Fiscal federalism has remained one of the potent challenges to the Nigerian nationhood. Abiodun Awolaja looks at some of the issues surrounding the concept in the country and some of the solutions proffered to tackle them.
DR Goodluck Jonathan is, by nomenclature, the current President and Commander-in-Chief of the Federal Republic of Nigeria. But is Nigeria really a federation? This question may be a perplexing one because, among other factors, the federalism question remains one of the potent challenges to Nigerian nationhood, some of the others being the fear of ethnic the dominance and population census controversy. With respect to the question of fiscal federalism, conflicts over revenue sharing formula, centralisation of fiscal relations and the agitation for resource control are problems which have proved quite intractable in the last 40 years at least.
Like most federal republics, Nigeria boats a bi-cameral legislature at the centre, and a unicameral legislature at the regional or state level. It also boasts a third tier of government, the local government, which underwent massive reform under the Olusegun Obasanjo regime in 1976. In addition, Nigeria has a centre which is stronger than the component units, which are currently the 36 states in the country and the Federal Capital Territory (FCT), Abuja, the seat of federal power which is run by an administrator rather than an elected governor.
In Nigeria, as in most federations of the world, questions of equitable revenue sharing formula have been at the forefront not only of policy discourse but also physical agitation, including militancy movements. The state governments in the country, especially since the return to civil rule in 1999, have also been engaged in wrangling with the Federal Government on the issue of securing adequate financial resources to discharge their constitutional responsibilities.
In this regard, particularly with reference to the Obasanjo era (1999-2007), fiscal federalism issues were encapsulated in debates and litigation over the controversial on-shore/off-shore dichotomy in the oil sector, with the former Minister of Justice and Attorney-General of the Federation, the late Chief Bola Ige, advising the affected states ( the Niger Delta states) to pursue their case at the Supreme Court, which finally gave its verdict in April, 2002.
In tackling the fiscal question, the Federal Government had, at various times, even form the colonial days, set up committees/commissions to look into the question. In addition to Decrees 15 of 1967, 13 of 1970, 9 of 1971, 6 of 1975 and Decree 7 of 1975, some of the commissions set up were the Phillipson Commission (1946), Hicks-Phillipson Commission (1951), nChicks Commission (1953), Raisman Commission (1957), Binns Commission (1964), Dina Commission (1969), Aboyade Technical Committee (1977),. Okigbo Committee (1980), and the Danjuma Commission (1988). However, none of these commissions was able to evolve a viable fiscal allocation formula for the country.
With the return to civil rule in 1999, the Federal Government established the Revenue Mobilisation Allocation and Fiscal Commission and the Politics of Revenue Allocation (RMFAC) to, among others, monitor the accruals into and disbursement of revenue from the federation account; review from time to time, the revenue allocation formula and principles in operation to ensure conformity with changing realities; advise the federal, state and local governments on fiscal efficiency and methods by which their revenue is to be increased; determine the remuneration appropriate to political office holders.
In 2001, the commission evolved the following sharing formula: Federal Government ( 41.3%) state governments 31%, local governments (16%), Special Fund (11.7%.) This formula, however, proved unworkable arising from the Supreme Court judgement on resource control in April 2002. Thus, in 2008, the fiscal body drafted a new proposal, which seemed to reinforce the hegemony of the Federal Government. By this new arrangement, the Federal Government was to have as much as approximately 54 per cent of the total revenue.
In the opinion of Dare Arowolo, a lecturer in the Department of Political Science and Public Administration, Adekunle Ajasin University, Akungba, Ondo State, the revenue allocation formula in Nigeria inevitably encourages parasitic governance where states become relaxed and endlessly expectant of the monthly ritual of allocation from the federal government. According to him,the implication of this is that while the allocation formula limits the capacity of states to provide public goods needed to promote and sustain governance, it also predates on the Internally Generated Revenue (IGR) of each state, thus making the states perpetually dependent on the Federal Government.
As he puts it, “This arrangement of allocation sharing in Nigeria threatens initiatives, innovation and modern ideas of generating resources, especially money, for sustainable development. The Federal Government, on the other hand, cannot also be divested of this revenue allocation ‘pathology’ since it appropriates and concentrates too much money at the centre leading to waste and corruption. The Federal Government lacks a basic plan for the transformation of resources into concrete developments. This also explains the reasons for the characterisation of politics in Nigeria as a ‘do or die’ phenomenon.’’
Thus, in order to redress the imbalance, Arowolo advocated the following options: readjustment of the tax revenue sharing power of the federation in an equitable manner among the component units which currently skew in the favour of the federal government; embarking on radical diversification of the Nigerian economy to other viable and productive sectors of the economy, such as agriculture, mining, industry and human development; reviewing the constitution, especially as it relates to federalism, and, finally, the adoption of the principle of derivation, which, in his view, is capable of spurring the states to work harder to contribute maximally to Federation Account.
Although the current administration led by Dr Goodluck Jonathan is yet to make any pronouncement on the revenue allocation formula, there appears to be grounds for believing that there might be a change in the coming months. For instance, on Monday, the president advocated a review of the country’s foreign policy to reflect current realities after 50 years of independence.
In the same vein, will the president make a commitment to the federalism question, particularly in the face of the resolve by legislators-elect on the platform of the opposition Action Congress of Nigeria (ACN) to fight for a more equitable fiscal federalism?
While the question still remains in the realm of conjecture, critical observers of the Nigerian may be left wondering why, since the murder of Major-General Aguiyi Ironsi, Nigeria’s first military Head of State, on charges of abolishing the federal structure of the country through the now infamous Decree 63 of 1966, the country has found it difficult to navigate its way out of the unitary structure foisted on it by the military.
