Ogun and revenue allocation formula

At a public forum recently, Ogun State governor, Ibikunle Amosun had this to say on the Revenue Allocation Formula in the country: “Today in Nigeria, the Federal Government takes 54 per cent of the wealth of the nation, the 36 states and Abuja share 26 per cent. But the states are given all the agencies. So, there is pain. Ogun State, as an example, has 70 bureau agencies; most of these agencies require the state to support their activities financially.”

According to Paragraph 32 of the Third Schedule, Part I, of the 1999 Constitution,
“The Commission (Revenue Mobilisation Allocation and Fiscal Commission -RMAFC) shall have power to :
(a) monitor the accruals to and disbursement of revenue from the Federation Account;
(b) review, from time to time, the revenue allocation formula and principles in operation to ensure conformity with changing realities.

Provided that any revenue formula which has been accepted by an Act of the National Assembly shall remain in force for a period of not less than five years from the date of commencement of the Act;
(c) advise the Federal and State Governments on fiscal efficiency and methods by which their revenue can be increased…”

According to reports, the current Revenue Allocation Formula (54% to FG, 26% to 36 states, and 20% to LGAs) has been in force for years and is overdue for review.

There have been agitations for a new revenue formula long before the current government came to power and so it is wrong for anyone to attribute any delay to the new administration. Besides, from the express provision of the constitution, it is the duty of RMAFC to review the formula while the National Assembly and the President ensure it becomes an Act. In other words, the ball is right in the court of the Revenue Mobilisation, Allocation and Fiscal Commission.

There is a general consensus across the country that the formula should tilt in favour of the states, being the real centres of development in the country. The Federal Government is expected to take up only core federal matters. The Revenue Mobilistion, Allocation and Fiscal Commission should, in my view, ensure that in the new revenue allocation template, each of the 36 states receives at least 1.5 per cent from the Federation Account, as against the current figure of 0.7 per cent (if we take a simple average for the sake of clarity – because states don’t receive the same amount from the Federation Account).

Today, you have a President Buhari who believes firmly in due process and does not interfere with the functions of autonomous bodies like RMAFC, The Revenue Mobilisation, Allocation and Fiscal Commission should end its years of slumber and perform its constitutional function of giving a new revenue formula to the country.

President Buhari won’t steal or mismanage a kobo even if you allocate 100% to the Federal Government, but who knows who may succeed him and what guarantee do we have that the country will not throw up another profligate administration? That is why things must be done properly and according to the law rather than relying on the goodwill of any administration.

While waiting for the Revenue Mobilisation, Allocation and Fiscal Commission to do the right thing, it behoves on all states to take their cue from the Buhari administration by working on diversifying their economies in order to end reliance on oil in the foreseeable future.

The Economic Confidential, an economic intelligence magazine, in its latest report, has listed Ogun among the five states that improved their Internally Generated Revenues. The National Bureau of Statistics, in its recent report, actually rated Ogun as first among the 36 states in terms of percentage improvement in IGR.

Of course, Ogun State Government could not have achieved such a financial milestone within a space of five years if its helmsman had not been frugal. Every kobo, whether from Abuja or generated within the state, is spent for the purpose it is meant. Of course, there are current financial challenges across the country which have affected all the states.

It should not be lost on anyone, including the Revenue Mobilisation, Allocation and Fiscal Commission, that diversification itself costs money. The states, which share power with the central government in a proper federalism, need resources to (further) open up their economies.

I should end this piece with a word on the argument that resources could also be wasted at the state level. Very well! If, for instance, a state governor decides to steal or misappropriate his state’s money rather than invest it in social services, then his own people who see how some other governors have judiciously spent their own funds will one day rise up against the spendthrift governor.

Surely, it is easier to hold accountable a state governor that is “your own” and lives among you than a president that is “for all” and lives in distant Abuja!
Opeyemi sent in this piece from Abeokuta via densityshow@yahoo.com