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Northern Govs’ Revenue Sharing Gambit

By TIMEYIN EJOOR
Governor Aliyu Babangida of Niger State comes across as an articulate politician who is sure of himself and has a conviction of spirit in whatever he does. The self-styled chief servant, no doubt, stands out among his peers. He is forthright and not intimidated to speak his mind on contending issues.

This, perhaps, explains why he was elected chairman of Northern governors Forum. But his recent outburst and agitation for a bigger share of federal revenue and the need to change the current revenue allocation formula is one that will no doubt open him for vilification. He has touched a raw nerve that is already drawing flaks from those concerned.

No doubt, there is a belief among many Nigerians that the current revenue allocation formula is lopsided and unfavourable, depending on which side of the divide you belong to. But the truth is that since independence, or rather since the advent of petroleum as the main stay of Nigeria’s economy, the revenue sharing formula has always been skewed.

At a time, the allocation was based principally on derivation. Prior to independence and shortly after, in the first republic, regions were allowed to keep fifty per cent of whatever was derived from their geographical area and a further share of federal revenue.

This in no small measure enabled the regional governments to jump start developmental initiatives some of which legacies are still visible today. These were the days when groundnut, cotton, millet, cocoa, palm produce and various other agricultural produce were the main foreign exchange earner for the nation.

However, with crude oil taking over in the early 1960s, there was a dramatic change. Suddenly, popul
ation, equality of states and land mass became the main factors. Why?

It is instructive to note that because of the seemingly low population figure and small land mass of the oil producing states, the federal government apparatus, controlled by the bigger tribal groupings, changed the equation to favour the latter.

That was perhaps one of the few occasions that the bigger tribal groups agreed on any major contending issue that cut across board. With the oil producing states in minority and little or no voice at all at the decision making level, the major tribes got away with such injustice.

The scenario was aptly captured by former Foreign Affairs Minister, Professor Bolaji Akinyemi, in a newspaper interview he granted in 2001. He said ‘It is an act of self-deception for anyone to argue that there is nothing wrong with the revenue formula. We have had basically two systems of revenue allocation in Nigeria.

The first system which we practiced during the First Republic allowed the North to keep the proceeds from its groundnut and cotton, the West to keep the proceeds from its cocoa, and the East to keep the proceeds from coal and oil produce.

Then we changed the system so that the Federal Government got its hands on the proceeds from on-shore and off-shore crude petroleum proceeds, and yet we don’t expect the minorities in the oil-producing areas to perceive that as an injustice done to them.

I have even heard some people turning history on its head by arguing that the country was developed on the proceeds of groundnut, cocoa and oil palm. Perhaps, [one could be correct] if you are arguing that the whole is the sum of its part.

But the oil-producing minorities have a point that the rule of the revenue allocation game were changed to disfavor them (Professor Bolaji Akinyemi, COMET, June 6, 2001.”

The situation created not a little restiveness in the Niger Delta which led to agitation for a review of the process. The clamour for resource control by the oil producing states only yielded some dividends with the introduction of the 13 per cent derivation in to the sharing formula even though the agitation was for 25 per cent or more.

This clamour, aside the Federal Government short-changing the oil producing states, was fuelled by years of neglect and the continuous environmental pollution and degradation that oil exploration activities engendered. Farmlands, rivers and creeks from where the people derive their livelihoods were rendered useless.

Unending gas flaring in our backyards not only degrades the environment but makes nonsense of daylight and night time. There have been reported cases of birth defects as a result of the severe pollution caused by oil production.

The effects are brunt borne by communities who live in these areas, yet somebody somewhere thinks otherwise. Shouldn’t there be compensation for bearing the brunt of producing the wealth of the nation?

Aside, it has been said time over and there is no further gain saying that the present states structure is unviable and nothing but a drain pipe on the economy. I have written in the past on the need to encourage and probably legislate on the merger of states which have proven to be unviable.

Just like the consolidation in the banking sector in 2004, a state that does not generate an IGR of at least fifty per cent of its annual expenditure should be regarded as fiscally unviable. It is also being advocate that each state should get the corresponding ratio of its contribution to the nation’s wealth.

Governor Babangida Aliyu’s exasperation is only a confirmation that state governors do nothing but wait for the end of the month to collect their share of the revenue; pay salaries, take care of their ever increasing retinue of aides and thereafter go to sleep. So, what happens if and when the oil dries up?

After all, it is not an inexhaustible resource. What plans are being made for any eventuality? The Northern governors should see the present arrangement as an opportunity to look inwards and develop whatever God has placed in their domain.

In fact, I believe they should take up the challenge, be more creative in their thinking and develop their environment such that one day they can make a mockery of the huge funds their counterparts in the oil producing states have collected with little or nothing to show for it. (This is a topic for another day).

Inadvertently, the Northern governors’ position on the revenue sharing formula may be stoking a fire which they may not be able to control. They are already sharing the sentiments and helping the cause of agitators for a Sovereign National Conference who say the nation has to be restructured.

Invariably, questions would also arise on the lopsided distribution of local government councils in the country foisted on us by the military, which, no doubt, is biased in favour of the North. The local government councils also have a share in the revenue allocation.

So, the northern states have an advantage in this area. How do you explain a situation where Kano State has a total of 40 local governments while Lagos State with a high population density has only 20? There is a whole gamut of yet unresolved issues that need to be addressed.


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