The APC report on fiscal federalism

IN its report on fiscal federalism, the All Progressives Congress (APC) Committee on Restructuring headed by Governor Nasir el-Rufai of Kaduna State unequivocally acknowledged the demands of Nigerians for the restructuring of the country. The APC initiative was in response to the sustained public outcry over the current, grossly unjust and hypocritical system that negates the cardinal principles of federalism. Ordinarily, the idea of restructuring should not have warranted unnecessary debate and delay if successive administrations in the country had not played the ostrich while the roof of the Nigerian house was literally on fire, and refused to appreciate that every nation remains a work in progress. Indeed, if the governing APC had honoured the critical provision in its manifesto on restructuring which encompasses fiscal federalism or what some stakeholders in the Nigerian project have dubbed resource control, the country would no doubt have made significant progress since 2015.  In the existing order, the constituent units of the federation run like beggars to the centre for mere handouts, whereas natural resources of high-yielding revenue potential are domiciled in their jurisdictions.

On the assumption of office, the Muhammadu Buhari government had a quantum of reports from past national conferences with far-reaching recommendations that should have guided it in addressing the issue of fiscal federalism. For instance, in its report, the 2014 National Conference recommended that the government set up a Technical Committee to resolve the appropriate percentages for revenue sharing. Before then, there were the 1994/1995 National Political Reform Conference (NPRC)  and the 2005 NPRC as part of efforts to tackle the jigsaw of fiscal federalism and other volatile issues. But the Federal Government failed to muster the necessary political will to act upon them, despite the huge of sums of public funds sunk into them.

In the midst of the laissez-faire attitude at the centre, isolated efforts have sometimes been made by the states to contest some nagging issues concerning fiscal federalism. One of this was a suit by Lagos State challenging the Federal Government over the control of inland waterways, in which it was able to secure a favourable judgment. In the Second Republic, some states challenged the Federal Government over its plan to forcibly acquire land, a major financial and economic resource, under the Federal Low-Cost Housing Scheme. The action revealed the rotten underbelly of the convoluted federal arrangement in the country. Similarly, about 15 years ago, the 36 states jointly challenged the power of the Federal Government over issues bordering on the waterways. This led to the Supreme Court judgment on the littoral states, and the onshore and offshore dichotomy.

The subsisting revenue formula anchored on Section 162 of the 1999 Constitution (as amended) is based on population, equality of states, internal revenue generation, landmass, terrain and population diversity, with special 13 per cent provision for oil-producing states. The formula is predatory and parasitic; it is all about resource sharing and not generation and management. It kills the initiative. It is no wonder then that petroleum exports, which accounted for only 10 per cent of export earnings in 1962, now account for about 90 per cent or more for a country that had ample opportunities to diversify its economy and restore the lost glory in agriculture,  its economic mainstay at Independence in 1960. Therefore, the recommendations in the el-Rufai committee report, including the one on fiscal federalism, are instructive.  They seek to empower states to control natural resources within their respective territories and only pay taxes or royalties therefrom to the Federal Government. It is only proper, as espoused by the report, to amend Petroleum Act, LFN 2004, Nigerian Minerals and Mining Act (2007), Land Use Act (1978) and Petroleum Profit Tax Act, 2007. However, the ghost of the onshore/offshore dichotomy must not be resurrected.

An upward review of the current revenue sharing formula in favour of the states through the amendment of the Allocation of Revenue (Federation Account etc.) Act (2002) should be regarded as sine qua non. The government must neither isolate nor distance itself from the popular wishes of the  Nigerian people. We wholly align ourselves with other stakeholders in demanding the implementation of the recommendations, and urge the National Assembly to liaise and cooperate with the Executive in ensuring their quick passage, along with others  on power devolution and state police.  The ample gains of the First Republic when the principle of fiscal federalism held sway have bolstered the campaign for a re-ordering of the existing system that encourages lethargy, inertia and lack of foresight and ingenuity. Surely, an end must come to the absurdity created by military interregnum and sustained by a gluttonous ruling class so far. It is time to enthrone a system that guarantees fairness, equity and justice. This is the only way to stave off the impending implosion in the country.