By Dr Akinwumi Adesina
I would like to congratulate my dear brother and friend, H.E. Oluwarotimi Akeredolu, SAN, on his well-deserved re-election as the Executive Governor of Ondo State. Your renewed mandate by the good people of Ondo State, is an undeniable mark of confidence in your remarkable leadership.
Thank you for greatly honouring me with an invitation to deliver this inauguration lecture. My lecture today is titled: “Towards a New Nigeria: From Federal Fatherism to a Commonwealth”.
Let me be clear from the onset that I speak for no one, I speak about no one, I speak for myself, from my heart, about my country, the nation of my birth, for which I have a relentless passion and longing for its glorious future, not too far from now. It has been a long time Governor “Aketi” since our student days at the great University of Ife, where we always say “great”. Today, I say to you “Aketi”: “Great”! – congratulations!
Your Excellency, Governor Akeredolu, like an athlete on the 4th and final lap of a 400-meter race, you must now run for the home stretch with your eyes fixed on the finish line that is ahead of you.
Race for legacy
It is a race for legacy. A legacy, for you, a legacy for the people of Ondo State. You stand today as Governor of Ondo State, for a second time, by the grace of God. Be the instrument to change things, more radically. Make your second term one of double blessings for the people.
Make growth more inclusive. Harness the dynamism and entrepreneurship of the youth and the power of the industrious women of Ondo State. This is the time to consolidate. This is the time to readjust. This is the time to move at a pace faster than you ever have. There is always a tendency for complacency during a second term, with the pressure of running for re-election no longer a factor. In such situations, the sense of urgency can easily evaporate. Therefore, with an eye on history, this is the time to reignite your vision. When the pages of history are turned, let them be turned to remember you for the exceptional good that you have done for the people of Ondo State.
As a Minister of Agriculture in Nigeria, I had the great opportunity to work with all the state governors and state governments. When I launched the Agricultural Transformation Agenda that revolutionized Nigeria’s agriculture and food security, and turned agriculture into a business, I recognized that success required that I worked very closely with all state governments of the federation — regardless of party affiliation. Without the States, there will be no Nigeria.
Therefore, Nigeria can only be as strong as its constituent States. Ondo State is rich in resources. Consider that it has the second-largest deposits of bitumen in the world. With an estimated 37 billion barrels of bitumen reserves, the bulk of which is found in Ondo State, this vital resource remains untapped in Nigeria (Source: The State of the States Report, 2018).
Given its vast resources in bitumen, Ondo State should have the best roads in Nigeria. But its roads are barely tarred with bitumen. That is the irony of Nigeria: it imports what it has in abundance and leaves its own resources untapped. The total value of bitumen reserves in Nigeria could be worth up to $1.5 trillion. With an estimated 16 billion barrels in Ondo state, the potential state wealth from bitumen alone could be worth $657 billion.
The paradox however is that Nigeria spends over 300 billion Naira importing bitumen. The publication The State of States (2018) shows that the vast deposits of bitumen can help Ondo State break into the asphalt shingles market that is estimated to be worth $10 billion globally by 2022 (The State of States, 2018 edition).
Ondo State also has abundant deposits of metals and minerals such as granite, gold, marbles, gemstones, lignite, and diorite. The State has one of the largest gas deposits in the world. It could also become a leading exporter and processor of cocoa and earn at least $1 billion per year (Source: The State of the States, 2018 edition, by www.YourBudgit.com). But nobody eats potential.
Ondo State’s wealth is not seen. It is locked under the ground. The state ranks number 13 of the top 20 States in Nigeria in terms of its GDP, estimated at $ 8.4 billion. That is the irony of Nigeria’s states: They are poor in the midst of plenty. They do not maximally explore or leverage what they already have in abundance. The Federal system of monthly grants has paralyzed them. With stupendous resources, all concentrated at the centre, states are ever dependent on the centre. With the magnetic field of federal revenue allocations, states are constantly pulled, powerlessly into perennial dependency.
State Governors now spend more time in Abuja than they do in their own states, seeking the monthly federal manna. This financial pilgrimage creates a sense of helplessness and overt dependency on the centre. States must become financially independent of the centre in Abuja.
The USA from which Nigeria derived its federal system, is essentially a coercive federalism. The federal government uses conditional grants to states to mainly support social, infrastructure and insurance programs. Essentially, these are ‘carrots’ to get the states to do what the centre expects.
Nigeria’s system is essentially a revenue sharing system. To be clear: only three states in Nigeria can survive without a Federal Revenue Allocation.
