The upsurge of democracy during the third and fourth waves democratic epochs has led to a "proliferation of alternative conceptual forms…involving democracy 'with adjectives'" (Collier and Levitsky, 1997:430). Clientele democracy, though similar with neopatrimonial democracy, is distinguished in both concept and substance. At the heart of the development of different democracy are the nature and character of political parties. The character of political parties in turn is highly influenced by the pattern of party funding, which accordingly determines the system of candidate selection and nomination and the overall organisation of political parties. This paper argues that political parties as conditio sine qua non to modern democracy significantly contribute to the development of "clientele" democracy in Nigeria. This is evident in the nature of political party funding and candidate selection (both for party offices and general elections). In this context, this paper examines the various aspects of political party funding and strategies for candidate selection in Nigeria. The paper contends that the system of party funding and candidates' selection in the country are reconstructing a new form of democracy that can arguably be called "clientele" democracy, in which godfatherism is the defining political technique of political party activities. The godfathers, in addition to serving as major party funders, also fully control their political terrain, through which they control both parties and the electorates. The paper argues that this practice is undermining political party institutionalisation in Nigeria.