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On the ‘unviability’ of some states

By Edoba Omoregie
23 January 2023   |   3:03 am
There is a constant refrain in our federalism discussion which suggests that some states in the country are unviable.


There is a constant refrain in our federalism discussion which suggests that some states in the country are unviable. It is suggested that because states have to visit Abuja monthly to receive allocations, some of them can actually not survive without such allocations. I find this belief or conclusion completely out of sync with the design of Nigeria’s federal system. 

Indeed, truth be told, there’s really nothing like “monthly” allocation to the states by the federal government. The latter is no more than a trustee of funds belonging to the federation. If this is properly understood, even the federal government receives “allocation”, as it’s not the owner of the money transferred to; or, to use the colloquial expression, the money “allocated” to it and the subnational levels comprising of the states and local government areas. 

Section 162 of the Constitution is quite explicit about the nature of fiscal arrangement the constitutional drafters have put in place. What’s provided in that section is a *Federation Account*, into which funds or revenue designated as belonging to that Account are to be paid, from proceeds raised from a variety of sources including revenue received from oil sales, VAT etc. 

It is important that a distinction is made between the _Federal Government_ and the _Federation_ in this regard, otherwise many of us will continue to fall into the common error of seeing the States as leeches, or as “unviable” units of the Federation, whatever that means. 
“Federation” in the context of section 162 (and virtually all other portions of the Constitution where the word appears) refers to the entire territory of Nigeria, composed of the federal government, the state government and the local government areas (or councils, as the case may be), each of which is entitled as of right to fiscal transfers from the Account pursuant to section 162 of the Constitution. 

We can raise queries about this centralised arrangement, but not to suggest that because states receive revenue from the Federation Account, some of them cannot survive without such allocation. 

Imagine a scenario where states have to retain a good portion of revenue generated in their domain which are today mobilised into the Federation Account, there would be little or no talk of “viable” states. 

As a matter of fact, there’s ample empirical evidence that all the states in the federation are endowed with sufficient natural resources, including human capital and arable land, to survive as stand-alone countries. Literally all of them are being strangulated by the fiscal federal arrangements put in place in the Constitution. 

This is why federalism reform advocates in Nigeria have continued to seek a radical change of the _status_ _quo_ with a view to empowering the states to retain greater control of their revenue without being required to come to Abuja for monthly “allocation”. 

To close, let me recall the view of a former President of the Forum of Federations which appears to summarise the challenges of our fiscal federal arrangement. According to him, ours is indeed a “unique” system of fiscal arrangement which is awkward, compared with what obtains in thriving federations. 

In summary, what is obvious is that the issue is not about the _viability_ of some states or most of them, but the _backwardness_ of our fiscal federal arrangement which has made states mere appendages of the federal government as it receives far more than a chunk of revenue mobilised into the Federation Account. This awkward arrangement has substantially denied the states, including those said to be unviable, access to their fiscal endowments. 

Going forward, stakeholders must sit down to review the entire fiscal arrangement of our federal system to make the states less dependent on fiscal transfers from the Federation Account, assuming that Account should be retained at all. 
Professor Omoregie is a Senior Advocate of Nigeria (SAN).

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