To highlight some significant events and developments in response to a review of Nigeria as a federal structure, it is intellectually pertinent to present a brief survey of the past to understand the distinct phases through which the nation passed to arrive at its present political state and economic condition vis a vis revenue allocation or resource control.
Some of these historical periods have enjoyed such degree of true federal structure, that in reference to revenue allocation and federalism, not only were great strides made in the promotion of social and economic development, the overall smoothness in the system at both the regional and federal (central) levels over shadowed the negative consequences of the power struggles, and by the late 1950s a myth of Nigeria as a “federalism” enjoyed considerable international credibility.
The revenue allocation issue in the political economy of Nigeria is as volatile as any other national question such as population.
This means that how national revenue is shared among the different components of the federal structure is irretrievably tied to the national question. Hence no broadly acceptable national revenue allocation formula has been put in place since 1947 and which has not generated controversy but had to be made acceptable in the “interest of national unity” this controversy can be amplified with the outburst of Gov Victor Attah of Akwa-IBOM state in response to the supreme court ruling on the onshore/offshore dichotomy case, According to him, if the judgment of the supreme court is implemented, it would mean that they would go home with nothing, where as those that have nothing to contribute, but have a large population and land mass which are the indices for revenue sharing from the federation account will be given the resources from our land to develop their land; and to them, it is not only unjust, it is also wicked and that is why it is unacceptable he therefore solicited the president to make as a matter of urgency a bill to the national assembly which would seek to abrogate the onshore, offshore dichotomy, as that will be in the interest of national unity 1.
However, for many years now the revenue allocation has been interlaced with volatile, which attracted the attention of people within and outside the country.
But the researcher is poised to make his own contribution to the effort towards bringing stability, peace and development in the Nigerian polity and to achieve national unity.
There are problems with devising a scheme of revenue allocation that is nationally understood and widely accepted as equitable. Over the years, various formula as many as thirteen have been tested and each has received some criticisms and resentments from many quarters of the nation state.
Succinctly, it has grown to the extent that it has assumed a thematic issue of national and international status. But there could be some reasons behind this and the following questions become relevant.
The main thrust of this exercise is to unearth the remote causes of dissatisfaction among the south – south in the revenue allocation formulae.
Secondly, to identify the reasons why the allocation principles have defied every pacifying effort.
And finally to explore why many units of the federation are demanding for the control of the resources collectively owned under Nigeria federal state arrangement.
However, this piece of work hopes to give a lasting solution to the disenchantment among the components of the federation.
In the words of Seltiz et. al. (1959) “One of the simplest ways of economizing effort in inquiry is to review and build upon the work already done by others.
This statement, in a nutshell, underlines the entire logic behind the review of literature related materials on a particular discipline. It serves as a stepping-stone, launcher, or an aid to mankind’s bid to push toward the frontiers of knowledge; which itself constitutes the essence of research.
While serving this function, the scope of knowledge is generally amplified and our perception of our worldview as regards the problem at hand will then come to a grasp in an appreciable manner and of great importance to mankind if our knowledge of the context of a particular subject matter understudy is greatly enhanced. It is thus been observed that even acclaimed geniuses who have played decisive roles in the history of social development, the likes of Albert Eistein, Charles Darwin, Karl Max, Sigmind Frend, etc; had to rely on the works of people before them to attain their thoughts knowledge, as widely held, albeit correctly is not and never borne out of vacuum.
Therefore, regarding our subject matter “the revenue allocation principle” and its attendant centrifugal effects on the Nigerian polity, it is necessary that we acknowledge that quite ample literatures have been expounded there upon.
The topic of discourse is very crucial and polemic sequel to the fact that it pricks the toga of Nigeria national unity. Inspite the fact that the issue of resource control reared its head long ago, it resurfaced into the polity following the enthronement of democratic regime in 1999.
