punchng/editorial/a-revenue-formula-nigeria-needs/ A revenue formula Nigeria needs A nationwide consultation by the Revenue Mobilisation Allocation and Fiscal Commission on what it described as “a persistent and often controversial national debate on revenue allocation” is underway. The commission’s chairman, Elias Mbam, says the new template will be ready before the end of this year. As a result, the agency has visited the country’s former military rulers for advice. But Mbam and his team met the wrong people whose roles in entrenching the destructive culture of revenue sharing in our system are well known. This sharing formula is an absurdity in a federal system and should be scrapped. Like every functioning federal state, Nigeria needs a spacious revenue generation policy that will promote self-reliance and not the regular ritual of unjust revenue sharing formula that will further fan the flames of discord. In the United States, Canada and other federal arrangements, states manage their own resources, but pay royalties to the centre. Under the current formula in operation, 52.68 per cent of monies collected and paid into the Federation Account are ceded to the Federal Government; states get 26.72 per cent, and local government councils get 20.6 per cent. Decreed into existence in 1990 and amended in 1992, it has morphed into an Act of Parliament. According to the law, the formula is subject to review every five years. In spite of the anomaly of states rushing to Abuja to collect monthly allocations, many do not see the rationale in giving the lion’s share to the Federal Government. States and rural communities where about 70 per cent of the population reside should be areas for development focus. But Mbam, this time, has raised optimism that his commission “will come out with a formula that will reflect the wishes of Nigerians.” Can Nigerians take his word for it? Though the commission is mandated to “review, from time to time, the revenue allocation formula and principles in operation to ensure conformity with changing realities” and “advise the federal, state and local governments on fiscal efficiency and methods by which their revenue is to be increased,” a sharing formula that gives more money to a distant centre goes against the grain of federalism and the socio-economic realities of the time. Consider these: why do we have federal roads across the 36 states that are not being maintained by the Federal Government, when states are in better stead to manage them? Lagos State claims it has spent N50 billion to repair 117 of such roads; Akwa Ibom State, N100 billion; and Ekiti State, N8 billion; just to mention but a few. Again, some motorised water borehole projects for rural areas are executed from Abuja. Not surprisingly, this is often a conduit for graft and such projects hardly last. The Federal Government runs a poorly-maintained Police force, which cannot respond effectively to mounting insecurity in the land. For this reason, states, on their own, now fund the police. Some governors have, in one gesture, purchased 100 operational vehicles for the Police command in their domain, while they procure communication gadgets and build police stations. However, neither the RMAFC nor the President should determine what each tier of government receives ultimately. It should, therefore, be reviewed in favour of the states and local councils. It is the duty of the National Assembly as spelt out in Section 162 (3) of the 1999 Constitution. It states, “Any amount to the credit of the Federation Account shall be distributed among the Federal, States and Local Government Councils in each state on such terms and in such manner as may be prescribed by the National Assembly.” Unfortunately, this is where partisanship and subterfuge are brought to bear on the equation. Since the skewed sharing template is predicated on the 68 items on the Exclusive List, (federal responsibilities) it makes sense to hand over some of them to the states, which are closer to the people. Revenue sharing is as controversial as elections and census in Nigeria. Northern governors have been campaigning for the removal of 13 per cent derivation, the source of additional funds to the nine oil producing states. According to one of them, the North’s slow economic pace is attributable to the 13 per cent derivation that denies them more revenue. This is illogical, smacks of dirty politics and mental laziness. Such pettiness should not feature when the parliament eventually debates the envisaged formula. If anything, the derivation should be raised. Every state has a resource through which it could benefit from derivation. Indolent states depending on oil revenues for survival should learn from Dubai that has elevated its tourism to a global money-spinner. But why has the present formula endured for 20 years despite our 14 years of democracy? It has prevailed because our lawmakers think of themselves, and not the country. A new formula from RMAFC, then chaired by Hamman Tukur, was crippled by the Presidency in 2003. After President Olusegun Obasanjo had sent it to the parliament, he surprisingly withdrew it, claiming that two versions were in circulation. “It has been ascertained that it is virtually impossible to tell the difference between the versions in circulation,” he claimed. But this was incredulous! The withdrawn formula slashed the Federal Government’s take to 46.63 per cent; states were to get 33 per cent, and LGs 20.7 per cent, using equality of states, population, internally-generated revenue, land mass, terrain, rural/inland waterways, potable water, education and heath as criteria. Now, the National Assembly has a chance to throw away this centralising military legacy and bestow on the country a reconfigured formula, based on reason. Going by sections 136 to 145 of the 1963 Constitution, among other criteria, funds in the Distributable Pool Account were divided among the Regions “in shares proportionate to the respective amounts” of goods consumed in regions while 50 per cent of proceeds from mining royalties and rents, including mineral oil, were retained by the regions. This was the golden era of true, equitable federalism. This constitution encouraged the regions then to engage each other in healthy economic competition, which we nostalgically talk about in our daily agony of how the country missed its trajectory to greatness.
Posted on: Mon, 07 Oct 2013 23:43:15 +0000
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