Decentralization and Nigerian Corruption

...the underlying cause of corruption is the structure of Nigeria’s quintessential “petro” state. There are a number of characteristics of the petro-state we can point to. Firstly, it features a broken social contract in the form of a rupture in the relationship between taxation and accountability. Royalties and taxes paid by international oil companies are direct contributions to the federal coffers, by-passing the citizenry. As the government has no need to rely on internally generated revenue, it has no incentive to engage with accountability actors such as civil society organisations. It is therefore close to impossible to apply accountability pressure into the system of governance. In Nigeria ministers never resign.

The obvious developmental solution to the stultifying fiction of the petro state is a systematic decentralisation of fiscal arrangements, supported by constitutional devolution. This would be the Nigerian ‘third way’ between an enforced unitary status quo and an unrealistic appeal for a once-and-for-all break up. This would include rigorous checks and balances placed against presidential and state governor discretion; it would also ensure that local governments are funded independently of state governors. Finally, it would include the mandate that oil windfalls over the benchmark price are saved rather than squandered (replacing the Excess Crude Account).