Concerns have been expressed very often as to why the intergovernmental relations in the federal system of many developing countries, especially in the Sub-Sahara Africa are predictably chequered. Lack of devolution of power to LGAs in Nigeria is usually at the expense of grassroots development especially with regards to infrastructure/social amenities. Besides, the confusion surrounding progressive decline in provision of rural infrastructure to the local government areas of the state despite humongous monthly fiscal allocations to the LGAs by Federation Account Allocation Committee (FAAC) equally creates existential problems to the rural dwellers. It is on this note that the study seeks to investigate the apparently disturbing paradox in Imo State. Data were sourced from both secondary and primary sources. Secondary data was sourced from government gazette and related literature while primary data was elicited from respondents through structured questionnaire. Multiple regression and graphical/pictorial analytical techniques were used for secondary and primary data respectively. The findings indicated that lack of transformative leadership exhibited in embezzlement of funds and indifference in leadership on the part of the State agents were the significant causes of poor development in the rural areas of Imo State. The study recommended inter alia; the enforcement of attitudinal change and punitive sanctions on the political and administrative classes in the state through legal measures to protect public funds for service delivery.