An evaluation of the economic implications of state-level fiscal autonomy in Nigeria: A case study of Oyo State
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Background of the study :
State-level fiscal autonomy refers to the power of sub-national governments to manage their own revenues and expenditures independently of the central government. In Nigeria, fiscal decentralization has been promoted as a strategy to enhance local governance, stimulate regional development, and improve public service delivery. Oyo State, a major economic region, has experienced varying degrees of fiscal autonomy between 2000 and 2020. This autonomy is expected to enable more tailored and efficient allocation of resources, fostering economic growth and reducing dependency on federal transfers (Afolabi, 2023). However, the implementation of fiscal autonomy has also revealed challenges, including disparities in revenue generation, accountability issues, and intergovernmental conflicts. Recent studies suggest that while fiscal autonomy can spur localized economic development, it may also lead to fiscal imbalances if not accompanied by adequate institutional capacity (Chinwe, 2024). This study investigates the economic implications of state-level fiscal autonomy in Oyo State by analyzing fiscal performance indicators, budgetary allocations, and socio-economic outcomes. The research aims to determine whether increased fiscal autonomy translates into better economic management and improved living standards (Uche, 2025).
Statement of the problem
Despite the promise of state-level fiscal autonomy, Oyo State has encountered significant challenges in realizing its full economic potential. Issues such as revenue generation disparities, inadequate fiscal management, and weak accountability mechanisms have impeded effective resource utilization. These challenges have resulted in suboptimal economic outcomes and persistent reliance on federal transfers. The gap between the theoretical benefits of fiscal autonomy and its practical application calls for an in-depth evaluation of the underlying factors that constrain its effectiveness. This study seeks to identify the key impediments to successful fiscal decentralization in Oyo State and to propose measures that can enhance the state’s fiscal performance and economic development (Afolabi, 2023).
Objectives of the study:
- To assess the economic impact of state-level fiscal autonomy in Oyo State.
- To identify the challenges that hinder effective fiscal management at the state level.
- To recommend strategies for improving fiscal performance and economic outcomes.
Research questions:
- How does fiscal autonomy affect economic growth in Oyo State?
- What are the major challenges in implementing effective state-level fiscal policies?
- What measures can improve fiscal management and economic performance?
Research Hypotheses:
- H₁: State-level fiscal autonomy positively influences economic growth.
- H₂: Inadequate fiscal management impedes the benefits of autonomy.
- H₃: Strengthened accountability mechanisms improve fiscal outcomes.
Significance of the study
This study is significant as it evaluates the economic implications of state-level fiscal autonomy in Oyo State, providing insights into how local fiscal policies impact regional economic development. The findings will inform policymakers on the strengths and weaknesses of current fiscal practices and offer recommendations to optimize fiscal management. Enhanced fiscal autonomy can lead to better public service delivery and sustainable economic growth, contributing to national development (Chinwe, 2024).
Scope and limitations of the study:
This study is limited to evaluating the economic implications of state-level fiscal autonomy in Oyo State only.
Definitions of terms:
- Fiscal Autonomy: The authority of a state or local government to manage its own finances independently.
- Economic Implications: The effects of fiscal policies on economic growth and development.
- Oyo State: A southwestern state in Nigeria used as a case study for fiscal decentralization.
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