Anxiety as FG ‘commits’ states’ funds to special devt commissions

• More fiscal strain awaits state govts as NWDC, others take off
• NEDC gets N84 billion from FAAC in six months
• SEDC must seek alternative sources of funding to fulfil mandate
• 50 per cent of ecological funds go to commissions
• Oil companies, mining companies to pay more

Amid falling or stagnating revenues, rising funding needs and the ballooning cost of debt service, state governments may not only lose their fiscal lifeline to emergency development vehicles, but Nigeria may create more channels to funnel away its lean resources.

Month after month, billions of naira would be transferred to the commissions, which may stretch their administrative and overhead expenditures far beyond the contemplation of their establishing statutes as seen in the case of the existing ones, leaving little or nothing left to fulfil their original mandate – addressing special development needs of the regions they were set up for.

This may leave an increasing number of state governments, which must sacrifice a percentage of their statutory monthly allocations for the operations of the commissions, with insufficient resources to fulfil their obligations.

However, of particular concern is the oversight gap in the operational models of the commissions, which are entrusted with enormous resources.

In the first half of the year alone, the North-East Development Commission (NEDC), caught in ridiculous contract scams a few years ago, such as the infamous grass-cutting contract, received N84.15 billion as its statutory transfer. There are other lines of funding for the organisation, including external sources.

At N131.83 billion, NEDC gets one of the most generous allocations from the Federal Government’s 2024 budget. Its enabling Act ensures “an appropriation of at least 10 per cent annual statutory allocations due to the member states of the Commission” from FAAC is due to it as the contribution of the Federal Government to its operation. It is also entitled to ecological funds and value-added tax (VAT) shares.

All the regional commissions may draw from both the controversy and unaccountable hefty budget of their precursor, the Niger Delta Development Commission (NDDC). NDDC, by creation, enjoys 15 per cent of the total monthly allocation of the member states of the commission from the federation account “being the contribution of the Federal Government”.

It also gets three per cent of the total yearly budget of the oil-producing companies operating onshore and offshore in the Niger Delta, 50 per cent of monies due to member states from the ecological funds in addition to other sources such as grants. Last year, South-south, which hosts six out of the nine states covered by NDDC, had a total of N1.84 trillion as allocation. Plus, N435 billion due to Abia, Imo and Ondo, the fringe state members of the commission, NDDC received N341 billion from the first line of funding alone – FG’s contribution.

The new or proposed commissions will be similarly funded. For one, the North West Development Commission (NWDC) would have received N180 billion last year given the N1.2 trillion the seven northwest states got from the federation account. With the addition of 50 per cent of money due to the member states in the ecological fund, grants, gifts and other sources of funds, the NWDC could receive about N300 billion or much more yearly as it takes off.

Stakeholders are already calling for an alternative funding source for the envisaged South East Development Commission (SEDC), which must have been handed 15 per cent equivalent (N102.1 billion) of the N680.6 billion disbursed to the catchment zone last year.  Like others, the states will forfeit 50 per cent of their ecological funds to the commission just as the oil and solid mineral companies operating in the region will equally surrender three per cent of their yearly budget to finance their activities.

Last month, a bill for the establishment of the South West Development Commission (SWDC), which is also structured to enjoy 15 per cent of the statutory allocation of the western states with a bite of the ecological windfall and budgets key oil and maritime companies operating in the region.

Amid the funding arrangement, the government may be expecting too much from the corporate entities in the country through the development commission creation with multiplicity effect across regions. For instance, prospective or current oil companies operating in Imo and Abia may have to remit to both NDDC and SEDC while those operating in Ondo may also be ‘servicing’ the proposed SWDC, when it becomes operational, and NDDC.

Already the federation account and state purses from where the funding is drawn are bleeding with debt overhang, other emergency spending, increase in wage bills and sundry spending. For some, the new norm would exacerbate the fiscal crisis the country already faces.

Foremost Public Administration scholar, Prof Ladipo Adamolekun has urged all stakeholders to support the regional development commissions being created in all the six geopolitical zones, noting that their advantages outweigh any complaints about them.
The eminent scholar, who is advocating that the six development commissions should be transformed into federating units, said the proposal is in tandem with the regional governments negotiated by the founding fathers of the country.

He said, “We should all support this development because it will solve most of the political crises in the country. Besides, I also suggest an adjustment to the federal allocation formula to 35: 65, meaning that the federal government will have 35 per cent while the six geopolitical zones will share 65 per cent equally. And it will now be the business of each zone to share the allocation among the states within their region.

