-ordinate macroeconomic policies, contrary to the provisions of the national FRA. The paper explores the policy framework for implementing the FRA across the 36 states, and identifies the underlying macroeconomic principles required for the FRA to be effective at the state level, and the political economy challenges facing the states in entrenching fiscal discipline in Nigeria.




Related

 

Nigeria Economic Update (Issue 19)

A recent report by the National Bureau of Statistics (NBS) indicates that Internally Generated Revenue (IGR) at the subnational level decreased slightly between 2014 and 2015. Specifically, the report shows that on the average, the IGR of all 36 states declined by 3.6 per cent from N707.9 billion in 2014 to N683.6 billion in 20157. A further disaggregation reveals that while IGR in 11 states improved in 2015 compared to 2014, IGR in 24 states were below their 2014 levels. As expected, Lagos state generated the most IGR during the period. Given that domestic resource mobilization is the most viable alternative to complement the shortfalls (driven by lower oil prices) in budgetary allocations to states from the federal government, state governments need to do more to improve the effectiveness and efficiency of revenue collection.

Capital Importation And Budgetary Allocation (ITC)

Capital Importation: Given the positive outlook on the ITC sector in the past few years, investments in the sector reached a 10-year peak in 2014. However, the foreign investment fell marginally in 2