Governor Babangida Aliyu of Niger State is an interesting personality. Since he became governor in 2007, he has remained consistently vocal on national issues even if it means that his views could sometimes be contrary to what the conservative North holds. Whatever anybody thinks of him, Aliyu is one governor who cannot be gagged as it were. But the recent outburst of the governor on the issue of a new revenue formula for the country is one controversy that will subsist for God knows how long.
Aliyu fired the salvo at the recent inauguration of the Advisory Council of the Sir Ahmadu Bello Memorial Foundation. In his speech, the governor, who is the chairman of the Northern Governors’ Forum, lamented what he described as a skewed revenue formula process that favoured the South-south at the expense of the North. He also called for a review of the consideration of the assignment of oil revenues in the continental shelf.
Aliyu’s demand for a review of the country’s revenue allocation is in tandem with earlier insinuation made by the petite and equally controversial Lamido Sanusi Lamido, the governor of the Central Bank of Nigeria. Lamido had linked the ongoing senseless massacre in the North by the Boko Haram Islamic group to poverty.
According to him, this poverty arose from the alleged lopsidedness of revenue to the South. If you do not want to refer to Aliyu and Sanusi as “two of a kind”, there is no doubting the fact that the two highly-placed northerners may have spoken the minds of their brethren up north.
‘Going by the ranging arguments on the issue, it is safe to conclude that nobody is against the review of the nation’s revenue sharing formula; the main point is how such a review would be effected’
Expectedly, these views, particularly the ones expressed by Aliyu, have ignited an inferno in the form of condemnations, accusations and counter-accusations by people who felt that such comments were unfair to the South-south region of Nigeria where 90 per cent of the country’s revenue is derived from. Currently, the revenue allocation formula favours the Federal Government which takes over 50 percent while the state and local governments share the rest with 13 percent allocated to the oil-producing states as derivation.
Going by the ranging arguments on this issue, it is safe to conclude that nobody is against the review of the nation’s revenue sharing formula; the main point is how such a review would be effected. Those who feel that the North needs more money are right. So also are those who feel that the South-south, a region considers as the goose that lays the golden egg, deserves more. But it is regrettable that the whole arguments boil down to cake sharing while nobody is actually talking about cake baking.
For several years now, the arguments in the country have been skewed in favour of cake sharing to the detriment of efforts directed at baking the cake in the first instance. I personally believe that over 50 percent revenue that is currently cornered by the federal government is unthinkable and no longer justifiable in view of recent realities. For quite some time, the federal government has operated like a
“Father Christmas” of a sort with the stupendous and scandalous wealth at its disposal. I quite agree that the federal government should shed some financial weight by increasing allocation to states and local governments. But then, can the states and local governments properly account for what has been disbursed to them in the past? Not quite. Past allocations to states and local governments have either ended up in private bank accounts or spent on white elephant projects that are in turn inflated to give room for embezzlement of funds.
Today, it is quite easy for the North to call for a review of the present revenue sharing formula, but have they forgotten that they have benefited more than their counterparts in the southern part of the country? Let us consider the spread of local governments. It is obvious that the creation of local governments in the country has been skewed in favour of a particular section of the country. That is why each time population census is carried out in the country, the figures are manipulated to favour that particular section. This is one way to justify the huge allocation of local governments to this part of the country. Let us also look at the issue of Value Added Tax, otherwise known as VAT. It is obvious that VAT revenue collection is far higher in the southern part of the country than the North. The reason is simple. Whereas in the South all manners of business, including hotels, bars and others are allowed to flourish without hindrance, such things are alien to the North through the instrumentality of the Sharia law. Consequently, the consumption tax that is paid in the South is very high, while in the North, it is too little. At the end of the day, the revenue accrued through VAT all over the country is pooled together and shared equitably without due regard to those whose areas have contributed more.
Closely related to VAT is the issue of Internally Generated Revenue, IGR. Lagos, with its ever-increasing population, has 20 local governments and 36 Local Council Development Areas, LCDAs. The idea behind the LCDAs arose from the insistence that the state cannot create local governments as enshrined in the 1999 Constitution. As a way out of the logjam, the state had to revert to the original 20 local governments, out of which 36 LCDAs where then carved out for administrative convenience. Sadly, while such a densely populated state as Lagos has 20 local governments, Kano State has 46 local governments. Even Jigawa State, which was carved out of old Kano State, currently has 26 local councils. So in any case, while a state like Lagos generates something in the neighbourhood of N14 billion as monthly IGR, none of the states in the North can match it or even generate half of that. The only major source of revenue to these states is the monthly handout in the form of allocation from the Federation Account to the states.
Some of the states have got used to this monthly ritual that they are no longer looking inwards to boost their IGR. That is source of the problem. Besides, while the South is growing its economy, and paying attention to the education of its populace, the North seems contented with ploughing their energy into religion and ‘breeding’ Almanjiris. It is these Almanjiris that have become foot solders for Boko Haram insurgents.
The fact is that even if the present revenue formula is reviewed and the states have more money to spend, the economic gap between the North and the South will still be there. For one, nobody can abrogate the 13 percent derivation. It can only increase.
It is in this vein that I align myself with the argument of those who are calling for fiscal federalism as a way out of the perennial agitation for a review of revenue sharing formula.
True fiscal federalism means that whatever resources are found in any state or region will be the property of such state or region, which will then control the revenue from such resources and only pay tax to the federal government. If this is put in place, then the onus will be on the states to scamper to develop their revenue base or IGR instead of waiting to share a dwindling cake via the Federation
Account every month. I am sure, if this comes into force, many of those now falling over themselves for such elective office as governors or local government chairmen will do a rethink as many of them are only interested in what they get from the common wealth rather than what they can bring to the table!
