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Federalist principles to guide new revenue sharing formula



THE issue of revenue formula has been contentious due to bastardisation of federalist principles in the military imposed 1999 Constitution. If the principles of federalism had been in place, the economy would have been diversified by abrogating the federal laws that prevent the states from exploring and exploiting resources within their jurisdiction to create wealth and massive employment as was the case of competitive federalism in the first republic. Other fallouts due to quasi federal practice include beleaguered power sector, security challenges which have assumed pestilential proportions as non-state actors range unchallenged in addition to the country’s precarious financial position and persistent economic adversity and binge borrowing that has apparently mortgaged the future of the country.

  No wonder a cerebral legal practitioner, Mike Ozekhome said that “Nigeria is a huge joke” because all the patriotic entreaties to the powers-that-be to restore and reinvent true fiscal federalism for the fortunes of the country to change for the better have been dumped.

  Nigeria is currently facing economic downturn and likely recession as revenue targets are falling short and over 90 per cent of what comes in is spent on repayment of foreign and domestic loans which have continued to accumulate. The situation has become scary if not irredeemable hence the international economy watchers have described Nigeria as the poverty capital of the world as it posts some of the world’s poorest human development indices.

  Going by the forgoing discreet observations, it became laughable how the Chairman of Revenue Mobilisation and Allocation Fiscal Commission [RMAFC], Elias Mbam and his officials have been traversing the geopolitical zones of the country to gather opinions on how best to review the revenue formular which had been done since 1992.

  It is pointless canvassing for a new revenue sharing formula whereas the practical solution is to convene national conference of ethnic nationalities to discuss the essentialities of federal system of government since the unitary-federal arrangement imposed by the military has virtually led to the destruction of all the sectors of governance. What the country needs urgently is massive devolution of powers [aka restructuring governance] and not new revenue sharing formula.

  Bastardisation of federalist principles led to the bloated Exclusive Legislative List whereby the federal government controls what the state could have conveniently and effectively managed. The over 68 items in the Exclusive List has made the federal government to take 52.68 per cent of the statutory revenue allocation while the states and local government have much less, even as they are supposed to cater for the sectors that should dramatically transform the lives of the people. The humongous federal share has occasioned massive corruption and unchecked financial sleaze while they bungle the sectors under its care like education and health sectors which are better operated by the sub-national governments. Concurrent legislative list has proved to be a ruse since the federal government compels the sub-national governments to observe the policies and programmes or face sanctions and blackmail.

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 The point is that the skewed federation led unrealistic revenue sharing formula at the detriment of the states and local governments which have not been financially positioned to discharge the enormous constitutionally assigned socio-economic responsibilities that would uplift the living standard of the people.

  Presenting the position of the federal government on why it should have 50.65 per cent of the new revenue sharing formula, Boss Mustapha, the Secretary to the Government of the Federation [SGF] laughably rationalised the still humongous portion of revenue allocation [difference of 2.03 per cent] saying that the recommended federal government’s new share was informed among others, by “its increasing visibility in sub-national level responsibilities due to weakness at that level, example, primary health care, basic primary education, increasing level of insecurity and increased remittances to state and local governments through VAT tax sharing formula, where the federal government had only 15 per cent and 35 per cent respectively”.

  This position of the SGF could be said to be pointedly sophistry because the players in government in Nigeria past and present have been known to be subtle if not deceptive to maintain the deprecating status quo. The fundamentally flawed position is simply to justify the bastardisation of the principles of federalism and divert attention from the nation-wide clamour for massive devolution of powers to sub-national units which calls for abrogation of federal laws that prevent state governments into exploring and exploiting the mineral resources within their domain as practiced in countries that adopt federalism.

 “Competitive federalism” is the way out of the groping in the dark looking for equitable revenue sharing formula. Competitive federalism as was practiced in the First Republic will birth realistic diversification of the economy and not the brazen deception of the federal government that it has diversified the economy by requesting the Central Bank of Nigeria, [CBN] to provide loans to the agricultural sector which it erroneously claims that it has excelled even as the murderous foreign herdsmen have been murdering farmers and driving them out of their farms and ancestral lands while the federal-controlled security agents look away.

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  Competitive federalism will jumpstart sustainable socio-economic and political growth and development of the country and stop the unrestrained binge foreign borrowing that mortgage the future of Nigerians. The skewed federation should be jettisoned to stem the country’s roller coaster to Golgotha. Put in another way, if the essentialities of federalism are restored, the sub-national governments would be operating over 80 per cent of MDAs while the central government will be concerned with defense, foreign affairs, and immigration as obtained in countries that practice federal system of government in its purist form. Time has proved conclusively that there is no way the 68 items in the Exclusive Legislative List controlled by the federal government could adequately address needs and aspirations of Nigerians whose socio-economic wellbeing has been comatose even as preponderance of the populace are in suffocating privations and grinding poverty and penury. That has been the pith and marrow of the nation-wide clarion calls for restructuring of the federation to enable the respective federating nationalities have freehand to plan their economy taking into consideration the world-view and value orientation of their people to create wealth and massive employment.

  The federal government’s position that “the responsibilities shouldered by each tier of government should guide the Revenue Mobilization Allocation and Fiscal Commission in the new formula…a lot of resources to the federal government was spent on providing services that were the responsibilities of state governments”, is patently contradictory because it had bitten more than it could chew by the 68 items in the legislative list. Such prevarications cannot make any headway and therefore, the sensible option is to restructure the federation for fiscal federalism. For Mustapha to say that “all over the world, revenue and resource allocation has always been a function of the level of responsibilities attached to the different components or tiers of government”, is equally contradictory showing that he knows that the 68 items in the Exclusive Legislative List need tinkering which is nothing but devolution of powers, aka restructuring governance to reinvent fiscal federalism.

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  The Nation’s editorial of November 14, 2021, while appraising the preposterous recommendation of the SGF described it as “cynical paternalism”, meaning that the federal government was hypocritically pitying the local government by reducing its original percentage allocation and breathing down on the state governments to step down from their percentage to up the share of the local government.

  The editorial went further to describe the preposterous recommendation as “a huge deform to the federal principle…there is no alternative to a sound and vibrant federal system, where (according to the chairman of RMAFC, Elias Mbam) cash is strictly tied to tasks and responsibilities”.

  The editorial, however, veered off the mark in its attack on the state governments for the deplorable condition of Primary Health Care and Universal Basic Education without acknowledging the fact that it was the federal government which forcefully and of course, deceitfully took over the two sub sectors ostensibly to channel humongous chunk of the federal budget to the northern part of the country at the expense of other states of the federation.

  This is one of the gimmicks of centralising policies and programmes of virtually all the sectors supposedly ‘unite’ the country while the real reason is to favour the northern part of the country; and that is why the Minister of Agriculture comes from the north to provide huge chunk of the federal revenue allocation to the building of dams to create the erroneous impression that the north is the food basket of the country.

  Rightly, the editorial was forthright in advocating that the ongoing RMAFC tour of the states to gather suggestions on how to review the statutory revenue allocation will “spark fresh thinking on the federal question and lay a foundation to re-federalise the polity”.

  To asseverate that the complex multifarious challenges hobbling governance are inextricably interwoven with unitarist principles is merely stating the obvious. The head-start remains substantial devolution of powers to sub national entities so as to survive the devastating maelstrom. 

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