The paper set out to examine how Nigerian government initiated higher education policy reforms that intended to bring its university system more in line with international best practice and also to analyse how the reforms promote increased institutional autonomy, greater system differentiation, strengthened governance and mechanisms for quality assurance. The paper adopts an approach that is based on a qualitative analysis of concepts of leadership and higher education. The gap in knowledge is how Nigerian government seeks to create a viable environment with more flexible and responsive system of university teaching, learning and research that will contribute increasingly to national innovation development and economic growth. The finding revealed that the crucial function of higher education in the knowledge economy has been the object of various empirical demonstrations that succeeded in showing a strong correlation between higher education and GDP growth, through human capital development and technology diffusion. Therefore the paper finds out that a large number of factors that can influence and limit the higher education benefits and some important issues need to be addressed. In Nigeria a variety of international donors support higher education, emphasizing or neglecting some aspects depending on their nature, their sensitiveness, their ultimate scope. This paper gives particular attention to issues of governance/ management, Leadership, finance and accountability.