02 May 2011

Babatunde Raji Fashola



As we gather to commemorate yet another anniversary of the World Labour Day, I do so with mixed feelings especially about the progress we have made in improving the lot and welfare of our productive population who generate the wealth of our nation, and I am concerned about our national inability to open the employment space quickly by vigorously pursuing and implementing policies that will galvanise our economy back to life.

My concerns are heightened by a combination of factors.
First, I refer to a part of my address at the Labour Day Anniversary in 2010 when I said:

“…I believe seriously that as we continue to have these matters, we must focus on how to evolve strategies that will reduce the cost of living, increase the purchasing power… the Nigerian worker has, and government makes it its continued responsibility to make sure that the cost of living does not over stretch the value of the worker’s salary. That really is the key, the meat and the substance of my message to you today.”

I made this suggestion then at the time the agitation for a new minimum wage was gathering momentum in 2010.
It was my view then and it remains my firm view today, that the root cause of agitation for wage increase was the daily diminishing purchasing power and value of the disposable income of the average Nigerian worker.
While I concede the legitimacy and sense of demanding for increased wages, I am not convinced that raising wages alone without more will improve the lot of Nigerian workers.

What I foresee is a simple adjustment of the same economic variables that have diminished the purchasing power of the Nigerian worker in a swift response to the wage increases so that in a very short time, we are likely to be back again where we all started, and commence the musical chair of fresh demand for wage increases within the foreseeable future.

Those economic variables include the lack of public power supply that aggravates the cost of production, cost of transportation and cost of living which every member of the consumption chain simply passes on.
They also include the absence of long term funding that can catalyse economic activities like agriculture and housing that have the capacity to employ a large number of people on a sustainable basis.

These are in turn compounded by the high cost of funding characterised by double digit interest rates, and an import dependent economy that offers insufficient protection for local industries which results in enormous stress on our national reserves and devalues our currency with the consequential diminution of its local purchasing value.

Distinguished comrades, please indulge me if I am long. I do so because I am concerned and I desire to contribute to put an end to this charade of economic disappointments that have bedevilled our workforce for decades.
If anybody is still in doubt, I will refer you to the lessons of history characterised by labour agitations for increased wages, resulting in pay rises by the Adebo and Udoji Commissions.

Without sound economic policies and aggressive response to some of the problems I have highlighted, I am afraid that the salary increase that follows the implementation of the Belgore Commission may soon amount to no more than a victory at a battle and loss at war for organised labour.
This is a case where clearly money alone will not bring happiness.
We must be bold and audacious to demand a reform of our current federal structure with even greater vigour than was used to secure the wage increase.

The reality is that not all the states will be able to pay the new wage structure unless there is an urgent amendment of the country’s revenue allocation formula that gives more money to the states and local governments.
Some local governments in Lagos are already feeling the pinch and in the last two months, the state government has had to come to their rescue.
The truth is that if we continue like this, states and local government will struggle only to pay salaries and developmental activity will be jeopardised.

We have operated a revenue allocation formula that gives 52.68 per cent of the country’s income to the Federal Government; 26.72 per cent to the 36 states and 20.60 per cent to 774 local governments for years.
Part of the justification for that huge percentage to the Federal Government was its management of many public facilities like NITEL, PHCN, Nigerian Ports Authority, Airports, Nigerian Airways Limited, Nigerian National Shipping Line, National Insurance Corporation of Nigeria, Ajaokuta Steel Company, National Fertiliser Company of Nigeria (NAFCON), Nigerian Aviation Handling Company Limited, Nigerian Sugar Company, Bacita, and other agencies.

Now that the Federal Government has privatised or sold these agencies and expresses its clear desire to engage private capital to do more, the case for keeping that large chunk of the Federation’s account is obviously no longer tenable or meritorious.
I have been privileged to serve as the Chairman of a Committee of the Nigerian Governor’s Forum set up to propose an amendment of the Revenue Allocation Formula, with the governors of Adamawa, Enugu, Niger, Rivers and Sokoto States as members.
We have concluded our deliberations and produced a report proposing an amendment of the Revenue Allocation Formula such that the Federal Government of Nigeria now gets 35 per cent, states get 42 per cent and local governments get 23 per cent.
It is my firm view that in order for the newly approved minimum wage policy to be effective and sustainable and in order for the states and local governments to still be able to function and provide basic social services, the adoption and implementation of the recommendation to amend the revenue allocation formula is a condition precedent that will help us stem any labour crises.

