Nigeria and Fiscal Restructuring; Much Ado about Much Ado

because why not? Nigeria is looking more and more like a Nollywood movie – and not even the good type.

The calls for fiscal restructuring of Nigeria have been rife in the news recently. Many concerned groups cutting across various sections of the country, quite uncharacteristically, have collectively agreed on one thing: if the country intends to shed the weight of problems holding it down, things have to change.

That the issue of restructuring was first raised in the 2014 confab report, is factually history. However, while an increasing number of Nigerians remain convinced that the country might indeed make good progress in the fight against her many institutionalised demons, the calls for restructuring, well, continue to be bland “calls” and not a lot more than that.

After the Nigerian Civil War ended in 1970, the then head of state, Yakubu Gowon introduced the country to a new political era by converting the country from a unitary state comprising four regions and replacing it with 12 federal states. It could be argued that the timing of this event, as it immediately followed the war, was deployed simply as a tactic to divide, conquer and rid the eastern region of any claims to ownership of Nigeria’s oil wealth in the unfortunate events that another movement for cessation and the institution of an independent state broken out from [this same section of] Nigeria was to repeat itself. To give Gowon the credit due, his foresight was undeniably well informed as half a century after the start of the ’67-70 Civil War, the agitation for an Independent Republic of Biafra, has probably not been stronger.

Prominent legal and political figures such as Femi Falana, the late Gani Fawehinmi and surprisingly, even the articulate and well-spoken but unfortunately dim-witted Femi Fani-Kayode have described Nigeria as a lot of things ranging from a pseudo-federalist state still retaining the old unitary structure, to designations as severe as a “failed state” putting Nigeria in league with countries like Afghanistan which, goes without saying, is more or less unduly critical – I think less. However, to consider the technicalities that distinguish a federal from a unitary state such as the presence of federal and state levels of executive; legislation and judiciary: the three branches of any democratic government as well as a local government; ministries and parastatals working independently yet in a sustained synchronistic and allied hierarchy. Politically, Nigeria still retains the federal structure. However, regarding the distribution of power as a function of individual states and their abilities to control their presents and determine their futures, the story is radically different and this has given rise to this situation where the populace, backed by the suggestions of the 2014 Confab reports, have as a matter of necessity, come together to call for the implementation of fiscal federalism.

The federal allocation sharing formula that has existed since the 60s was deployed for good reason: all fingers are not equal. To give the poorer, less resource endowed states a chance to grow at a similar economic and infrastructural pace as the wealthier ones, the FG pooled resources into a single purse and shared from it the best it could to meet everyone’s needs. Looking at a state like California; the largest oil producing state in America has a larger local economy than that of Russia and Iran – combined. Amusingly, Iran and Russia are two major oil producing countries in their own rights. Following that line of reason and comparing with Nigeria that implements the same basic style of government as the US, there should be no logical reason why Lagos State for instance should be richer or more infrastructurally developed than Akwa Ibom, Delta or Rivers, but the reality and what should have been, very often make up two different narratives. A friend of mine described the existing situation as a man going to work hard for a living only for someone else to dictate what share of his earnings he might be entitled to. As a matter of fact, the system is counterproductive as the more a state contributes to the federation, the less it is definitely sure to receive. The country’s unhealthy dependency on trading crude oil since the mid-70s has taken this situation and drawn it out into what now exists as a something of a significant problem. Crude Oil isn’t as valuable as it used to be, many states are facing different levels of internal difficulties that need to be sorted out independently and sustainably, the political clime in the country is at the most unstable it has been since 1970 with the agitation for the cessation of Biafra becoming alarmingly high and hence, one should reason that the calls for restructuring are essentially SOS calls being made by Nigerians, for the future of the country. The calls for restructuring seek the development of stronger institutions and resource control policies at the levels of the state that would see a far better chance at long-term progress being made and sustained.

