An evaluation of the efficiency of fiscal decentralization in Nigeria: A case study of Oyo State (2000–2020)
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Background of the study :
Fiscal decentralization involves the transfer of expenditure and revenue-raising responsibilities from the central government to sub-national entities. In Nigeria, this policy has been implemented with the aim of promoting regional development and improving service delivery. In Oyo State, fiscal decentralization has been a key element of public financial management from 2000 to 2020. The decentralization process is expected to enhance efficiency by bringing government services closer to the people, increasing accountability, and tailoring fiscal policies to local needs (Afolabi, 2023). However, the extent to which fiscal decentralization has achieved these objectives remains contested. Some studies suggest that decentralized fiscal systems can lead to improved local governance and economic performance, while others point to challenges such as revenue misallocation, inadequate administrative capacity, and persistent central government interference (Chukwu, 2024). This study critically evaluates the efficiency of fiscal decentralization in Oyo State by examining revenue mobilization, expenditure patterns, and service delivery outcomes. It employs both quantitative data analysis and qualitative interviews with state officials to assess whether the decentralization policies have resulted in tangible improvements in economic governance and development (Babatunde, 2025).
Statement of the problem
Despite the theoretical advantages of fiscal decentralization, Oyo State continues to face significant challenges in achieving efficient local governance. Issues such as revenue leakage, inadequate capacity at the local government level, and ongoing central interference have hampered the effective implementation of decentralized fiscal policies. These challenges have led to discrepancies between policy objectives and actual outcomes in service delivery and economic development. There is a need for a comprehensive evaluation of fiscal decentralization efficiency to determine if the expected benefits are being realized. This study aims to identify the factors contributing to these inefficiencies and propose actionable recommendations for enhancing fiscal governance in Oyo State (Afolabi, 2023).
Objectives of the study:
- To assess the impact of fiscal decentralization on local revenue mobilization and service delivery.
- To identify challenges affecting the efficiency of fiscal decentralization in Oyo State.
- To recommend measures to improve fiscal decentralization outcomes.
Research questions:
- How effective is fiscal decentralization in enhancing revenue mobilization in Oyo State?
- What are the major barriers to efficient fiscal management at the local level?
- How can fiscal decentralization policies be improved to enhance service delivery?
Research Hypotheses:
- H₁: Fiscal decentralization significantly improves local revenue mobilization.
- H₂: Administrative inefficiencies undermine the benefits of decentralization.
- H₃: Strengthening local capacities leads to improved fiscal outcomes.
Significance of the study
This study is significant as it provides insights into the efficiency of fiscal decentralization in Oyo State. The findings will aid policymakers in identifying the gaps between policy intent and practical outcomes. By addressing issues related to revenue management and administrative capacity, the research offers recommendations to improve fiscal governance and service delivery. The study contributes to the broader discourse on decentralization and local economic development in Nigeria (Chukwu, 2024).
Scope and limitations of the study:
This study is limited to evaluating fiscal decentralization efficiency in Oyo State only.
Definitions of terms:
- Fiscal Decentralization: The transfer of fiscal responsibilities from central to local governments.
- Revenue Mobilization: The process of generating income through taxes and other means.
- Oyo State: A southwestern state in Nigeria used as a case study for fiscal decentralization.
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