While in practice, infrastructure decentralisation is gaining ground in developing countries, it is not clear that it is supported by robust literature on its capacity to deliver superior growth and poverty reduction outcomes. Rather, a number of social goals seem to be behind the push for decentralisation. While these lofty goals should be encouraged, the trade-off with economic efficiency can be quite high, particularly when proximity considerations are not weighed vis-à-vis capacity challenges that face sub-national governments. By looking at the literature and showing some results from benchmarking of Nigerian states, we attempt to show in this article that the capacity challenge at sub-national governments is potent. The article also outlines a number of other considerations that need to be incorporated while deciding the effective levels of decentralisation and what services should be in the basket of decentralised sectors. It posits that the procedure and factors affecting such a decision remain context-specific, and where the goals are economic, should be supported by equally context-specific empirical analysis.
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