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Prudence, accountability and fiscal federalism

By Editorial Board   |   01 February 2017   |   3:22 am
PHOTO: nta.ng

PHOTO: nta.ng

When former interim chairman of the All Progressives Congress (APC) in Bayelsa State, Richard Kpodo, the other day asked the Federal Government to investigate how the 13 per cent derivation fund to the states in the Niger Delta oil producing area has been spent over the years, he echoed a general observation that the huge money received by the various governments has not reflected in the area’s development. The consequence, of course, has been militant agitations and ‘the breaking of oil and gas pipelines because there is so much anger and hunger in the land.’ As an opinion leader from the Niger Delta region, Kpodo can be presumed to know a thing or two about the prudence or otherwise of public spending in the region. To the extent of his and other Nigerians’ concern for probity, accountability, and judiciousness in public spending for public interest, therefore, any such suggestion as he has made must be taken seriously. However, in a federation where the substantially self-accounting units of government have constitutionally guaranteed powers and authority, it is doubtful that the Federal Government can lawfully investigate the spending behaviour of any state government as far as the money lawfully belongs to that state.

Concerned citizens may need to seek another legal means to compel the states concerned to render accounts. The Freedom of Information Act, 2011, for example, empowers any citizen to demand information from any public institution in furtherance of public interest. And such institution must provide the information within stipulated time, or give valid explanation for its inability to do so, or failing in both respect, be liable for legal sanction.


Having said this, the idea of the government at the centre ‘graciously granting’ to a state a meagre 13 per cent of huge revenue generated from the mineral resource(s) of that federating unit, is indefensibly absurd.  For the umpteenth time, the point must be made to any one honest enough to believe in, and accept the spirit and the letter of a federal system of government that the generation by and sharing of revenue among the federating units is at the heart of fiscal federalism. It is arguably, the most contentious aspect of federalism or it is all about who gets what and why.

The Nigerian state today appears an aberration within the universal understanding of the principle and practice of federalism. In terms of revenue  allocation formula, the  country has  regressed from the more honourable practice of  50 per cent  to the  federating  parts, 20 per cent to the  central government,  to the present intolerable  formula of  54.68 per cent to a  Federal Government that in reality owns nothing by itself except what it appropriates from the federating units, and 26.72 per cent and 20.60 per cent to  the states and the local  governments that own  land  and other natural resources. Fiscal federalism, any way it is implemented has more than economic impact and implication; it has political and social impact too. And in Nigeria, this fact is even more glaring.

The negative impact of the crooked revenue allocation structure is well documented and obvious.  The states lack the financial muscle to assert themselves as constitutionally granted. They are therefore amenable to the political pressure, whims and demands from a well-resourced, domineering, but distant central government. The states and the local governments are supposed to be closer to the people at the grassroots, better positioned to appreciate the needs of the people and deploy resources judiciously in matters of health, basic education, and agriculture. But whereas, in  Part III,  Fourth Schedule (2)(b) the functions of  a local government  council includes ‘ the development of  agriculture  and natural resources’  it  pointedly excludes ‘the exploitation of minerals’ which, by all  good reasoning, yields  huge revenue for development. Thus, financially dependent states are unable to serve and to service their constituencies as constitutionally required of any government worthy to be so called. In the worst scenario playing out lately, they go borrowing from the central government to meet their obligations. But in truth, it is the very money that derived from their natural and other resources.


Item 39 of Part II, Second Schedule, Part I of the 1999 constitution of the Federal Republic of Nigeria may rank as the most atrocious, most anti- federalism of its provisions as it exclusively puts under federal legislative authority ‘Mines, and minerals, including oil fields, oil mining, geological surveys, and natural gas.’

The agitation for fiscal federalism will never go away until Nigeria’s federal system lives up to the spirit and the letter of the concept. As once suggested by this newspaper, this APC-led government must live up to its ‘change’ mantra and do what is manifestly good for Nigeria. To this end, the government should study and begin to implement the recommendations of the 2014 National Conference. There is no new thinking required. Only implementation in the best interest of every part of this nation.




  • Mystic mallam

    The only thing that can set Nigeria free is the truth of un-manipulated federalism. Every Nigerian of goodwill and patriotism knows it, those who deny or oppose true federalism do so for very selfish reasons.

  • real

    This article is on point and has hit the root of Nigeria problems. however I must add that due to lack of leadership, simple solution and progress in Nigeria would not be forth coming. I don’t believe power is given, it is taken and won. right now we don’t have state leaders that are fighting both in words and action to demand true federalism. how many states have filed or even began to talk to the federal government for control or some agreement on solid minerals. how many of those state are even fighting to keep more of their VAT within the state. state rights and true federalism would not be given from the federal government, the state government needs to take it and demand changes.

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