A national debate over the sharing of national cake may have begun with the call for the review of the Revenue Sharing Formula among the three tiers of government by the Niger State Governor, Babangida Aliyu in Abuja, reports BAYO OLADEJI
Once again the song that polarizes the polity has begun; the drumming is hard and tempting. To resist joining the league of the dancers is a difficult task if not impossible. A critical study of the stage shows that all the parties involved are the elite while the masses are the spectators. It is about the sharing of the national cake also known as ‘revenue allocation’.
Speaking at the inauguration of the Sir Ahmadu Bello Memorial Foundation Advisory Council, the Chairman of the Northern Governors Forum and Governor of Niger State, Dr. Mu’azu Babangida Aliyu, stirred the hornet nest when he alleged that Northern Nigeria is being economically marginalized because of the current revenue sharing formula. He called on the government to revise the formula to reflect the regions dire economic circumstance today.
According to Governor Aliyu, “The North today is in a very grave situation where illiteracy, poverty and general backwardness are on the rise in the face of an unfavorable federation allocation structure in which the Northern states are at a great disadvantage.
In Niger State, for instance, we receive between N4.2 billion and N4.5billion annually and spend over N2.1 billion on wages and salaries, leaving behind the balance of N2 billion to be spent on a population of 4.1 million people, including other exigencies of state, like social services, hospital and road construction.
“This is unlike the situation where some states collect twenty times more than what we collect with their small population.
According to the constitution, the federation allocation formula is expected to be reviewed every five or ten years and we are hopeful that there will be a review this year. Revenue from oil wells within 200 kilometers of the continental shelf ought to be shared for the benefit of the whole country, but the revenue largely goes to some selected states. What is happening will not serve equity and therefore we will continue the discussion until there is equilibrium.”
Under the current sharing arrangement, Nigeria’s central government gets 52.7percent of the revenue, the states receive 26.7 percent and local councils have20.6 percent. Recently, Lagos State Governor, Babatunde Fashola appealed to the Federal Government to review the revenue allocation formula which, he says, currently favours the government at the centre to the detriment of component units.
But the quest of the Northern Governors seems to be targeted at the13 per cent derivation fund being enjoyed by their colleagues in the oil producing states in the South-South and two others in the South-East.
Ironically, the people of South-South are depending on the Niger-Delta Development Commission (NDDC) created during the Obasanjo administration for the development of their oil rich communities. The state governments in the geo-political zone have failed to account for the manner in which the 13 per cent derivation fund is being spent.
Former President Olusegun Obasanjo ordered the Federal Ministry of Finance to publish the monthly allocation among the three tiers of government and this is what was said began the skirmishes between him and the then Delta State governor, James Ibori since his state is the chief beneficiary of the derivation regime.
It is a tragic irony that since 1999, when the military returned to the barracks, the National Assembly has failed to revisit the terms of the formula and the current formula is simply dictated by the Presidency. The National Revenue and Fiscal Commission have also been dilly-dallying on the proposed bill.
The current formula dates back to July 10, 1992 when the military was having Nigeria under its jackboot with the promulgation of the "Allocation of Revenue (Federation Account, etc, amendment) Decree of 1992”. The Decree provided for a vertical allocation to the tiers of government, etc, as follows: Federal Government 48.5 per cent of Federation Account; the state governments24 per cent; local governments 20 per cent; and a special fund of 7.5 per cent of the Federation Account.
During the Obasanjo administration, the RMAFC reviewed the inherited formula, by submitting a revised vertical allocation proposal to the National Assembly as follows: FG 41.3 per cent; States 31 per cent; local government councils 16 per cent; and special funds 11.7 per cent.
However, before the National Assembly could debate on that proposal, there was a Supreme Court verdict in April 2002 on the Resources Control Suit which nullified provision of Special Funds in any given Revenue Allocation formula.
With the new development, Obasanjo used an Executive fiat in May 2002 to redistribute the formula to reflect the verdict. The Executive order, gave FG56 per cent; States 24 per cent; and local government councils, 20 per cent.
But the Governors Forum resisted the new formula vehemently and few weeks later the Presidency reviewed the Executive Order in July 2002 making the federal government take, 54.68 per cent; States 24.72 per cent; and local government councils 20.60 per cent.
But in March 2004, the then Minister of Finance, Dr. Ngozi Okonjo Iweala issued a letter modifying the second Executive Order that increased state allocation to 26.72 per cent and reduced the federal government’s share to 52.68 per cent.
While this was going on, the RMAFC seemed asleep and the National Assembly was too busy with a harvest of public hearings which seemed more rewarding than their primary function!
The new chairman of RMAFC, Mr. Elias Mbam, late last year disclosed the readiness of the commission to deliver a new revenue formula this year to President Goodluck Jonathan but three months of the year are passing by and nothing is being heard from the panel.
For the states, their desperation for increased revenue from the federation account is obvious, even as many have no evidence of any meaningful utilization of their allocation, other than enriching the governors.
The litany of poor socio-economic amenities like healthcare, educational facilities and potable water; and months of unpaid salaries are common features hidden by boastful talk and deceptive propaganda.
Furthermore, it is feared that the governors will leverage their influence again to get the new revenue allocation formula in their favour. It is however hoped that the current exercise would be concluded after the 2015 elections, by which time, whoever becomes the President would have to free himself from the clutches of the governors to be his own man.
But while some political and economic watchers agreed that most states are not viable due to their reckless spending and corruption, a few still hold the belief that there is a need for the Federal Government to reduce its allocation on the basis of its historical performance and in order to reduce the enormous power at the centre.