This is a Federalism of fiscal dependency. It is a Federalism that is fiscally unhealthy for the states and the Federal Government. Because Nigeria depends on oil for over 70% of government revenues, any decline in the price of oil creates fiscal and economic volatilities that reverberate across the states. What’s needed is greater economic and fiscal autonomy for the States. The issue is less about state or regional autonomy, but financial and economic viability of Nigeria’s constituent states.
If Nigeria were to be a conglomerate firm, it would not be economically viable because 92% of its constituent ‘subsidiary companies’ are not viable without the support of the holding company. Nigeria’s federalism does not grow its constituent entities. It simply makes them perpetually dependent. The Nigerian system is therefore not Federalism … but ‘Fatherism’. The agitations for decentralization can be understood when viewed in the light of a craving for greater autonomy.
Greater fiscal self-reliance
But let us face it, political autonomy is meaningless, unless it is backed by greater fiscal selfreliance at the state level. Nigeria has an estimated 87 million people living in extreme poverty. You cannot tax people who can barely afford to eat. This debilitating poverty makes the country highly vulnerable to social and political risks. And it provides fodder for anti-social behaviour and recruitment by insurgents and terrorists. Poverty provides supermarkets for terrorists.
The level of indebtedness of Nigeria is extremely high, at N22 trillion. The debt stock of states is over N4.1 trillion. The three states with the highest revenues also have the highest levels of debt. Without incomes and rising debt, many states are essentially not viable. Nigeria’s inequality is also extreme. Over 55% of the youth do not have jobs. Rural areas are now zones of economic misery with high rates of poverty and extremely high birth rates. This double whammy continues to perpetuate an inter-generational transfer of poverty. Poverty, co-mingled with high levels of unemployment and underemployment has led to an astonishing rise in crime, banditry, and kidnappings.
Great dangers of leadership
Sometimes leaders think all is well when it is not! One of the great dangers of leadership is to rely on others to tell you what is going on. Effective leaders must connect themselves.
You can delegate tasks, but you cannot delegate your vision and responsibility. Transparency is the core of accountability. Citizens have the right to know. Today, therefore, there is a greater need for e-governance systems to enhance transparency and accountability to the people. That is people-centered governance. That is why the African Development Bank is developing a public service delivery index that will rate governments on the quality-of-service delivery for citizens. Participatory tax-based financing systems demand participatory governance. While tax rates are low in Nigeria compared to several African and non-African countries, this is not a justification to increase taxes.
Norway’s tax to GDP ratio is 39%. In Singapore, the tax to GDP ratio is 13.2%. Nigeria’s tax to GDP ratio is 6.1%. It is easy to make the comparison and say Nigeria needs to raise its taxes to similar levels as in Norway or Singapore. But in Norway, like all the Nordic countries, education is free through university. Singapore, a country that had 1/3 of Nigeria’s per capita income at its independence in 1965, has today 100% access to electricity and 100% access to potable water.
Also think of the following: the per capita income of Norway is $68,000, while that of Singapore is $ 65,300. Nigeria’s per capita GDP is just $ 2,250. Taxes must therefore take income levels into consideration. The rich must pay more, but we cannot tax the poor to death. We must distinguish between nominal taxes and implicit taxes — taxes that are borne by the people but are not seen or recorded. Truth be told, Nigerians pay one of the highest implicit tax rates in the world.
Many Nigerians provide electricity for themselves via generators; they repair roads in their neighborhoods, if they can afford to. There is no social security system. They provide security for their own safety. They provide boreholes for drinking water with their own monies. Governments simply transfer their responsibility to citizens. When governments or institutions fail to provide basic services, the people bear the burden of a heavy implicit tax. If people pay taxes, governments must deliver services. The public service is the engine of government. The more efficient it is, the better government runs. The slower and more bureaucratic it is, the slower governments deliver. Governments should set high performance targets for public service and be held accountable.
If the people do not see tangible delivery in terms of improved quality of services, they should demand for them. That is why the African Development Bank will support the development of public service delivery indices for state and federal governments in Nigeria.
There is an urgent need to diversify the source of financing for states across Nigeria. Just take a look at the Nigerians in the diaspora and what they hold in resources. The value of remittances to Nigeria in 2019 was $24 billion. Compare that to the value of crude oil exports at $48 billion. Remittances to Nigeria accounted for 50% of the value of crude oil exports from Nigeria.
It is clear: Nigerians in the diaspora are Nigeria’s new oil. State governments should float diaspora bonds targeting specific investments in their states. States can match the diaspora resources to finance infrastructure development.
