The government in Nigeria is the dominant player in the economy, with government spending comprising 50 percent of GDP. The oil sector, which provides 90 percent of the foreign exchange, is controlled by the government and generates 70 percent of its revenues. Economic activity is thus highly correlated with oil price volatility and government behavior, and the issue of fiscal decentralization is of central importance to the country. Within this policy context, the Initiative for Policy Dialogue (IPD) hosted two Dialogues with the Nigerian policymakers, civil society representatives and other stakeholders in January 2002 and in May 2004.

IPD held its first dialogue event in Enugu, in southwestern Nigeria. The event, organized by the African Institute for Applied Economics (AIAE), brought together policy makers, private sector representatives, academics, development specialists, and members of civil society. The IPD team focused on the need to strike the right balance between centralized and decentralized power structures in economic policy planning and implementation and presented an economic framework in which to analyze policy alternatives. An open forum following the formal presentations set off a vibrant discussion generating fresh ideas on policy in Nigeria.

The second dialogue, which targeted policymakers and government officials, took place in the capital, Abuja. The discussion exposed policymakers to best practice policies and created an open discourse for policy reform. The Dialogue emphasized issues of vital importance, such as the effects of exchange rate devaluation and corruption. In addition, several government ministers raised topics of importance to their particular ministries. Participants highlighted the need for additional research and a continuation of open dialogue and policy forums.