Financing State Governments in Nigeria, 1980-2007

Abstract

State governments in Nigeria are saddled with a lot of responsibilities that are geared towards the development of their areas. To do this, they engage in expenditure profiles that are at times overwhelming, especially when compared with their limited financial resources. This problem of insufficient funding sources and over-dependence on external sources was investigated by this study using multiple regression analysis technique. It was found that while Federal allocation, internally-generated revenue and stabilization fund, were significant sources of financing state government expenditure in Nigeria, loans, grants and value added tax were not significant. Therefore, strategies for beefing up and sustaining internal revenue sources were recommended to help states strive towards financial autonomy and attracting grants for their programmes.