How Federalism Can Boost Nigeria's Productivity

Federalism works not just because power is shared. It succeeds when authority, incentives, and skills are worked out to make productivity key to political success. When states strive to build strong institutions, attract investments, develop their people, and grow their productive capacity, competition turns into development. This alignment, rather than perfect laws, creates productive ability, develops local advantages, and makes sustainable growth possible.

Understanding Productive Federalism

Productive federalism isn't about all states building the same industrial parks, airports, universities, or government-owned businesses. While these investments are not bad, using limited resources needs a smarter approach. States should find their economic chances and organize public and private investments around those chances. They also need to build the required skills and gradually create local advantages. The goal is not to compete for show but to achieve real results.

How many lasting businesses have been set up? How many companies have grown or reinvested? Has farm output per hectare improved? Have transport costs gone down? Are technical schools providing the skills needed by local businesses? Has the state attracted firms that support a growing industry? Have local revenues increased because of more productive activities, not just because of rising taxes and fees? This takes strong institutions that can find outside opportunities, connect them to local skills, and make sure benefits stay within the local economy.

This difference matters because Nigeria sometimes mixes up productive competition with politically driven show-offs. States compete to announce the biggest airport, the most impressive government building, the newest university, or the most ambitious industrial project, even if they lack the economic base to sustain them. The outcome is competition in spending, not in skills.

A productive federation should reward governments not for how big their announcements are but for how well their economic systems stand the test of time. Public investments should be evaluated on whether they lower production costs, improve market access, expand knowledge, increase worker productivity, and attract more private investment. Political success should link more to economic results rather than just handing out favors or launching flashy projects. Sadly, this is the reality in Nigeria.

The Push for Local Government Independence

This also affects how states relate to local governments. The same authority-incentive-capability approach that works between the federal and state governments must also apply within states. Nigeria cannot create a truly productive federation while local governments stay weak in terms of development.

Many services that are closest to the people, like fixing roads, local markets, primary healthcare, community libraries, sanitation, local economic information, and some agricultural support, need strong local government institutions. But state governments have taken over functions and revenues without always giving better replacements. Authority is now focused, accountability is unclear, and local governments are left with few incentives or skills to drive development in their areas.

States should be able to openly compare themselves on attracting investments, education quality, healthcare services, agricultural productivity, infrastructure upkeep, business survival, local revenue, and job creation. Successful reforms in one state should be shared and adopted by others. Governors should not only face electoral competition within their states but also developmental comparisons across the federation.

The key question is not just whether local governments should receive funds directly. It is whether authority, revenue, responsibility, and accountability can be better aligned where specific public services and development tasks can be done most effectively. Direct funding without skills and accountability may just create the same weaknesses at a lower level. But taking away meaningful authority from local institutions stops an important layer of testing, information gathering, and implementing development, all of which are crucial for building the federation’s ability to generate, use, and share local economic information for national growth.

Productive federalism needs clarity on who is in charge of what, the resources available for those duties, and the results that will measure performance. Assigning authority without financial or administrative capacity will lead to failure. Providing revenue without responsibility and accountability turns distribution into the main goal.

The Role of Institutions in Development

This is where organizations like the Nigeria Governors’ Forum need to take on a more developmental role. The Forum should not just be a place for political negotiations with the Federal Government or for discussing common stands on revenue sharing. It should become a venue for productive peer reviews among states.

States should be able to compare themselves openly on attracting investments, education quality, healthcare, agricultural productivity, infrastructure upkeep, business survival, local revenue, and job creation. Successful reforms done in one state should be documented and adapted by others. Governors should face not just electoral comparisons within their states but also developmental comparisons across the federation.

Kenya’s experience with county-level devolution offers a useful, though not perfect, example. Counties are increasingly compared on healthcare, agriculture, infrastructure, and service delivery. Rwanda, while not a federation, has used performance contracts to connect local administration with measurable results. The lesson for Nigeria is not to copy either country, but to understand that decentralized authority leads to development when performance is clear, comparable, and impactful.

The Federal Government also has an important role. Productive federalism does not mean a weak or indifferent central government. It needs a center that focuses on functions that benefit from national coordination: macroeconomic stability, national infrastructure, interstate trade, competition policy, national standards, international trade relations, security coordination, research, and providing public goods that individual states cannot supply well on their own.

The Path Forward for Nigeria

The debate in Nigeria is not just about whether to restructure the federation, but what kind of federalism the country wants. A federation focused mostly on distribution will keep creating political competition for existing resources. A federation focused on productive ability will encourage competition to create new wealth.

The center should also collect and share economic information, coordinate national and state institutions, remove barriers to interstate production and trade, and ensure that equalization supports minimum standards without killing incentives for local initiatives.

Redistribution is still necessary. Nigeria’s states have different resources, populations, revenue abilities, and historical advantages. A federation cannot ignore these differences. But redistribution should help less-advantaged states build their abilities; it should not be a permanent replacement for productive efforts. Equalization should help participation in development, not create a dependence on allocations.

The debate in Nigeria is therefore not simply whether to restructure the federation, but what kind of federalism the country wishes to practise. A federation focused on distribution will keep producing political competition for existing wealth. A federation focused on productive ability will encourage competition to create new wealth.

Conclusion

The argument here is clear. Many of the necessary pieces for productive federalism are already in Nigeria’s governance system. What is missing is not just good laws but the governance structure needed to align authority, incentives, and capabilities.

As Nigeria gets ready for another election cycle, this debate should not be turned into ethnic arguments or reduced to slogans about "true federalism." It should not become a fight between those who support redistribution and those who focus on production. Every successful federation needs both. The real challenge is to create a system where fair redistribution boosts rather than weakens the drive to produce.

Federalism succeeds not just because power is shared, but because authority, incentives, and skills work together to make productivity key to political success. When states compete to create strong institutions, attract investments, develop their people, and expand their productive capabilities, competition leads to development. This alignment, not just perfect laws, builds productive abilities, creates local advantages, and makes sustainable growth achievable.