his Revenue-Sharing Thing Again

26 Feb 2012




Simon Kolawole Live!: Email: simon.kolawole@thisdaylive.com



The faulty nature of our federalism was highlighted once again last week. This time, by the chairman of the Nigerian Northern Governors Forum, Dr. Babangida Mu'azu Aliyu, who lamented that Northern states are marginalised in the sharing of federally collected revenue. The way forward, he offered, was to review the formula in a way that the North would derive more benefit. He was speaking at the inauguration of the Sir Ahmadu Bello Memorial Foundation Advisory Council to advise the Northern governors on development.

Allow me to quote Aliyu generously: “The North today is in a very grave situation where illiteracy, poverty and general backwardness are on the rise in the face of unfavourable federation allocation structure in which the Northern states are at a great disadvantage. In Niger State, for instance, we receive N4.2 billion to N4.5 billion 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 expecting that the there would be a review this year. Revenue from oil wells within the 200 kilometres of the continental shelf ought to be for the whole country, but the revenue goes to some states. What is happening will not serve equity and therefore we will continue the discussion until there is equilibrium.”

I will discuss three points from his statement which I consider very important as we continue to debate our peculiar form of federalism in Nigeria. One, Aliyu spoke of "the North" in the sense that we are still operating a regional system of government. It would appear from his statement, therefore, that the parameters of revenue allocation were deliberately skewed against the region as a unit. The last time I checked, there were 19 states in the North. The North as a region was disbanded by the state creation of 1967. But there still remains this unbreakable sentiment about "the North" as a political and economic unit. Hence the conspiracy theory that the North is being cheated in revenue sharing.

However, Southerners would argue—and I've heard this argument again and again—that the revenue sharing formula was deliberately designed to favour the North. Principles such as "land mass", "population" and "need" are believed to have been built into the formula so that the North would get a good chunk of the national cake, so-called. That is why population census in Nigeria is always controversial; there's no census conducted that Southerners have not complained that cattle and goats were counted in order to beef up the population of the North. This is clearly uncharitable but it is a very strong sentiment down South. So when Aliyu complains that the North is marginalised, Southerners would be furious.

My opinion on this is that insofar as revenue sharing principles are applied on a state-by-state basis and not region-by-region, the North cannot complain as a unit. The revenue does not go to the North; it goes into individual states and it is individual states that should complain. After all, the Northern states do not spend the money on the region. What goes to Niger is not spent on Kaduna. Every state takes care of itself. Canvassing more revenue for the North is, therefore, an exercise in futility. Just as many Northern states can complain that the federal allocation is not enough for them, so can many Southern states. No governor should shy away from addressing the needs of his state under the guise of "the North". The problem of Benue is different from the problem of Plateau. Even if the problems are the same, no state would spend its own funds to solve the problem of another state, no matter the regional solidarity. Emphasising region above state won’t cut it.

Two, Aliyu said his state collects between N4.2 billion and N4.5 billion annually and spends 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". I couldn't believe my eyes when I read those words. The impression he is creating is that the federation created Niger State and appointed him as general manager without giving him enough funds to run it. This logic is at the very foundation of our faulty federal system. I have been trying to study federal structures around the world and even though I have not gone very far, Nigeria still remains the only one where component units rely on the central pot for their livelihood. Component units are supposed to contribute to keep the centre alive; in Nigeria, the centre is expected to sustain the units.

Aliyu was talking as if Nigeria has a responsibility to feed Niger State—or any other state for that matter. And he seems to argue that since Niger has more population than some other states, it should get a larger chunk of the revenue. There are several problems with this argument. To start with, the idea of federalism is that every state should substantially fend for itself. Before we discovered oil, for instance, we never heard Sir Ahmadu Bello or Chief Obafemi Awolowo or Dr. Nnamdi Azikiwe complain that they were not getting enough share of the federation account. If you have more population, how is that the problem of another region or state? Every region used to cater for itself.

Today, we depend 90 per cent on petrodollars and by military fiat, the income comes from the Niger Delta and goes straight into the federation account from where it is distributed among the 36 states of the federation. The revenues from cocoa, coffee and groundnuts etc in those days were never sent into the federation account. Every region made its own money and spent it as it liked. We have now reversed the logic. More so, if all we are seeking is that more money should come from federation account, where is the need to make internal revenue efforts? If you have a population of 4.1 million people, where is the creativity to turn this into an asset rather than a liability? Does the rest of Nigeria have the responsibility of taking care of your children for you?

Three, Aliyu’s position further exposes the fictitious nature of our federalism which can only continue to drag us back. In my opinion, states should begin to work assiduously towards gaining financial independence from the federation account. It is not going to be easy; it takes a lot of thinking which many governors are not ready to do. There is this wrong assumption that development can only come when you get more money from federation account. This is the logic that often drives the clamour for “more money, more money”. Every state must work towards developing its local economy with policies and programmes that will encourage the growth of industry and service. It will not happen overnight—it takes careful planning and attracting the needed investment. Every state must leverage on its area of strength. I have said it a million times—states such as Anambra and Abia can build electronics manufacturing cities without spending a kobo of their own money! It is all about using the brain.

