Fiscal Operations In A Depressed Economy: Nigeria, 1960-90

Fiscal federalism remains an important area of study especially in an economy characterized by regional or state organization. The Nigerian economy consists of states. Twenty-one states and the Federal Capital Territory (Abuja) made up the federation until 25 August 1991, when the federal government created additional nine states. Hence, the country now consists of 30 states plus the Federal Capital Territory. However, this study concentrates on the original 21-state structure. The pattern had developed from one with three regions to one with four regions between 1960 and 1966. From 1967 to 1971, the country operated a 12-state structure. A 19-state blueprint, which lasted until September 1987, was created in 1975/76. These reorganizations, though political, have reasonable doses of historical and economic considerations. From the economic sphere, the creation of more states affects an economy's fiscal operations. The nature and type of relationship(s) between the center and the states have to be worked out especially in terms of revenue sharing and expenditure. State fiscal structures have to be developed and fiscal functions of allocation, distribution, and stabilization should be properly monitored in order to ensure growth and development within the economy. The center must ensure that expenditure and revenue patterns in states or regions do not create distortions in the larger economy.