We need a better way of supporting States to finance critical infrastructure. While many roads are federal roads, the challenge is that they pass through state boundaries. The poor condition of some of the Federal roads negatively affect the economies of the states. The very high cost of construction makes many of the roads too expensive for the States. As a result, critical roads take forever to complete. People in the states do not care whether a road is a federal road or a state road.
They just need good roads. We must learn from others and deliver quality infrastructure, faster. For a comparison, the Golden quadrilateral road project, the largest in India, with a length of 5,846 kilometers, with 4-6 express lanes, was started in 2001 and completed in 2012 — in just 11 years. The total cost? $13.2 billion or $2.2 million per kilometre. In Nigeria, the East-West road, of only 337 kilometres, is one that has been on the books for decades. Originally estimated to cost N211 billion in 2006, its cost has since risen to N349 billion, with estimates that it may cost up to one trillion naira by the time the road is eventually commissioned.
For a 337 Km road, that is a cost of $2.7 billion or $8.1 million per kilometre. It’s been 14 years and the road is still not completed.This is also the case with the Lagos-Ibadan express way, a road of only 128 kilometers. It is time for governments to strongly embrace the private sector more strategically and transition into Public-Private Partnerships for all major infrastructure projects. The Federal government could also allow states to own these roads by delegation. This will allow the states to support their construction by utilizing development finance institutions to provide cheaper sources of finance to complete these roads.
I am delighted with the progress Nigeria is making of recent on railways. The recent launch of the InfraCo to mobilize 1 Trillion Naira for investment in infrastructure, under public-private partnership, is highly commendable. It will be the first such fund in Africa. This should help support infrastructure development across the states. If states focus on unlocking the huge resources they have, based on areas of comparative advantage, they will rapidly expand wealth for their people. With their increased wealth they will be able to access capital markets to secure long-term financing to fast-track their growth and development.
States that adopt this strategy would have less of a need for monthly trips to Abuja for grants.
Instead, part of their federal revenue allocations can be saved as internal ‘state sovereign wealth funds’. This can then be used as guarantees against borrowings from capital markets.
Restructuring should not be driven by political expediency, but by economic and financial viability. Economic and financial viability are the necessary and sufficient conditions for political viability.
Surgeries are tough. They are better done well, the first time. The resources found in each state or state groupings should belong to them. The constituent entities should pay federal taxes or royalties for those resources. The achievement of economically viable entities and the viability of the national entity requires constitutional changes to devolve more economic and fiscal powers to the states or regions. The stronger the states, or regions, the stronger the federated units. In the process, our union would be renewed.
Instead of a Federal Government of Nigeria, we could think of The United States of Nigeria or The Commonwealth of Nigeria. The old will pass away for the new. We would change the relational mindset between the states and Abuja: the fulcrum would be the states, while the centre would support them, not lord over them.
With good governance and better accountability systems, and a zero tolerance for corruption, more economically stronger constituent states would emerge!
We would unleash massive wealth across the states. It would be a commonwealth. Wealth for all, not wealth for a few. A New Nigeria would arise! We will need all of us — not some of us. From the flickers of fading longings of forgotten rural villages, to our boisterous and dynamic urban areas; from the sparks of desire in the eyes of our children, to the heartbeat of hope of our youth; from the yearnings of our women and mothers, to the pride in the heart of fathers for a better tomorrow, and the desires of the old that our end would be better than our past; from the hard-working street vendors and small businesses to the largest business conglomerates — we must create a movement of hope. Hope for a better Nigeria! Not a Muslim Nigeria. Not a Christian Nigeria. Not Eastern Nigeria, Western Nigeria, or Northern Nigeria, but one Nigeria – a New Nigeria.
A New Nigeria, powered by torrents of hope, trust, equity, fairness, and wealth at every level, in every state … by all and for all. We have the capacity to do this and make it happen. We must rise above mistrust and divisions and make history. Not the history that is written about us, about Northern Nigeria, Eastern Nigeria, Western Nigeria; not the history of divisive political parties; but a new history that we commit to write for ourselves – the history of a New Nigeria — a nation where majority prosper, not just a privileged few; a nation that provides real opportunities for the youth. A nation where equality of opportunities for women is a reality, not a dream.
A nation known for wealth, not poverty. A nation set on a hill whose light will never be hidden. A New Nigeria that we all are proud to call home. So, help us God! May the same God bless you, Your Excellency, Governor Akeredolu. Thank you very much. God bless you all.
*Speech Delivered By Dr Akinwumi A. Adesina, President, African Development Bank Group, on The Inauguration of His Excellency Rotimi Akeredolu, S.A.N, Executive Governor of Ondo State, February 23, 2021 Akure, Ondo State, Nigeria