The second policy initiative which must in my view follow, is the accelerated completion of the privatisation of the power sector to be complemented by the payment of all monies owed to the states and local government by agencies such as the Nigerian National Petroleum Corporation (NNPC), the Nigerian Custom Services, the Federal Internal Revenue Services and other Federal Government agencies who earn or manage our collective resources and who have implemented a policy not backed by law, that allows them to deduct or defray their operational expenses from revenues collected on behalf of the Federation rather than paying them to the Federation Account. This is in clear violation of Section 162 (1) of the constitution.
The correct and lawful practice is that the operations of these agencies of the Federal Government must be funded by the Federal Government from its own budgeted share of the Federation Account and not by any deduction at source as appears to have been the case.

More importantly, at this time when oil prices are still exceeding our economic expectation as a result of the political developments in North Africa and the Middle East, organised labour must demand a more development focused budget that allows us to invest at least 50 per cent of our budget in every state and the Federal Government in capital projects for the development of critical infrastructure like roads for transport, schools for education, hospitals and water supply for healthcare to mention but a few.
This is a short term strategy for immediate job creation and poverty alleviation which massive construction will create as we have done in Lagos over the last four years. The development of the power sector, to reduce cost of production, agriculture to reduce cost of feeding and similar policies will help stabilise the erosion of the purchasing power of the worker’s income if it does not improve it immediately.

Dear comrades, these are some of the thoughts that are uppermost in my mind about the road we must travel together in the next four years.
It requires all of us to see it as a journey of necessity in which we must commit to being various parts of the solutions and resist the temptation to be parts of the problem.
While I am not certain how much success we will achieve if we make the effort, I am certain that nothing will improve if we fail to make the effort.

Fashola, SAN, is the Governor of Lagos State

http://www.thisdaylive.com/articles/we-need-to-review-revenue-formula/90646/

Worth reading this entire post.

But this snippet contains the meat of it, I think:

ekt_bear:

I have been privileged to serve as the Chairman of a Committee of the Nigerian Governor’s Forum set up to propose an amendment of the Revenue Allocation Formula, with the governors of Adamawa, Enugu, Niger, Rivers and Sokoto States as members.
We have concluded our deliberations and produced a report proposing an amendment of the Revenue Allocation Formula such that the Federal Government of Nigeria now gets 35 per cent, states get 42 per cent and local governments get 23 per cent.

Thoughts on this formula?

I think the ideal allocation formula should be something like Federal Goverment 30% State government 55% Local governement 15% so that the governors could really be held to account.

seanet02:

Dude always making sense!!

If only have more of people like this in top government positions in other states and at federal level. But religious and tribal sentiments no go gree

Tall dreams and wishful thinking.

baksonlee:

I think the ideal allocation formula should be something like Federal Goverment 30% State government 55% Local governement 15% so that the governors could really be held to account.

I don't think it is a good idea to shrink the LGA share too much. You sort of want to strengthen this unit of government, not weaken it. At least, in my opinion.

I Prefer True federalism  with 100% resource contronl with the centre getting royalties from the states.

Part of the justification for that huge percentage to the Federal Government was its management of many public facilities like NITEL, PHCN, Nigerian Ports Authority, Airports, Nigerian Airways Limited, Nigerian National Shipping Line, National Insurance Corporation of Nigeria, Ajaokuta Steel Company, National Fertiliser Company of Nigeria (NAFCON), Nigerian Aviation Handling Company Limited, Nigerian Sugar Company, Bacita, and other agencies.

Now that the Federal Government has privatised or sold these agencies and expresses its clear desire to engage private capital to do more, the case for keeping that large chunk of the Federation’s account is obviously no longer tenable or meritorious.

how many of these bloody facilities still exist or even work efficiently, there are massive looting joints.

Whatst he justification for collecting ore money when these things have been sold/ in the process of being sold

We need more fasholas in Nigeria

^-- Amen to that

Mynd_44:

We need more fasholas in Nigeria

err, the idea of reviewing the revenue formular in order to meet the minimum wage requirements is laughable and irresponsible. Several states have already comitted to meeting the said requirements without additional funds from the feds. Fashola may want to source for additional funds by look into the N2billion Tinubu gets per month through Alpha Beta and the other alleged N13billion he gets through various other deals which they all use to fleece Lagos state.

Fashola needs to call for a review for other reasons but not because of minimum wage requirements.

Ooh sorry fash!! I knw ur boss needs more money from u to continue his owambe!!! More allocation more monthly payment for Godfadda tinubu keep dreaming

Hrm. The Alpha-Beta money is from IGR, not from federal allocations, no?

So there isn't much room for Tinubu to collect from it.

In any case, while in a perfect world there would be no need for such, since the ACNs political opponents have access to enormous amounts of federal cash I don't think there is any real alternative.

Gotta fight fire with fire.