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Federalism, revenue allocation and restructuring in Nigeria

By Sylvester Odion Akhaine
27 December 2021   |   3:28 am
Since the beginning of Nigeria’s fourth republic in 1999, the public sphere has been inundated with calls for restructuring of the Nigerian state accompanied by a dint of affirmation and denial about the health ....

Since the beginning of Nigeria’s fourth republic in 1999, the public sphere has been inundated with calls for restructuring of the Nigerian state accompanied by a dint of affirmation and denial about the health of the polity. Remarkably, however, there have been a couple of state-led efforts to remedy the contradictions besetting the Nigerian state. Both the Obasanjo and Jonathan administrations convened national conferences in 2005 and 2014 respectively to address the challenges of the Nigerian state. One was deadlocked; the other produced far-reaching recommendations left to gather dust in the presidential trash can in Aso Rock, the seat of the Nigerian government.

The contradictions of the polity, unresolved, have continued to complicate in a dialectic continuum, perhaps, until their eventual resolution. A fundamental element of the contradictions is what Alfred Stephan has called the “rightfulness of the units”, in other words, the character of the Nigerian state. Engagement with these contradictions has spawned multiple characterisations, namely, “restructuring”, “constitutional reform”, “true federalism”, “skewed federalism”, “quasi federalism”, “unitary federalism” and “feeding bottle federalism” among others. Besides, it has also engendered editorial advocacy in some Nigerian news media, such as the Lagos-based The Guardian and The Punch.

The above political conversations are the pre-occupation of Salisu Yekini’s Federalism, Revenue Allocation and Restructuring in Nigeria: A Historical Perspective. The book is organised into eleven chapters, each of which engages with an aspect of the federalism question. Chapter one focuses in three short sections on the meaning of federalism. The core definitional features of federalism, namely, Latin origin, power relations, coordinacy, democratic principles, management of diversity, legal relationship, mutual recognition of frontiers and power, and the desire for cooperation are illuminated. Somewhat, the author finds an anchor in Justice Hugo L. Black of the United States Supreme Court whose sense of federalism is, “A proper respect for states functions, a recognition of the fact that the entire country is made up of a union of separate state governments and a continuance of the belief that the national government will fare best if the states and their institutions are left to perform their separate functions in their separate ways” (p. 3).

Equally, the chapter engages with the all-important question of revenue allocation and its post-independence trajectory, the provisions of the extant 1999 Constitution as amended, and its deviations over which The Punch editorial of May 23, 2012, is summoned. Notably is the chapter’s expose on the controversial restructuring debate. It provides connotational elements of restructuring that include systemic overhaul, power devolution, and routinised systemic lubrication. The succeeding chapter two is a presentation of the conceptual outputs of the theorists of federalism, western and local, especially Nigerian theorists. In this endeavour, the essentials of their thoughts are captured. As the book goes, this chapter is the theoretical matrix or what might be called the intellectual “bottom pot.”
Chapter three is about the federal debate and harnesses the divergent views on federalism, both theory and praxis, in the context of Nigeria’s multiple contradictions. They are the views of renowned Nigerian public intellectuals, statesmen, and editorials, namely, professors, Jonah Isawa Elaigwu, Akin Oyebode, Itse Sagay, Chief Emeka Anyaoku, Dr. Gbenga Ojo, Atiku Abubakar, Senator Ike Ekweremadu, Odilim Enwegbara, and The Guardian. The viewpoints of these individuals converge around the dysfunction of the Nigerian federation, its remediation by a return to truer federalism, and subtle reification of the point that there is no single federal model and therefore the Nigerian given should be embraced. Chapters four and five are historical excursions in revenue allocation and adjustments in Nigeria, from the Phillipson Commission of 1946 to the Okigbo Commission of 1980.

These chapters foreground the goal of revenue allocation, that is, attainment of good governance, protection of the autonomy of the component units, and promotion of political stability. Although R. J. May outlined these points among others in his 1969 book, Federalism and Fiscal Adjustment, Nigeria gave an accent to efficiency and equity in the allocation of the country’s scarce resources. But on the strength of the historical information in these chapters, Nigeria’s allocation process has been plagued by inconsistency and political meddlesomeness in ways that have atomised the federal essentialities of the Nigerian state and its natural asymmetrical turn. This became worse under military rule.
After an initial reversion to the pre-1966 allocation formula of 50 percent derivation, the carving of the existing region and the recommendation of the Dina Committee of 1968 open the floodgate to the politicisation of revenue allocation and the atomisation of the federal ingredients of the Nigerian state. Remarkably, Decree 9 of 1971, transferred all rents and royalty on offshore mines, both territorial waters and continental shelf, to the central government, and which was only resolved geopolitically, not financially, under the Obasanjo administration with the enactment of Allocation of Revenue (Abolition of Dichotomy in the Application of the Principle of Derivation) Act, 2004.

The Marketing Board Reform of 1973 resulted in the transfer of power to fix prices for export crops from the states to the central government, the Uniform Tax Decree No. 7 of 1975, and above all, Decree 36 of 1985 ensured the transfer of revenue from the mineral producing states to the central government, the 2 percent accruing to the states from the federation account based on the mineral produced. It also applied to the 1.5 percent from the mineral-producing areas (pp. 77-80). Details of military fiscal policies are in chapters six and seven of this book.
To be continued tomorrow.
Akhaine is a Professor of Political Science and visiting member of The Guardian Editorial Board.