Effect Of Fiscal Federalism On Economic Growth In North Central Nigeria: 1997 - 2020

Fiscal federalism, which shows the amount of fiscal autonomy and responsibility accorded to sub-national government, has been an important subject in the policy equation in Nigeria. Sub national government has constantly faced rigorous challenges in carrying out their developmental duties. This study therefore examines the effect offiscal federalism and economic growth in Central Nigeria from 1997-2020. The study adopted quantitative longitudinal panel data regression analysis to achieve the study objectives. It relied heavily on secondary data sourced from the publications of Central Bank of Nigeria (CBN), National Bureau of statistics (NBS), Federal Inland Revenue Service (FIRS), Statistical bulletin, and annual financial statements reports from the offices of the States Ministries of Finance. The data collected were first subjected to preliminary and post estimation tests for variables stationarity. While unit root, and Hausman tests were all conducted for the study. Findings from the study showed that internally Generated Revenue of sub- national governments have a significant contribution to Economic Growth in North Central Nigeria. It was also observed from the study that Value Added Tax (VAT) of sub-national governments have a significant contribution to economic growth in North central Nigeria. Lastly it was inferredfromthestudy that sub-national governments Statutory Allocation has a significant impact on economic growth inNorth CentralNigeria. Based on the study findings it was recommended that Federal laws should be adjusted to give more economic power to the sub-national governments in order to enhance its ability to generate internal revenue in the state. The state government needs to structure an effective tax collecting system as more revenue can be generated through tax for economic growth. Fiscal base of sub-national government needs to be strengthened by assigning more revenue generating ability so as to reduce total dependence on statutory allocation.