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April 18, 2016

Mr. President: Fiscal federalism will end Nigeria’s economic woes

Mr. President: Fiscal federalism will end Nigeria’s economic woes

President Muhammadu Buhari

Recently the National Economic Council after its retreat came out with the proposal for the Federal Government to cooperate with state governments in a bid to achieve far-reaching economic goals for the country.

President Muhammadu Buhari

In a normal environment where everything is not politicized, the move would have been expected to yield the desired result.

Unfortunately, Nigeria is a country where politicians do everything to run down others.

If the current government had control in all the states of the federation, the proposal would succeed like success. But principal officers of this administration know what they themselves have done in the past and would not wish away stiff opposition to anything that would make them succeed.

The opposition would want to see that they hold on to their own. In the last dispensation, the Lagos State Government was vehement in its opposition to federal policies just as at the twilight, Rivers State Government was antagonistic to the Federal Government.

This government would be living in a fool’s paradise if the PDP states promise 100 per cent cooperation in policy implementation of this administration. What this government ought to do to free the nation from the vicissitudes of poverty and cyclical financial doldrums, is to embark on fiscal federalism.

This is what will ginger states to compete in terms of infrastructure, investment drive and development of the resources in their domain.

Asking for cooperation is to say the least, make states lazy. There is certainly no part of the country that is not endowed with the gift of nature to grow its local economy. But as long as the Federal Government holds on to mineral deposits and continues to give hand- outs to states on monthly basis, it will continue to impoverish the states and citizenry. It is the rent-seeking attitude of Nigerian political class and the elites that has held the economic progress of the nation to ransom.

The Federal Government must remove the obstacle that makes states lazy in the utilisation of local resources.

The Land Use Act and the Mineral Resources Act must be repealed and replaced by a people-friendly law.

The law cannot vest ownership on state governors and deny the people direct access to mineral deposits in the same land.

To mine any mineral, an individual has to apply for a mining licence to the Federal Government while the same person building on land will have to apply for certificate of origin from the state government. These absurdities must be dealt with for the nation to move forward.

This government of change must muster the moral courage to face realities and do the needful if it hopes to leave a mark on the sands of governance in Nigeria.

The government must learn a lesson from the founding fathers of Nigeria. In their time, Nigeria, after independence, was on the right path of economic growth and development. It had visionary leaders who were interested in the welfare of the people. They operated a federal constitution that was based on true federalism.

The relationship between the Federal Government and the regions was fiscal federalism. During this period, industries were springing up in every region of the country.

In the North, Ahmadu Bello who held sway was pre-occupied with setting up farm settlements, textile industries etc. It was the same story in the East where Michael Okpara set up farm settlements and a number of manufacturing companies.

In the West, Chief Awolowo, apart from the popular free education, set up a number of industrial estates which attracted several companies from abroad. It is this simple reason that the West is the most industrialised part of the country today.

At this time, the Nigerian economy was in top shape and at take-off stage in economic development.

The Nigerian economy was rated along the same indices with Brazil, Indonesia, Malaysia and the rest of the now talked about BRICS countries.

Then Nigeria had development plans that guided the nation. In the North, pyramids of groundnuts and cotton were part of foreign exchange earning commodities.

In the West, cocoa was found in abundance. It brought pride to the nation. The various regions were autonomous entities and there was competition among the regions on internally generated revenue.

The military intervention and the discovery of crude oil in commercial quantity seemed to have radically altered the course of Nigeria’s economic development.

While the military discarded the fiscal federalism structure of the country and made the states to become federal allocation collectors, the discovery of oil made Nigerian leaders to sleep-walk and refuse to plan believing that the money flowing from the ground will solve all the nation’s problems.

Peter Drucker, the management expert, in his book, The Practice of Management wrote that “Innovation is the specific instrument of entrepreneurship, the act that endows resources with a new capacity to create wealth.

President Buhari and his team must understand that management must always, in every decision and action, put economic performance first. It can only justify its existence and its authority by the economic results it produces.

There may be great non-economic result that is the happiness of the members of the political class, the contribution to the welfare or culture of the ruling class, etc. Yet, management has failed if it fails to produce economic results. It has failed if it does not supply goods and services desired by Nigerians at a price the consumer is willing to pay. It has failed if it does not improve or at least maintain the wealth-producing capacity of the economic resources entrusted to it. Nigeria is a land of ample opportunity and immense possibilities. In a fast changing and evolving world, where weaklings of yesteryears have become economic giants and the strong of yesterday are fading in economic glory and becoming weaklings, Nigeria has a chance to make a difference. Twenty years ago, no development economist would have accepted any theory that postulated the emergence of China, India and Brazil as economic power houses. China is almost the largest economy in the world beating United Kingdom, Japan, France, Germany and Italy.

Nigeria was on the path of greatness at independence. It evolved development plans which saw major development in the country at the early stages of the nation’s development on the plank of fiscal federalism. The first, second and third national development plans were executed but the fourth was abandoned and since then, Nigeria has had no development plan.

Nigeria needs to return very quickly to fiscal federalism if it is to tap into the vision many are seeing for it. If the fourth development plan that was jettisoned was religiously implemented, Nigeria would be singing songs of freedom today. In that plan, the framers said “Since the fourth national development plan is only one in the series of medium term plans intended to transform the Nigerian economy and society over time. Nigeria cannot achieve economic greatness in the present set up, Nigeria must go back to basics, not asking for cooperation of states.

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