FISCAL FEDERALISM AND REVENUE GENERATION CAPABILITY OF STATES IN NIGERIA

Abstract

The study examined the effect of fiscal federalism on revenue generation capability of the states in Nigeria. The study was based on descriptive survey using data gathered from Nigeria Bureau of Statistics and Central Bank of Nigeria Statistical Bulletin covering the periods of 2011 to 2017. It was revealed through the findings of the study that the internally generated revenues of the states have not witnessed the desired improvement over the years. The revenues generated internally are growing at arithmetic progression while the financial commitments of the states are growing at geometrical progression. Based on these findings, it could be concluded that fiscal federalism has encouraged over-dependence of states on revenues from the federal and thereby weakened their ability to generate internal revenues. It is therefore recommended that the fiscal federalism practiced in Nigeria should be reviewed to diffuse too much power concentrated at the centre and encourage the states to learn from the private sector on how to source for revenue internally.