DR Goodluck Jonathan is, by nomenclature, the current President and Commander-in-Chief of the Federal Republic of Nigeria. But is Nigeria really a federation? This question may be a perplexing one because, among other factors, the federalism question remains one of the potent challenges to Nigerian nationhood, some of the others being the fear of ethnic the dominance and population census controversy. With respect to the question of fiscal federalism, conflicts over revenue sharing formula, centralisation of fiscal relations and the agitation for resource control are problems which have proved quite intractable in the last 40 years at least.
Like most federal republics, Nigeria boats a bi-cameral legislature at the centre, and a unicameral legislature at the regional or state level. It also boasts a third tier of government, the local government, which underwent massive reform under the Olusegun Obasanjo regime in 1976. In addition, Nigeria has a centre which is stronger than the component units, which are currently the 36 states in the country and the Federal Capital Territory (FCT), Abuja, the seat of federal power which is run by an administrator rather than an elected governor.
In Nigeria, as in most federations of the world, questions of equitable revenue sharing formula have been at the forefront not only of policy discourse but also physical agitation, including militancy movements. The state governments in the country, especially since the return to civil rule in 1999, have also been engaged in wrangling with the Federal Government on the issue of securing adequate financial resources to discharge their constitutional responsibilities.
In this regard, particularly with reference to the Obasanjo era (1999-2007), fiscal federalism issues were encapsulated in debates and litigation over the controversial on-shore/off-shore dichotomy in the oil sector, with the former Minister of Justice and Attorney-General of the Federation, the late Chief Bola Ige, advising the affected states ( the Niger Delta states) to pursue their case at the Supreme Court, which finally gave its verdict in April, 2002.
In tackling the fiscal question, the Federal Government had, at various times, even form the colonial days, set up committees/commissions to look into the question. In addition to Decrees 15 of 1967, 13 of 1970, 9 of 1971, 6 of 1975 and Decree 7 of 1975, some of the commissions set up were the Phillipson Commission (1946), Hicks-Phillipson Commission (1951), nChicks Commission (1953), Raisman Commission (1957), Binns Commission (1964), Dina Commission (1969), Aboyade Technical Committee (1977),. Okigbo Committee (1980), and the Danjuma Commission (1988). However, none of these commissions was able to evolve a viable fiscal allocation formula for the country.
With the return to civil rule in 1999, the Federal Government established the Revenue Mobilisation Allocation and Fiscal Commission and the Politics of Revenue Allocation (RMFAC) to, among others, monitor the accruals into and disbursement of revenue from the federation account; review from time to time, the revenue allocation formula and principles in operation to ensure conformity with changing realities; advise the federal, state and local governments on fiscal efficiency and methods by which their revenue is to be increased; determine the remuneration appropriate to political office holders.
In 2001, the commission evolved the following sharing formula: Federal Government ( 41.3%) state governments 31%, local governments (16%), Special Fund (11.7%.) This formula, however, proved unworkable arising from the Supreme Court judgement on resource control in April 2002. Thus, in 2008, the fiscal body drafted a new proposal, which seemed to reinforce the hegemony of the Federal Government. By this new arrangement, the Federal Government was to have as much as approximately 54 per cent of the total revenue.
In the opinion of Dare Arowolo, a lecturer in the Department of Political Science and Public Administration, Adekunle Ajasin University, Akungba, Ondo State, the revenue allocation formula in Nigeria inevitably encourages parasitic governance where states become relaxed and endlessly expectant of the monthly ritual of allocation from the federal government. According to him,the implication of this is that while the allocation formula limits the capacity of states to provide public goods needed to promote and sustain governance, it also predates on the Internally Generated Revenue (IGR) of each state, thus making the states perpetually dependent on the Federal Government.
As he puts it, “This arrangement of allocation sharing in Nigeria threatens initiatives, innovation and modern ideas of generating resources, especially money, for sustainable development. The Federal Government, on the other hand, cannot also be divested of this revenue allocation ‘pathology’ since it appropriates and concentrates too much money at the centre leading to waste and corruption. The Federal Government lacks a basic plan for the transformation of resources into concrete developments. This also explains the reasons for the characterisation of politics in Nigeria as a ‘do or die’ phenomenon.’’
Thus, in order to redress the imbalance, Arowolo advocated the following options: readjustment of the tax revenue sharing power of the federation in an equitable manner among the component units which currently skew in the favour of the federal government; embarking on radical diversification of the Nigerian economy to other viable and productive sectors of the economy, such as agriculture, mining, industry and human development; reviewing the constitution, especially as it relates to federalism, and, finally, the adoption of the principle of derivation, which, in his view, is capable of spurring the states to work harder to contribute maximally to Federation Account.
Although the current administration led by Dr Goodluck Jonathan is yet to make any pronouncement on the revenue allocation formula, there appears to be grounds for believing that there might be a change in the coming months. For instance, on Monday, the president advocated a review of the country’s foreign policy to reflect current realities after 50 years of independence.
In the same vein, will the president make a commitment to the federalism question, particularly in the face of the resolve by legislators-elect on the platform of the opposition Action Congress of Nigeria (ACN) to fight for a more equitable fiscal federalism?
While the question still remains in the realm of conjecture, critical observers of the Nigerian may be left wondering why, since the murder of Major-General Aguiyi Ironsi, Nigeria’s first military Head of State, on charges of abolishing the federal structure of the country through the now infamous Decree 63 of 1966, the country has found it difficult to navigate its way out of the unitary structure foisted on it by the military.
0 comments:
Post a Comment