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Lessons in arithmetic of Nigeria’s revenue allocation formula

By Rotimi Fasan
THERE might have been other reasons but one important if not the VERY reason for the British amalgamation of the Northern and Southern Protectorates of Nigeria, was the need to make the South support the North which the colonialists thought was not economically viable.

This much Nigerian historiography tells us. And if nearly after a hundred years during which the two protectorates would transform into four regions through 12, then 19 and now 36 states that are probably less economically viable than the Northern Protectorate of 1914- if after these many decades of  sibling help 19 state governors of what was the former Northern Region want the support of their Southern sibling to remain, we must all recognise this as not totally unexpected of members of the same family as Nigerians North, South, East and West have become.

What we must take care not to do is kill the proverbial goose that lays the golden egg or forget that the passage through which the egg passes out many times ache.

This should be timely warning for all Nigerians, including those from the Niger-Delta which provides the bulk of Nigeria’s oil revenue and politicians from the North who have in the last couple of weeks been calling for a change in the country’s revenue sharing formula that apparently favours the South, specifically the Niger-Delta, more than the North in particular and other parts of the country in general. In bringing the North and South together for economic reason we must not forget that the British left the regions that would come out of these protectorates some significant measure of control over their resources.

It would take the military’s incursion into power to destroy all of that under a unitary command structure that was misnamed a federation. So strong were the regions that the three leading political figures of the time had very close affinity to their respective domain. Indeed, Sir Ahmadu Bello chose to send his deputy, Sir Tafawa Balewa to Lagos as Prime Ministers after their party, the Northern Peoples Congress, won the 1959 general elections.

But over the passage of many years, the skewed structure put in place by the military which concentrated most power in the centre would breed a sense of entitlement in Nigerian political leaders most, not all, of whom happened to come from the North. They saw what went to the centre as what belonged there as a matter of right and shared it on criteria based on anything but the right of the producer to own what they produced.

Ironically, at this time the sources of Nigeria’s revenue have shifted from the primary agricultural products that came from the four regions of the post-independence years to oil, a product that came mainly from a little section of one of the four regions. Things would remain like this until 1999 when insurgency in the oil-ravaged Niger-Delta would force the Nigerian state to concede 13 percent of the revenue that came from oil to the states from which oil is derived.

In spite of this, the Federal Government takes a princely 52.8 percent of the entire revenue, while the state and local governments share 47.2 percent. The matter seemed settled for some time to come- until Sanusi Lamido Sanusi, the CBN Governor, opened what now seems like the Pandora Box of bottled rage concerning the sharing formula in the wake of Boko Haram insurgency and terrorism in the North. He believes not just in a close link between poverty and the terrorism of the fringe group. Sanusi goes on to point out the anomaly in the sharing formula that sees the ostensibly highly populated North getting lesser revenue from ‘Federal’ coffers than the oil-producing Niger-Delta states.

Perhaps in a bid to put his (?) money which in this case is Nigeria’s or, specifically Niger-Delta money where his mouth is, he made a princely donation of N100 million to victims of the Boko Haram bomb blast in Kano, his home state. He followed this with N25 million to victims of an earlier attack in Madalla, Suleija, after criticism of his gesture to Kano.

But like rotten carrion whose stench would not leave the air, Sanusi’s Robyn Hood act has spawned calls for review of the sharing formula by politicians from the North, pitting them against their Southern counterparts. It was the Northern Governors’ Forum that first took up the call to be followed by the Arewa Consultative Forum. And the shouting match to determine the loudest voice has begun even as the National Assembly has rejected calls by the ACF, Afenifere and other socio-cultural groups for a Sovereign National Conference. Where this would all end I’m not a prophet to know.

But while attending the Business Hallmark lecture in Lagos last week, Babangida Aliyu, Governor of Niger State and Chair of the Northern Governors’ Forum restated the call of his group for a new sharing formula. In the same breath as he made his call, Babangida also spoke of the need to cut down on the concentration of power at the centre in favour of the states.

If the call is not tongue in cheek then our Servant Leader would understand that there is no way he could sustain his call for the review of the revenue sharing formula in the manner both he and the ACF want as well as ask for reduction in ‘federal power’. Federal power is what makes fiscal federalism impossible.

One would rather expect that our barely viable states would devise creative means to generate revenue instead of the lazy dependence on crude oil that we can’t even refine in spite of our ownership of moribund refineries. Since Nigeria’s crude oil deposit is not expected to last forever what would the oil producing states turn to thereafter? Dubai is the world’s business and tourist destination today because its rulers recognised the necessity to make something for their country before their huge oil deposit dries up in a matter of years.

But Nigerians have abandoned every other productive venture for crude oil exploration, yet nobody sees what development is made with the oil revenue. Not even the Niger-Delta states have anything to show despite what goes to them by way of derivation funds from oil. After years of running from the law, it took the British government to arrest James Ibori  and make him own up to laundering his people’s money.

While he found Dubai a haven where he could expend his wealth and even escape to as a fugitive, he forgot it’s just an oil-rich country like his Niger-Delta. Tomorrow that region would be expected to bear the brunt of oil exploration all on its own. This is the tragedy of our revenue sharing formula.


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