Fiscal Decentralization and Social Outcomes in Nigeria

Abstract

This research is motivated by the increased attention in recent times to the delivery of public services and the role of decentralization. The study explores the linkage between fiscal decentralization, infant mortality rate and literacy rate. It is based on a panel of the 36 states and federal capital territory in Nigeria. Socioeconomic indicators such as infant mortality rate, literacy rate and the ratio of state government revenue to federal government revenue, which is used as a proxy for the level of fiscal decentralization, are employed. Findings demonstrate that higher fiscal decentralization is consistently associated with lower mortality rate and higher literacy rate; benefits from fiscal decentralization are not particularly important for states with high population and low internally generated revenue; the internally generated revenue enhances literacy rates and reduces infant mortality. This underscores the need to improve state autonomy and reduce dependence on transfers from the centre. On the whole, the research findings provide useful information for the ongoing fiscal reforms in Nigeria.