Page 25 - CITN 2017 Journal

1. INTRODUCTION

The 1999 Constitution of the Federal Republic on Nigeria (section 7, 4th schedule) clearly
states and empowers the existing 774 Local Government (LG) areas to ensure effective
service delivery and enhance sustainable development at the grassroots. Coincidentally,
these economic-cum-development functions seem to have been affected by the type of
administration or governance - civilian or military - at each period. Between May 29, 1999
and the present democratic civilian administrations have uninterruptedly been at the helm
of affairs at virtually all levels in Nigeria - Federal, State and Local Governments.

Although the LG chairmen are often appointees of State Governors to whom they are
politically accountable, they are, however, expected to be responsible to the people at the
grassroots in the first instance. One question that comes to mind is, whether there has been
a significant difference in local authorities' service delivery since transition to civilian
administration in Nigeria in May 1999. The purpose of the present paper is to investigate
the fiscal activities of Osogbo LG area of Osun State. The intention of the study is to
provide insights into fiscal actions of the local governments, with a view to assessing
possible welfare effects of such actions. The study would greatly provide insight into
activities of local governments in the context of Osun State and Nigeria.

Previous studies on impacts of fiscal policy in Nigeria have largely remained at the macro
level. The current study focuses on micro-analysis of fiscal actions, with a view to drawing
implications for improving living standards. Whereas about 70 per cent of the Nigerian
populace dwells in rural areas, which are essentially being administered by local
authorities; there are bundles of constraints towards its optimal performance, and these
include lack of integrity, transparency and accountability (Agbo, 2010). Besides, Otoghile
& Edigin (2011) identify misappropriation or misallocation of funds as another obstacle to
the performance of LGs in Nigeria. Whether there has been gains or losses since May
1999's transition to democratic regime, given the myriads of challenges affecting local
governments, is the whole essence of enquiry in the current study. As far as fiscal
behaviour of a sub-national government is concerned the present study seems the first to
investigate the issue using an city-headquartered local government such as Osogbo Local
Government in Osun State, Nigeria

The recently launched Fiscal Sustainability Plan (FSP) in Nigeria highlights some key
strategic objectives including transparency and accountability; increase in public revenue;
public financial management reforms; rationalisation of public expenditure; and
sustainable debt management at & by the sub-national governments (FSP, 2016). The FSP
is a response to the fiscal challenge, especially due to revenue shocks, that Nigeria has
experienced in recent period. In addition, it has placed focus on the role of sub-national
fiscal authorities in Nigeria because it became clear that their fiscal activities have fallen
short of realities. For instance, over the last two to three years most of the State
Governments in Nigeria are unable to pay workers' salaries up to date due to reduced
allocation from the federation account, mismanagement of resources, and corruption.
Hence, it becomes fundamental to examine the fiscal behaviour of these sub-national
governments.

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