FRC Raises Concerns Over Subnational Fiscal Recklessness
By Patience Ikpeme
The Fiscal Responsibility Commission (FRC) has expressed deep concern over the current fiscal federalism structure in Nigeria, worried over it’s potential sustainability.
Victor Muruako, Chairman of the FRC, noted that subnational governments, particularly states, often enjoy the benefits of federal revenue sharing without assuming commensurate responsibility for the nation’s overall fiscal health. He emphasized the need for greater fiscal cohesion and consistency in intergovernmental fiscal management.
A major concern is the substantial discretionary power granted to states and local governments over their revenue allocations. While they receive a significant portion of the Federation’s shareable revenue, they have full autonomy to appropriate and spend these funds without adequate oversight. This autonomy, while empowering, can also lead to fiscal recklessness and suboptimal resource allocation.
Moreover, subnational governments often make fiscal decisions that can negatively impact the nation’s macroeconomic indicators, such as economic growth, inflation, and interest rates. This underscores the need for a common code of fiscal prudence, transparency, and accountability across all tiers of government.
To address these challenges, the FRC is committed to promoting fiscal discipline, transparency, and accountability in public finance management at the subnational level. The Commission aims to strengthen financial management systems, enhance decision-making, optimize resource allocation, and ultimately improve the lives of Nigerian citizens.
The FRC is actively supporting subnational governments through technical assistance, capacity building, and oversight. The Commission is particularly focused on strengthening local government fiscal management, in line with the recent Supreme Court judgment on financial autonomy.
While recognizing the progress made by state governments in transparency and accountability, the FRC believes there is still room for improvement. The Commission encourages states to continue publishing annual financial reports, budgets, and other relevant information in a timely manner, and to engage with civil society organizations to enhance transparency and accountability.
Through its nationwide sensitization programs, the FRC aims to empower subnational governments to make informed decisions, optimize resource allocation, and improve public service delivery. By promoting transparency, accountability, and fiscal discipline, the Commission seeks to contribute to a more sustainable and equitable future for Nigeria.
