The Impact of Existing Inter-Governmental Financial Relations on Effective Service Delivery at the Grassroots in Nigeria

In Nigeria, the fiscal inter-relationship between the three-tiers of government has been contentious over the years due to lack of an acceptable formula. It generates tension and bad blood among the three tiers of government. This paper has discussed the impact of existing inter-governmental financial relationship on service delivery at the local government level in Nigeria. Nigeria’s fiscal federalism involves the allocation of expenditure and tax-raising powers among the federal, state and local governments. The 1999 constitution has outlined the revenue profile of each tier of government; the revenue sources of the local government only generate a paltry amount of revenue that is inconsequential. The structure of the revenue profile of the local governments in Nigeria clearly indicates that they heavily depend on statutory allocation for their survival since the internal revenue sources are insignificant. There is a clear mismatch between responsibilities and revenue powers at the lower tier of government and this has greatly impaired the ability of local governments to deliver service at the grass root. This definitely is not a healthy situation given fact that about seventy per cent of the Nigerian population live in rural areas and the only impact of government on their lives will be service delivery by the local governments which presently is lacking in most local governments in Nigeria major as a result of the nature of the inter-governmental financial relationship and corruption. The paper recommends that the problems created by inter- governmental financial relationship can be resolved in a number of ways such as: re-alignment of responsibilities and revenue sources; a review of the constitution in-order to grant local governments’ financial autonomy; reduction in wasteful expenditure and corruption; increase in internally generated revenue.