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Fiscal Federalism In Nigeria: Matters Arising

A century after the formation of the Nigerian state, when the controversy on revenue sharing started, the issue has continued to reverberate

In every federalism, there are usually two forces that exert contrary pulls. They are: the centripetal and centrifugal forces. Whereas the centripetal force is the one which “acts on a body moving in a circular path and is directed towards the centre around which the body is moving”, i.e. pulling toward the centre, the centrifugal force refers to “a force, arising from the body’s inertia, which appears to act on a body moving in a circular path and is directed away from the centre around which the body is moving”, i.e. suggesting fissiparous tendencies (i.e., forces directed outside the centre).

According to authorities in this field, the two forces must exert equal pulls for any federalism to survive or succeed. Although, there are no two federal states that have the same historical path, they exhibit the same characteristics and tendencies as affirmed by the classical theorists on this subject-matter.

For instance, whereas the United States is a union agreed to by independent states ,which subscribed to (after the winning the war of independent in1776, the 13 colonies were joined by others) become one country, the Nigerian federalism unlike the United States, was not the case of countries that were originally independent, but of formerly totally independent kingdoms, empires, nations and autonomous communities being brought together by an external authority, in this case , the British Government, which felt it was the only way to govern a colony with fissiparous tendencies.

It was not the initiative of the people on whose behalves the arrangement was being made; nevertheless it has the same characteristics of any federal state in the world. A caveat must be made that every federalism is unique in its way depending on the culture of the various peoples that make-up the union. Some are old and have gone through various stages (like the US, Germany, Australia, Canada, Switzerland), perhaps, on account of their advanced democracies and economies, while others are young, poor and unstable comparatively, nevertheless, they all exhibit the same tendencies.

In every federal state, while some proponents of this form of government advocate a ‘little’ strong central government others call for a loose centre and stronger units. Those who call for a strong centre believe that strong centre will make the country stronger and more progressive; the proponents of strong units believe that they can be well-off without a central government and can even form independent states. This was demonstrated during the formative years of the Nigerian federalism.

Then, the slogan was: “The North for the Northerners”; “The West for the Westerners”, “The East for the Easterners” and “The Centre for Nobody.” Late Chief Obafemi Awolowo, who led the West, was often quoted as describing Nigeria as a mere geographical expression and that the Western Region would not be part of the proposed federation if its leaders were not satisfied with certain arrangements by the colonial authorities. Similarly in 1951, the leaders of the Northern Region threatened not to be part of the federation and gave conditions upon which they would be part of the arrangement. Also in 1967, the Eastern Region attempted to secede from the federation to form the state of Biafra, plunging the country into 30 months civil war. There were also demands by the so-called minorities. All these are not peculiar to Nigeria. They are cleavages or fissiparous tendencies common in every federalism.

They are the issues every federal country has to contend with. Canada, India, Austrelia, the US and many other federal states had (and a still having) a does of these during their formative years. One of the most contentious issues in every federalism is the issue of revenue, i.e. how to share the revenues generated by the country between the central and unit governments (as well as the local governments in some federalism).

Deterministic variables (i.e. sharing formulae) in the sharing of revenues in the country includes: Derivation ,which emphasizes the source of earning; National Interest ,which emphasizes the sector of the economy that the nation is interested in should be given greater attention; Uniform Development that holds the revenue is to be shared in such a way as to ensure even national development and Population, which emphasizes that those with highest population should have greater part of the revenue.

Unfortunately, in Nigeria, it is difficult to pinpoint the formulae preferred by the unit governments as it is the spur of the moment that determines the position often taken by of the units. For instance, between 1950 and 1960, perhaps, because of the boom in primary commodities in the international market as a result of the Korean War, the North generated much revenue from the export of groundnuts, while the West prospered from Cocoa and others exports.

The East depended on exports of palm kennel, which did not yield much hence its resort to increasing taxation. Because of this, the North and West always insisted on derivation principal as their preferred formulae, while the East wanted it to be based on need and national interest. This situation, however, changed in 1958, when crude oil was discovered in commercial quantity in Oloibiri, in the then Eastern Region. The revenue from the sector changed the earlier positions of the regions.

A century after the formation of the Nigerian state, when the controversy on revenue sharing started, the issue has continued to reverberate. Much of the President Goodluck Jonathan’s administration was marked by calls by governors from the Northern states for a review of the current system of revenue allocation, which they vehemently argued disadvantages the region. Former governor of Niger State, Dr. Babangida Aliyu, who was also the chairman of the Northern Governors’ Forum, reportedly took umbrage at the 13 per cent derivation principle; in particular, arguing that the revenues from offshore explorations are treated as being derived from the Niger Delta, when in his opinion, they should not.

Expectedly, this generated reactions from lawmakers and from South-south politicians, who supported counter agitation for ‘resource control’. Whether the Northern states were right or wrong in their demand is not the issue here. It is a topic for another day. The sticky issue is that our politicians, especially, the governors are imprudent and lack creativity and only desire power for self aggrandizements. During campaign, they promised heaven and earth to the electorate, which gave them the mandate.

Now, they are given excuses for reneging on their promises and for not paying workers for interminable period. They share with Federal Government from the Federation Account. They have also cornered the money meant for the local governments along with security vote which they not account for; now , they do not want to pay workers who labour day and night for them, an indication that they do not have anything to offer in terms of creativity and leadership, which they clamed they had.

Their target now is the Sovereign Wealth Fund (SWF) meant for the future of the country. As has been proved by the Economic and Financial Crime Commission (EFCC) and other anti-graft agencies’ invitations and prosecutions of former governors, their mission is nothing but to line their pockets with public funds.

Today in Nigeria, there is no difference between the state fund and private pockets of these state governors. Federalism refers to a system of government where there is a constitutional division of power between the central government and the federating units. Under this arrangement, the federating units have fiscal autonomy, meaning that they do not have to depend on the central government for their fiscal needs outside of the Federation Account.

They are each within a sphere co-ordinate and independent, meaning that in away, each is like country. In fact, many of the states in Nigeria are far bigger in population and size than some countries. But regrettably, they behave like local authorities in a unitary government. It is high time these governors started seeing themselves as heading a part of the country and come up with a well-thought-out vision on how to transform their states instead of running to Abuja every day to ask for bailout fund.

Like their counterparts in the advanced federalism, state governors should put in their thinking caps. They should think outside the box. They should go to the archives and find out how late Ahmadu Bello generated funds to build Ahmadu Bello University and other monumental projects in the North or to Ibadan to find out how late Chief Obafemi Awolowo got money to build Cocoa House, University of Ife and all the businesses owned by Oodua Investments. They should also find out where Late Dr Nnamdi Azikwe got the money with which he built the University of Nigeria, Nsukka and other projects he executed in the defunct Eastern Region.




 Chris Uba

•Chris Uba is News Editor of The Union

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