EXAMINING THE ROLES OF INTERGOVERNMENTAL FINANCIAL TRANSFER AND COMMUNITY DEVELOPMENT AT THE GRASSROOTS IN NIGERIA

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CHAPTER ONE INTRODUCTION

1.1 Background to the Study

Intergovernmental relations involve the relationship, both vertical and horizontal, that exists between the various organs and departments within the sovereign government of a particular country (Akinsanya, 2005). If we take Nigeria for example, inter-governmental relations would mean the relationships existing between the various levels of government from the federal, state to the local government level; between the various ministries, etc (Usman, 2010). Evidently, finance has emerged as the most critical policy issue in intergovernmental relations in every federal administrative system since the Second World War.

A dominant theme in intergovernmental relations studies as noted by Ademolekun (cited in Sam, Eme and Emeh, 2012) is the different attempts made to administer federal finance to the satisfaction of each level of government. In this manner, Danjuma (cited in Sam et al., 2012) opined that the existence of a federal system with its accompanying political units necessitates a revenue sharing arrangement to enable its units to carry its constitutional assigned responsibilities. Corroborating this stand, Onuoha (2007) stated that in a federation, the logic underlining the allocation of tax powers (revenue resources) does not always tally with the logic underlining the assignment of constitutional responsibilities and that there is always a gap between the revenue obligation and revenue resources to the levels of government. Financial transfers therefore have been evolved as a mechanism for dealing with this imbalance or gap between expenditure obligation and revenue sources.

Nigeria’s model of fiscal federalism represents a fundamental legal and institutional framework for policymaking in the country. As in other federations, it defines the core rules for f inancial transfers , distribution of responsibilities for service delivery, and mechanisms for interaction between different tiers of government (Angahar, 2013). In practice however, there exist some degree of decentralization in what is discernable in a federal states hence Ekpo (2004) averred that among the different levels of government, fiscal arrangement must be worked out to ensure fiscal balance in the context of macro-economic stability and this fiscal arrangement is referred to, in a federal structure as fiscal federalism or intergovernmental fiscal relations. Fiscal federalism, according to Nwankwo (2007) is essentially about the allocation of government responsibilities, as well as the sharing of revenue resources among tiers of government.

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EXAMINING THE ROLES OF INTERGOVERNMENTAL FINANCIAL TRANSFER AND COMMUNITY DEVELOPMENT AT THE GRASSROOTS IN NIGERIA