As far back as history allows one to reach, the first evidence of the federal allocation debate began as far back as the 1940s before Nigeria even gained her independence. There have been several amendments and adjustments that sought to redefine the sharing formula in a variety of ways, giving credence to a variety of reasons as their likely justifications. These reasons ranged from population considerations to a bid to institute equality in development and equity determined by income generated by the different states and region, etc. The Obasanjo government instituted the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) and the body, existing since the year 2000, has been charged with overseeing accruing and allocating funds between the different tiers of government. The 2010 amendment to the Federation Account Allocation (FAA) Act (the legislative institution through which the RMAC functions) still remains operational today and is the reasonable point of focus when we consider the issue of fiscal restructuring. It is in this 2010 amendment we see the sharing formula of 56% of national revenue being allocated to the FG, 24% to the State and 20% to the LG after the 13% derivation allowance and royalty payments have been taken away. Regardless, the calls for fiscal federalism are essentially attempts at revamping the current status quo and giving it a different spin; it changes very little and still retains the original problem of laziness and parasitic relations between the environment, the FG and the State. A better representation of what should be implemented is a decentralised resource control and revenue generation scheme that places the emphasis and the greater part of the responsibility of wealth creation, not on the FG, but on the State Governments while the FG is sent contributions from the states’ revenue. This is Fiscal Decentralisation.

The current sharing formula, in comparison with the reality on ground, very evidently supports the notion that the FG is juggling a lot more than is responsibly advisable and delivering so little over so much time. Another concern that has been cited by many individuals in the Nigerian political and socioeconomic scene is that the current formula and its lop-sidedness in the favour of the FG has been responsible for the inconceivable levels of corruption that plagues the higher ranks of the FG. These individuals include academics like Itsejuwa Sagay, Arowolo Dare and a host of others who push a strong argument on the devolution of powers from the federal tier to the state. These two factors come together to form a powerful collaboration that sees everything but national interest and general welfare of the population anywhere but the top of the government’s priority list. It weakens the state and her institutions and transforms them into slavish organisations that have very little in the way of influence over themselves, their operations, their interests and even less for the people that constitute the citizenry that they represent.

Comparing the “fiscal federation” structure with other federal states in the world, Nigeria is the only federal state in the world that has chosen to maintain this façade of an arrangement. In other federal states from Canada to Germany, as they follow the paradigm laid down by the US that developed the system, a decentralised pattern in the sharing of fiscal responsibilities is not a suggestion to be given as a way forward to a few problems, it is the typical system on which the federation structure is built and sustained. Although inherited from the British colonialists, the system in place today has not been reassessed over more than half a century to correlate with common sense, rather, it chooses to make slight alterations from time to time. At this point, one could ask oneself what we have been able to use our independence for if issues as basic as planning for economic independence and prosperity on a national scale still continue to be issues closed to discussion.

In a decentralised system, the investments on the part of the state towards issues like industrialisation would understandably be greater as the more that is invested by the state, the more profits the state might stand to gain.

We see things like these coming into play when we consider cities like Ruhr in Germany, California, New York, Toronto and many famous cities in industrialised countries. Issues like education and manpower development would also be tended to with proactive urgency as the efficiency of workers in a state would translate directly to state-wide productivity. Whether the investments would be made directly by the states or expressed through outlets like increased availability of credit facilities to stimulate private sector participation across the various economic sectors; land use reforms, etc., the gains on this end are more tangible compared with the present situation as the states are closer to the interests and visions of the people than the FG is. With individual states bearing the responsibility of generating 100% of their revenue, a very important advantage becomes apparent: there will be drastic reductions in wastage of hard earned funds. It should appeal to reason that the harder individual states might have to work to generate revenues through taxation and resource extraction, the more frugal they would be with spending and the more determined they would be towards progress and accountability. Under this situation, the state understands that the more people they can put to profitable work, the more they will stand to gain in terms of income taxation, total revenue generation and credit favourability by extension therefore reducing negligence about economically sensitive issues like creating employment and stimulating greater determination in tackling the responsibility of local economic development in cooperation with different parties from other branches of the government and the private sector. It does make some sense to wonder what exactly the differences are between “allocations” and “bail-outs” especially when it is considered that very many Nigerian states are economically dysfunctional, doing so little to stimulate economic activity locally while choosing instead to rely almost entirely and rather parasitically on these “allocations”. In essence: “bring from Niger-Delta let us eat. As long as they feed us, why should we bother about feeding ourselves?

