When fiscal federalism reverberated in Ibadan

The neglect of the practice of true federalism as espoused by the Constitution of the country over the years and which has taken its negative toll on the fiscal policies of the country, came to the fore at the last gathering of the governments and other stakeholders in the South-West geo-political zone early last week in Ibadan. The gathering was at the instance of the Revenue Mobilization Allocation and Fiscal Commission (RMAFC) for what it called “Public Sensitisation Programme on the Review of the Revenue Allocation Formula.” So, for two consecutive days the governments and various interest groups from the six states of Oyo, Ogun, Ondo, Osun, Ekiti and Lagos in the geo-political zone gathered at the International Conference Centre, University of Ibadan, for deliberation on the sharing formula of the nation’s resources. In view of the ever-growing discontent mounting over the sharing formula of the allocation accruing to the nation’s common purse, always described as imbalance, it should be expected that there would be different kinds of representations and the organizer was not in short supply. All the states governments through their governors/representatives made propositions on what the allocation formula should look like and the various pressure groups, including labour and civil society groups were not left behind Chairman of RMAFC, Engr. Elias Mbam, in an interview with journalists shortly after the programme was declared open by the Governor of Oyo State, Abiola Ajimobi said the Commission appreciated the huge turn-out of people and promised that the decision of the Commission at the end of the exercise would be a reflection of the people’s wish and not that of the Commission. Earlier in his welcome address, the chairman said the Commission had been crisscrossing the geo-political zones of the country on advocacy and mass mobilization campaign on the review of the allocation formula through consultations, sensitizations and public hearings.
“The aim of the public hearing is to further provide another veritable platform for Nigerians to express their views and submit memoranda on the review process and I therefore call on all the people of the South-West zone to take advantage of this opportunity and make their contributions accordingly,” the chairman said. He did not fail to acknowledge the ever-consciousness of the people of the zone on any issue of national discourse, saying, “I wish to observe that the South-West zone is renowned for its highly intellectual and robust contribution to national debates and dialogue. I am therefore optimistic that the public hearing for this zone will produce one of the most outstanding inputs in the review of the Revenue Allocation Formula”.
The chairman, while pleading for non-politicization of the exercise noted its sensitivity as well as its socio-economic implications and implored all the participants and indeed all Nigerians to make inputs devoid of ethno-religious and regional sentiments. He equally assured that the Commission would be committed “to ensuring the full application of the principles of fairness, justice and equity in the review process. We shall be guided by the wishes of Nigerians and I enjoin you all to be frank and objective in your contributions, knowing full well that every section of the country shall be considered fairly and justly”.
In his keynote address with which he declared open the programme, Governor Ajimobi condemned the current fiscal structure which favours the Federal Government with 52.68% of the total national revenue, saying “it is at variance with the responsibilities of the other tiers of government.”
Consequently, he recommended a review of the revenue allocation formula that would give 30% to the Federal Government and 42% to the states, with the local governments taking the remaining 28%. While stressing the need for fiscal equity, governor Ajimobi said that the responsibility of governance, both at the state and local government levels, had become so enormous but frustrating for the operators due to what he called inadequacy of resources. Governor Ajimobi urged all stakeholders to lend their voices to the desired devolvement of more financial resources from the centre to the states and local governments, noting that some of the issues that would lead to the realization of the dream would require constitutional amendments and that necessary steps should be taken to correct the present imbalance and unfair distribution of the nation’s financial resources. The governor maintained that “Cries against this inequitable distribution have been strident among federalism experts and nationalists, yet there is no respite at the moment.”
Ajimobi also called for the independence of RMAFC from the Federal Government which he said was an interested party in revenue mobilization and sharing formula just as he stressed the need for the creation of an Office of the Accountant-General of the Federation to be responsible to the National Assembly separate from the Office of the Accountant-General of the Federal Government. The governor also pointed out that the issue of crises of population should be given a proper attention as one of the relevant determining factors for revenue allocation.
He consequently canvassed for load shedding in the areas of universal basic education, primary health care, the so-called Federal Roads and some other issues like the drivers’ license and agriculture, asking that “where is the Federal Government land to practice agriculture”?
Ondo State, the only one in the zone that belongs to Oil Producing States in the country, became the roaring voice for the people of Oil and Gas Producing Communities in Nigeria with a powerful presentation. Its own presentation, of all the presentations was unique in the sense that its concern was not about the entire revenue sharing formula per se but, about the end destination of the statutory 13% derivation fund which it insisted must statutorily be directly remitted to the affected communities instead of the present system where it goes to the state governments. In the presentation made by Sam Ebiwanno on behalf of Omojuwa Adewale, the Leader, Oil and Gas Producing Communities of Ondo State the Federal Government, should through the Revenue Mobilization Allocation and Fiscal Commission (RMAFC) stop the direct remittance of the statutory 13% Derivation Funds to the state governments. They instead pleaded that the funds be remitted directly to the communities bearing the brunt of the derivation, where “Oil exploration, exploitation and production are being carried out, causing monumental degradation, pollution and health hazard”. They insisted that the affected state governments had failed the affected communities.
The spokesperson of the Oil Producing Communities noted that the payment of 13% derivation pursuant to section 162 (2) of the 1999 Constitution of the Federal Republic of Nigeria as amended and lamented that the huge billions of Naira derived from the derivation over the years had not translated into meaningful development of the affected communities.
The pan-Yoruba organization, Afenifere Renewal Group (ARG) in its own presentation by Wale Oshun, it described the current revenue allocation formula by which the Federal Government of Nigeria gets over 50% of centrally-collected revenues in the Federation Account as lopsided and maintained that the formula had created a glaring and unacceptable imbalance in the financial resources of the three tiers of government. While expressing its recognition of the fact that revenue adequacy is central to the existence and functioning of a Federal Government, the federating states and their local constituents, it maintained that the lopsidedness of the current formula made it unacceptable. The group lamented that the formula had also adversely affected the delivery of core social services and infrastructure development where they matter most.
According to the group, “This, alongside associated economic and political factors, has led to a situation in which State and Local Governments are dependent on Federation Account Allocations, with many States not financially stable and viable, as they find it challenging to maintain efficient and effective public services. This dependency relationship is also a destructive factor to our federal system, as the autonomy of state governments, which presupposes their developmental responsibilities, is essential to a true federal arrangement”. It subsequently recommended the adoption of the definition of ‘fiscal federalism’ as a set of principles that could be applied in attaining true federalism and fiscal decentralization. “Fiscal federalism, just as true federalism, should be an overarching normative framework in Nigeria for assignment of functions to the different levels of government with the appropriate fiscal instruments for carrying out these functions.
“The underpinning principles that inform our recommendations are that every one of the Nigerian constituent units should be opportune to aspire to achieve its highest potentials within the Nigerian nation without hindrance
“Governments at various levels are held in trust and should be accountable to the people, while more resources should accrue to those tiers of government that are closer to the grassroots for the purpose of rapid development.
“Revenue allocation should be done transparently and in a manner widely accepted by the generality of the people of the Federating Units and allocation should be able to provide each of the stakeholders with, at least a minimum level of funds in the light of their responsibilities, current level of development and developmental aspirations”, the group stated.
No doubt that the Commission left the zone with loads of papers as presented by the various state governments, labour groups, civil societies and others. The aggregate opinion was that there is need for the country’s leaders to develop the political will to ensure power devolution as appropriate and in concert with the constitutional provision as a federal set up truly in practice rather than in theory and unitary in practice as currently in operation.