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This paper is motivated by recent controversies surrounding granting of autonomy to local governments in Nigeria and examines advantages of local governments as dependable vehicles for service delivery. By using qualitative data and extensive literature review, the paper reflects on the historical evolution and the objectives of decentralization in Nigeria, discusses present state and nature of service delivery, and strongly supports the need for inclusive governance based on popular participation at local level. Decentralization must be both political and fiscal with each tier of government concentrating on its constitutional responsibilities and available resources. Local governments should have the freedom of preferences and choices as well as control over their decisions, assets, resources and expenditure. The paper concludes that the multiplier effect of service delivery through local governance include improved well-being and human resource development, increasing productivity and income, popular participation and democratic stability, market expansion and socio-economic development.