On another hand, the possibility of increased levels of cooperation between the individual states would be given more impetus under a decentralised system and as such, relationships like that which was seen between Lagos and Kebbi concerning the production, transportation and sale of rice in the yuletides of 2016, the one that crashed the price of a 50kg bag of rice from 24,000 to under 13,000 in a matter of hours, would become more popular. A possible example of where this might apply would be in organising oil swap deals between a state like Kaduna which houses the Kaduna Refinery and a rather developing oil producing state like Imo, or, development of extensive rail routes that may link manufacturing hubs like Aba and Ogun with consumer markets as far as Kano, Abuja and Lagos. This would mean that many of the goods and supply chains that have been outsourced to date through importation might find strong reasons to be reversed in favour of locally developed goods which in turn would translate to more jobs, higher income locally and a stronger collective national economy.

As it might concern infrastructural development, looking to the Apapa Ports and the roads that lead into and out of them would be a very relevant example. The Apapa Ports generates revenue in the order of billions of naira daily – the ports are governed in majority by the FG. The roads that lead into and out of them – the “federal roads” – are notoriously terrible and they hamper operations of the ports by delays that cost valuable man hours; goods and property damage from vehicle accidents; during rainy periods traffic delays last very long hours and so on. To get good understanding of just how much suffering goes down daily on the famous Apapa road, all one need do is speak with a Lagosian – honestly pick anyone, even a child. Now the question is: understanding the financial and economic importance of the port, if the Lagos State Government had a larger part to play in its running, would it be imaginable that they would not do all in their power as quickly and as efficiently as possible to ensure that this port as well as the roads that connect them with business outlets run as efficiently as possible? Well, the reality is that if the Lagos Ports cannot work efficiently, the FG has another in Port Harcourt and if that doesn’t work well enough there is another in Delta and another in Cross River, and at the very worst (present reality) they would just focus on [failing at] trading crude oil. This situation describes the reasons why infrastructure in Nigeria, especially those within the realm of responsibilities of the FG continues to see so little growth and more decline over the years. The Apapa ports are not alone in this debacle, we see as well a similar situation with the Lagos Airport Roads; we see the same with the Badagry – Mile 2 expressway; and the infamous Benin-Ore road to point out a few. Perhaps the one of the most pitiable instances as this “FG negligence business” affects infrastructural development would be the construction of the Second Niger Bridge which has been promised so many times that it has all but become a point for canvassing election votes. Realising just how much the ease of movement of goods and services between their regions and the Port Harcourt and Lagos Ports might benefit the prosperity of their local economies, if the state governments of Delta, Abia, Anambra and Enugu, had the means to pool resources to see that this bridge becomes a reality, I wager the bridge must have been more than 15 years old by today. As another instance maybe we should consider the dredging of the River Niger to allow larger trade vessels deeper into the country where the transportation of goods into and out of the country might be more efficient and cheaper and you wonder why there is a constant agitation for the Republic of Biafra today? As far as the infrastructural development debate goes, so long as its efficiency links back to a possibility of affecting state revenue: roads and transport, healthcare, electricity, security, etc. would be issues that would be tended to with more seriousness. Presently, even under the same conditions of a nationwide economic recession, states like Lagos, Ogun and Anambra, are making the sacrifice to increase capital spending to boost local productivity and grow their local economies. Compare them with a state like Jigawa who wants nothing more in the world than to build using public funds, 97 mosques through which they would pray their ways to fame and fortune. It becomes obvious that this “fiscal federal structure” we have in place only serves to impede the determination and ambition of the more daring states by bonding them to insolent slobs who are not ready to take charge of their own futures.