Allaying the fears that deductions of funds meant to run the commissions may have untold impact on the economy of the states, the Director General (DG) of the Development Agenda for Western Nigeria (DAWN) Commission Seye Oyeleye, said, “As per the meeting we have had with the six Southwest state governors, they have shown a serious commitment to the success of that commission and are also willing to commit more if the need be to ensure that even projects that would benefit the entire region are embarked on.”

He also disclosed that the governors of the Southwest have also decided that the DAWN Commission would also continue to exist to play the think tank role for the commission, an indication that for Southwest there is already a template which the past, present and future administrators of the region are working on. So, the deduction is not going to have any economic impacts since it is going to be ploughed back into the developments of various states.

Oyeleye noted for instance that in Southwest, the idea of the board of the commission embarking on staggering projects may be discouraged because there is a template of a proposed railway system that will connect the entire region and which will also touch over 42 towns.

There is also the plan to embark on the reconstruction of major link roads across the region as well as focusing on the rehabilitation of all the dams within the region to bring them to optimal usage for irrigation, electricity generation and other benefits.

He said: “In the management of the funds for general benefits, the incumbent governors have also in their wisdom decided that projects to be embarked upon by the commission would be thrown open for discussion and priority, which must first and foremost address the challenges of the entire region.

According to Oyeleye: “The fear of deducted funds having untold economic impacts on the states may likely not arise in Southwest.”

Speaking in the same direction, one of the regional leaders of Southwest All Progressives Congress (APC), Ayodele Afolabi, said that the N1.5 billion deduction from the source is not easy but since it would be ploughed back into the development of the states to address Infrastructural deficit and environmental challenges, I do not foresee problems and or complains depending on the seriousness of the board of the commission.

According to him, “I believe that the deduction may have a negative impact in the beginning but with time when the infrastructure starts coming, various states would begin to benefit.

“As for the fear of using the commissions to undermine the governors in the future is subjective. It will rather challenge and spur the governors to do more in their various states.”

Speaking in the same vein, the spokesperson of Pan Niger Delta Forum (PANDEF) Ken Robinson, said as long as the deduction is going to be plough back into developing the states “I don’t foresee problems.

According to him, “It will take collaboration, cooperation and understanding for the states to work along with the commission.”

In his remark, National Chairman of the African Democratic Congress (ADC), Ralph Nwosu, while supporting the idea of creating a development commission for each of the zones since that’s mainly for development vehemently kicked against regionalism.

He said creating a regional system the way it is being debated is like adding a fourth tier of government, which would not serve any good interest but merely open an avenue of corruption to some people.

According to him, “Instead of going back to regionalism, the National Assembly should further strengthen the local council by making it independent of governors, who have been undermining it over the years.”

He said the development commission, if properly established and monitored, would spur the sleeping governors to work harder and not regionalism. “All that ADC wants is that additional states should be created in the South East and that something should also be done about the Northwest which at present has seven states. It is either other regions add one more state or it reverts to six.”

Contrary to Nwosu’s position, the National President, Arewa Youth Conservative Forum (AYCF), Yerima Shetima, said, both the development commission and regionalism are what Nigeria needs to come out of its current predicament, which the borrowed presidential system of government plunged it.

He said while the development commissions would ginger the governors out of their laziness, regionalism would encourage a weaker centre and stronger regions like of old.

According to him, “There was no better time in this country than under the Regional Constitution of 1963.

Speaking with The Guardian, a member of the House of Representatives representing Epe, Wale Raji, stated that the proposed South West (SWDC) Development Commission will expand the economic focus of Oodua Investment, incorporating social and political development for comprehensive regional growth.

According to Raji, the Commission will build upon the successes of Oodua Investment, expanding its focus beyond economic development to encompass social and political growth.

He said, “The proposed commission will not only focus on economic activities but will also delve into social and political development, ensuring a holistic approach to regional growth.”

He noted that the Oodua Investment has been instrumental in promoting economic cooperation among South Western states, but the commission will take it a step further.

Raji cited the decision of former Lagos Governor Akinwunmi Ambode’s administration to purchase shares in the Oodua Group for the state government as a testament to the region’s commitment to collective development.

But both NDDC and NEDC are complaining of paucity of funds, accusing the federal government and member states of not contributing a certain percentage of their income to the agencies as specified by the law establishing them.