Political pundits strongly believe more financial and political power from the centre to the state would help the polity but efforts should be made to check the excesses of governors.
But from all indications the unity and oneness of the Governors Forum might be threathened while the debate lasts because the Governors from the South would not welcome the advocacy of their Northern counterparts. Already the polity is becoming heated as agitation also rises from the South.
According to reports, members of the National Assembly from the South-South are accusing the Northern leaders of provocation, insensibility and distraction from the Boko Haram insurgency in the North by their calls for reduction in the revenue accruable to the oil producing Niger Delta states.
On the other hand, some South-South leaders have welcomed the call as a possible opportunity for the enactment of the fiscal federalism that has to also be canvassed by elements in the South-South region.
Coincidentally, the view of the Niger State Governor tallied with the view of the Governor of the Central Bank of Nigeria, Mallam Lamido Sanusi Lamido, who in a recent interview linked the ongoing insurgency by the Boko Haram sect to poverty.
In his reaction to the quest, Governor Emmanuel Uduaghan of Delta State, while confirming that South-South governors had scheduled a meeting over the development, he stated that, “The review of revenue allocation has to be done under the law, the law is that land and water are part of a state and so, the oil and gas resources found 200 kilometers away is inside the state that it is found”.
“There is no way you can say that 200 Isobath does not belong to state. They (northern governors) are entitled to make a request for the review of the revenue allocation formula, but to say that those oil wells do not belong to a state is unacceptable”, he added.
Aside from Governor Uduaghan, Senators, members of the House of Representatives, former Minister of Information, Prof. Sam Oyovbaire, Prof. B.I.C. Ijomah, and leader of the Niger Delta Peoples Volunteers Force, NDPVF, Alhaji MujahidDokubo-Asari, traditional rulers were among others who also concored.
Among the Senators from the region who expressed dissatisfaction to the agitation were Senators Ikirikpo Claver, PDP, Bayelsa East, Enyinniya Abaribe, PDP Abia South, Senator Lokpobiri Heineken, PDP, Bayelsa West, Senator Solomon Ita Enang, PDP, Akwa Ibom North East and Senator Ifeanyi Okowa, PDP, Delta North.
Senator Claver reportedly wondered why Northern leaders have bypassed the issue of the oil proceeds to the oil producing states to focus on Boko Haram, he stated, “They should not see us as fools because Jonathan is the president now, they want to destabilize him and the government with whatever means. How many argued when they had 50 per cent from groundnuts and cocoa?
“As a Senator representing an oil producing state, I believe that the Niger Delta States are presently receiving less than what they should be receiving because they suffer the degradation of their environment and subsequent loss of income earnings due to these oil prospecting activities. Instead of talking about reduction, we should talk about increasing their share through a change in the revenue allocation formula.”
Senator Lokpobiri said: “The problem of Nigeria today is that its successive governments have deviated from the true structure that was agreed by our nationalists before independence.
Every state has its own resources, everyone should be thinking of developing sectors in their states with a view to raising revenue. No one is talking about how the people of the Niger Delta suffer due to environmental hazards; what is good for the goose is good for the gander, the revenue allocation should be increased to 50 per cent.”
To Senator Enang, Chairman, Senate Committee on Rules and Business there is a need for the amendment of the constitution that will reflect true fiscal federalism which would allow the states to exploit their resources and pay taxes to the federal government.
Senator Enang suggested, “Let them consider the dual carriage ways in the north and tell us how much of these are in the Niger Delta and other parts of the country. How much has been spent on FCT alone and where is the money from.
Let them consider how much is invested in Kaduna State alone and how much has been invested in oil producing States, how much of oil money in river basins that is in the North can you find in the South?
Those who are making this call now want to wake up the people of the Niger Delta and the South on issues we said should be allowed to rest so that our children and youths will not be reminded of concessions we made just for national unity, what is the value of NNPC towers, PTDF in the north, is there such in the Niger Delta?”
Senator Ifeanyi Okowa on his part described the call as an insult. He said, “I think it is not right to talk in that manner. The constitution in the first instance said nothing less than 13 percent should be given to regions where resources are being sourced from and the Federal Government is currently implementing that. Any attempt to take it below 13 percent rather than move it to 25 percent will be very insulting to the Niger Delta people.
“Northern leaders can say what they like about the revenue to the Niger Delta, but they should know that the Niger Delta has made more sacrifices to Nigeria than any other region.
And where this resource is coming from, most of the villages are not developed. You need to go and see how people are suffering in the Niger Delta.”
It is ironic that the polity grew faster economically during the regional governments than when we are having the 36 states structure. During the First Republic, regions looked inward for the accumulation of revenue probably because the centre depended on the productivity of regions not the reverse; each region contributed 50 per cent to the centre.
Today, people recall the achievements of the First Republic leaders with nostalgia because of the landmarks recorded while the governors who have ruled the country recently are remembered for doing nothing.
The Local Government Councils have become the satellite campuses of the states and the Chairmen merely collect monthly allocation from Abuja which ends up being dropped on the table of governors! Unfortunately, this adds to the reasons why the government would not encourage more democratically elected leaders at the grassroots level.
Of the 36 states, political pundits argue that only seven or less states can be regarded as being viable while the rest depend largely on the monthly revenue sharing for their survival. Some are calling for the scrapping of most of those states or to merge them in order to get better results.
Others are asking the states to be abolished and replaced with the central government and the Local government councils as is practiced in Britain. Another solution being suggested is a return to regional governments but this time around using the six geo-political zones structure.