Need we continue to hammer on the fact that our over-reliance on oil revenue is bound to hurt us one day? Every discussion about public finance in Nigeria starts and ends with federation account. It is sickening. State commissioners for finance run to Abuja every month to collect FAAC cheques, the same way workers wait for their salaries! If oil money were to dry up today, where would the finance commissioners run to? How would the states survive? What are the governors putting in place in their states to prepare for a future without oil, a future where the oil-fuelled federation account will become more like pocket money to them?

To be sure, I understand the politics of Aliyu’s pronouncements. It is part of the entire political economy game currently going on in the country as the stakes continue to rise. The Niger Delta says this; the South-west says that; so the North must also say something. But in all the politics, let’s still reserve some place for development-oriented thinking. That is what can liberate our federalism.

And Four Other Things...

The Joke Called PSC
The Police Service Commission (PSC) never ceases to make me laugh. Over three years ago, it demoted the former chairman of the Economic and Financial Crimes Commission (EFCC), Malam Nuhu Ribadu, from Assistant Inspector General of Police (AIG) to Deputy Commissioner of Police (DCP), claiming his promotion, which saw him skip the rank of Commissioner of Police, was improper.  Of course, PSC was being used to humiliate Ribadu by the President Umaru Musa Yar’Adua government. Today, the same PSC, headed by the same person, has promoted Mr. Marvel Akpoyibo from Commissioner of Police straight to Deputy Inspector General of Police (DIG), skipping the rank of AIG. I have no problems with Akpoyibo’s promotion—let me be clear about that. It’s the hypocrisy that stings me. I mean, the same PSC surreptitiously reinstated Zakari Biu into the force and promoted him two years ago. Now they’ve sacked him! Who are they trying to impress?

NYSC’s Posting Policy
The National Youth Service Corps (NYSC) has been at the centre of controversy for quite a while now, especially with the killing of youth corps members. The cry of many Southerners is that the body should be scrapped because nobody wants the children to be killed in these ethnic, religious and political crises up North. But beyond the “national integration” objective of NYSC, there is the “national service” component which we have ignored for decades. In some countries, you actually serve in the military! The government has introduced a new policy—corps members will now be posted to only four sectors of the economy: education, health, agriculture and infrastructure. I consider this to be a smart move. National service should be focused at achieving certain goals and I think this is the sort of reform the scheme had been crying for in the decades gone by. I hope more reforms will follow…

Sanusi’s Donations
There is something I always fail to understand with government officials—their inability to match their words with action. If there is one person who has been campaigning against waste in government, it is the governor of the Central Bank of Nigeria (CBN), Malam Sanusi Lamido Sanusi. And I’ve always liked him for that. He drew our attention to the crazy overheads of the National Assembly. He canvassed small government during the logjam over the removal of petrol subsidy last month. But what did he do next? The CBN board, under his watch, approved donations to victims of Boko Haram in Kano and Madalla. It is corporate social responsibility, we were told.  I don’t buy that argument. It is politics. If we have to cut cost, donations must be included. That’s simple logic. It is ironic, isn’t it, that the same CBN spent nearly a billion naira to acquire a piece of land to expand the governor’s residence. Prudence indeed.

My Errors
In my last article three Sundays ago, there were two mistakes I cannot allow to go, no matter how late I discovered them. I messed up people’s names so badly. I referred to the former Sultan of Sokoto, Alhaji Ibrahim Dasuki, as Alhaji Ahmed Dasuki. To add insult to injury, I wrote Shehu Umaru Yar’Adua instead of Shehu Musa Yar’Adua! I was actually joining the late president with his late brother. God have mercy…

lateef4me:
Today, we depend 90 per cent on petrodollars and by military fiat, the income comes from the Niger Delta and goes straight into the federation account from where it is distributed among the 36 states of the federation. The revenues from cocoa, coffee and groundnuts etc in those days were never sent into the federation account. Every region made its own money and spent it as it liked. We have now reversed the logic. More so, if all we are seeking is that more money should come from federation account, where is the need to make internal revenue efforts? If you have a population of 4.1 million people, where is the creativity to turn this into an asset rather than a liability? Does the rest of Nigeria have the responsibility of taking care of your children for you?

It is corporate social responsibility, we were told.  I don’t buy that argument. It is politics. If we have to cut cost, donations must be included. That’s simple logic. It is ironic, isn’t it, that the same CBN spent nearly a billion naira to acquire a piece of land to expand the governor’s residence. Prudence indeed.

Simon Kolawole is a G.

Spot on Simon Kolawole..........
How long are we gonna keep sharin oil money to the detriment of other natural resources ?
This structure,this system cannot work,and will not last in the long run .
The responsibility lies on GEJ to restructure our revenue sharing formula in order to promote creative initiatives on the part of other regions than runnin to Abuja every month to collect allocations .