Dr. Martin Luther King was quoted as saying that riots and protests of the people is “the language of the unheard” and more than anything else, the agitation for Biafra exemplifies MLK’s sentiments. As a matter of fact, as long as the current system remains in place; as long as it still remains an issue of “oil money” from the Delta into Federation account and allocation sharing, Nigeria will never know peace and it will not matter whether derivation allowance stands at 60% or whether the FG gets 1% of all allocations. The biggest threat to Nigeria’s “non-negotiable” unity is not the people blowing up oil installations, it isn’t the IPOB or even Boko Haram, paradoxically, it will remain the Federal Government itself through their acts of wastage, the perpetuation of corruption (I mean, Nigerian politicians are willing to complain about corruption to anyone who would listen. If that isn’t an admission of guilt, then I don’t know what is), delay and/or blocking the passage of this restructuring. As it so ironically happens, the FG is the one body who asserts that claim of Nigeria’s non-negotiable unity. Part of the inherent advantages of the decentralisation is that, in itself self-actualisation is non-negotiable; should one choose to rely on the other, it must be for reason justifiable to both parties. Considering the political reality today, if self-actualisation is what groups like the IPOB /MASSOB why not let them as well as every other region and ethnic group in Nigeria have it while there is still “a” Nigeria?

Another advantage that fiscal decentralisation might bring will be the improvement in the quality of governance. When the responsibility of “finding their daily bread” becomes a prime worry of the state governor; when governance is a lot more than who gets voted in to be a custodian of allocations and the chief money sharer of the state, the need for more visionary leadership with cogent and practical ideas for progress would no longer be issue that would be affected by factors like ethnicity, gender or religion. If the people who would have the best practices on efficiently running the state continuously come from one specific region, then it will continue to be so unless the people of said state are ready to settle for lower standards of living or are ready to improve their local stock to be able to compete honourably for the prized seat. Who knows? Maybe it might, in the spirit of true democracy appeal to the people of Enugu State for instance to vote in a man from Ekiti as governor. Fiscal decentralisation might even have a better chance at improving our current democratic system and redefining the current structure through which political powers are expressed in the country today.

However, one thing that remains very bothersome is that when organisations like the OPC become more reliable in fighting for security when the police will not; when the Niger-Delta Avengers will fight for the economic prosperity of a region when the government will not; when the IPOB/MASSOB will fight for the right of democratic independence and self-actualisation when the government seeks only to institutionally marginalise and subjugate, we see a gradual but certain shift in the assignment of responsibility of the government from the failure of a nation to that of a state and the eventual burden being borne by a group of individuals sharing interests in a given locale. Inadvertently, this will result in the gradual but certain devolution of the state and an eventual dissolution of governmental authority. These developments will by no means be sudden. The Nigerian society will see an increasing reluctance on the part of the people to carry out civil responsibilities like paying taxes on income earned within the state as they see no reason in terms of infrastructural development why they should; there will also be a notable reduction in voters turning out to elect new public office holders and this will constitute a particularly tricky problem as they people will not accept or support any form of leadership the system seeks to impose, but will spiritedly revolt against anyone who is emerged by the system. The people will turn towards these informal and even outlawed organisations like IPOB and OPC, giving them the support the government will otherwise need as well as starving the government of access to their sources of funding which definitely will grind governmental operations to an unfortunate halt, laying bare that undeniable reality that the power of a democratic government truly lies in the hands of the people that they lead. Even if the military would be turned to for the maintenance of law and order, other than the outright institution of a military dictatorship, how many people would the government then be willing to marginalise and get away with if the worst gets to it? The time for Nigeria quite seemingly from all indications, has run out – or is doing so, very quickly. The restructuring towards fiscal decentralisation is in fact a “do or die affair”.

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