The NDDC Act states how the Commission shall be funded. Section 14(2) provides that, “the Federal Government shall pay the equivalent of 15 per cent of the total monthly allocation due to the member states of the commission from the federation account, this being the contribution of the Federal Government to the commission; three per cent of the total annual budget of any oil-producing company operating onshore and offshore in the Niger Delta area, including gas processing companies; 50 per cent of monies due to member states of the commission from the ecological fund…” and other sources such as grants and loans.

Apart from the Federal Government, which has been accused of not complying with the provisions of the NDDC Act, some of the oil companies have also not been paying the three per cent of their annual budget as required by law. NDDC alleged that they deducted the first charges before calculating the three per cent from the balance.

It was gathered that NDDC is not only owed about N2 trillion, but the interventionist agency is hugely indebted to its various contractors to the tune of over N1.3 trillion.

Indeed, President Bola Tinubu had only on July 12, approved the agency to source N1trillion loan to fund some of its capital projects in the region.

For the NEDC, the Act establishing it clearly stated that “in each financial year, an appropriation of at least 10 per cent annual statutory allocations due to the member states of the Commission from the Federation Account as the contribution of the Federal Government to the Commission; a sum of at least 10 per cent of the Ecological Fund annually for 10 years; a sum equivalent to 3 per cent of the annual VAT collection as first line charge, to accrue to the Commission for 10 years, notwithstanding the provisions of any other law; such money as may be granted, lent to or deposited with the Commission by the Federal or a State Government, or any other body or institution whether local or foreign; money raised for the Commission by way of gifts.”

There has been a complaint galore from the agency because of non-compliance of both the federal government and member states to the Act establishing the agency. NEDC is currently shopping for N31 trillion to implement its 10-year development master plan.

However, while NEDC is shopping for N31 trillion to achieve its master plan, the Chief Executive Officer (CEO) of BudgIT, Oluseun Onigbinde berated the Commission for having spent N126 billion on overheads.

Onigbinde on his X handle said, “NEDC, which was created in the last administration, already has a personnel cost allocation of N126b, six times the personnel cost of an average Federal University, is this how to bring development to North East?

The Board of Trustees (BoT) Chairman of the All Progressives Grand Alliance (APGA), Chief Chekwas Okorie, while reacting to the funding of the newly approved Southeast Development Commission (SEDC) stated that it should be allowed the latitude to source funds from local and foreign sources.

He maintained that the Commission aimed to solve the infrastructural challenge of the region, stressing that anything short of that could have defeated the essence of the agency.

He also stated that the provision for deduction in allocations meant for states in the region to fund the Commission would increase the financial burden of the affected states and in the long run, impede their developmental strides.

Okorie said: “The main purpose of the Southeast Development Commission is to address the infrastructural deficit of the Southeast geopolitical zone resulting from the devastations of the Biafra/Nigeria war that ended in 1970 (54 years ago).

“The people of the Southeast are celebrating the approval of the Commission by the Tinubu administration because it will mark the first time in 54 years that the Nigerian government is taking any form of practical step to address the Reconstruction aspect of the 3Rs post-war policy declared by General Yakubu Gowon in 1970.

“All Nigerians expect that the federal government will make substantial allocation of funds to the Commission to carry out its mandate. It is not on record that the State Governments in the Niger Delta areas and the Northeast areas are being taxed to fund the Niger Delta Development Commission and the Northeast Development Commission.

“However, it will not be out of place to allow the Southeast Development Commission the latitude to additionally attract or source local and foreign investments with the collaboration and approval of the federal government. Anything short of this will be tantamount to giving the people of the Southeast something with one hand and taking it back with the other hand. It will leave a sour taste in our mouth”.

A university teacher, Dr Euphriam Ogaziri, noted however that the main challenge with setting up the commission was how to find it.

He said that he knew over time that the federal government would look into the resources meant for state governments to fund the commission, especially now that every region has a development commission.

“But I can add that we need to do more. We should allow the commission to source funds on their own as well as make annual budgetary provisions for them. I say this because, the states have barely enough and when you go and deduct from what they have, it is almost like telling them to find alternative ways of survival.

“The way the economy is, especially in the southeast, we are not into manufacturing. What our governments have done here has been to increase taxes paid by people. If you push them further by deducting their allocations, they will force it on the people by increasing the cost of services and tax. So, I am suggesting that there should be a way of capturing the programmes of the commission in the budget and releasing the same in good time to enable them to fulfil their obligations”, he stated.

Ogaziri, who lectures at the Federal University of Technology, added that there must be a way for the commission to make money inwards to enable it to fulfil her mandate.