The North-South Institute



Political Decentralization and Natural Resource Governance in Nigeria

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Political Decentralization and Natural Resource Governance in Nigeria

Published: March 8, 2013

Nigeria has been described as a typical example of the so-called ‘resource curse’ – as a country rich in natural resources but struggling with poverty and weak institutions. The system of federalism in Nigeria has also thrown up an intriguing paradox of political decentralization with low subnational transparency; while states have fiscal autonomy, and states’ spending constitutes around half of consolidated public spending, not much is known about how states manage natural resource revenues. The project conducts a case-study of resource revenue management for two subnational governments in the oil-rich, but restive Niger Delta. The case-study reveals that the subnational governments are highly dependent on volatile federal (oil) revenue allocations, poverty remains high as public expenditure is not adequately directed at pro-poor social sectors, there is low budget transparency, and actual budget implementation is poor. Furthermore, there are no effective mechanisms for ensuring subnational fiscal discipline and political accountability. In general, the findings of the study suggest that political decentralization within federal political systems may not necessarily result in improved natural resource governance. Local context – the nature of socio-political institutions, technical capacity in managing public finances, and the degree of political accountability, is important in determining how subnational governments manage revenues in resource-rich federations.

Author: Vanessa Ushie

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