Municipal Infrastructure Financing in Nigeria: Strategy and Policy Implication

The advocacy for the diversification of local government finance in order to meet the developmental needs at the grass root in Nigeria has generated serious controversy among scholars. This paper argues that while the advantages of using bonds to finance urban infrastructure are increasingly evident in emerging economies, the Nigerian government should exercise serious caution in establishing municipal bond market in Nigeria. The paper documents extensive evidence to show that a robust municipal bond market is unlikely to evolve in Nigeria unless there is improved market transparency, stable macroeconomic environment, fiscal discipline, developed local capacity for accounting, budgeting and financial management among others.