According to Okafor Celestine, writing in Vanguard Newspaper of July 14th, 2001, “the battle for control of resources specially oil resources has been a long drawn one. He recalled that by 1914 when Nigeria was amalgamated, a legislation, colonial mineral ordinance was promulgated which ensured on the monopoly on “British and British allied capital” by the while government excluding the local people from taking part in the nations oil sector. So the indigenous people goaded by the local elite did not take it slightly and started agitating for greater participation in the administration and management of the natural resources.
Furthermore, Ralph Nkwokedi maintained in his book; REVENUE ALLOCATION AND RESOURCES CONTROL IN NIGERIA FEDERATION that,
The question of resource control was for the first time I Nigeria raised as a serious constitutional matter during the London conference of 1953 to prepare for the 1954 constitution which reinforced the federal structure in Nigeria and move clearly demarcated power between federal and regional government 3.
Nwokedi further pointed out that the issue of resource control had not in the past generated much controversy in the national politics mainly because during the colonial era and up to the inception of the independence constitution the regions control their mineral resource.
The regional governments then enjoyed certain degree of autonomy that made it possible for them to control their natural endowment.
But contrary to the existing situation Nwokedi contends that the adoption of the report of Raisman Commission of 1958, which recommended revenue allocation arrangement of 50% against former 100%, culminated to the demand for resource control by the regions. Coupled with the advent of the military regimes that eroded and abrogated derivative principle to the advantages of the oil producing areas, which aggravated the agitations.
In his submission in relation to the issue of resource control in Nigeria federation he suggested that Nigeria leaders should address the issue of resource control to give states adequate participation in the development or management of their resource and to enjoy substantial reward from the exploitation of such national resources. This can be achieved by partnership agreement between states and federal governments as well as the foreign investors. Again that they should work out a universally acceptable mode of revenue allocation formula that gives to each state revenue according to its contribution.
However, from his suggestions above, one can solve the problem of resource control. But a keen observer of Nigeria polity and the existing formula was universally accepted based on the voice of majority and considering the nature of Nigeria and nature of their leaders “ATTITUDES PERCEPTION” of the leader, it will be difficult to go by. Nigeria leader “Northern leaders” that wields this political power is devoid of the political will to listen to the voice of the minority moreover as the outcome will not favour his people hence the allocation on population/ land mass.
There’s no gainsaying that the politics of resource control stems from the believe that “the demand for restructuring and resource control is borne out of deep-seated feeling of marginalisation of the people that produce the bulk of the nation’s foreign earnings i.e. oil.
Again, the highlight in the ten point communiqué issued by southern Governors in GUARDIAN NEWSPAPERS OF TUESDAY JULY 9, 2002, they said that they have resolved to fight for a review of allocation along a democratic line as against an imposed one. Remarkably, they also called for a national conference of all of Nigeria’s ethnic nationalities. They described as unacceptable the saddling of the nation with a unitary revenue allocation system inherited from the military .4
Again during the second summit of their conference, held in Enugu on January 2001, which was presented by Governor Chimaroke Nnamani states inter-alia.
That resource control and derivation should hence forth be accepted as the basis of for revenue generation and allocation. 5
Meanwhile, several summits of the southern Governors both in Enugu, Benin and Lagos have given a veritable platform for the actualization of the resource control demand. They argued that restricting ethnic zones without resource control is like building without foundation. The governors unanimously agreed that it would even be better for each of the federation to control their God given resources as was practiced in the first republic when each region developed at its own pace in line with the principle of true federalism.
So also, Godwin Darah writing in African Today magazine on the topic “Niger Delta” the case for Federalism and Resource Control, he made his opinion explicitly that,
The demand for the convocation of a national conference is a peaceful way to resolve all the issues of resource control and true federalism. Power will be decentralized and a slim federal government will emerge. 6
From this it can be inferred that Darah is of the opinion that the idea of convening a national conference that will restructure the statuesque to the advantage of the federating units leaving a slim central federal government as was obtained in any other nation that is practicing federalism will be the way forward for the polity.
The issues of resource control have enjoyed supports from many sympathizers and analyst. The Guardian Newspaper of December 21st 2000, in its front page reported that;
NIGERIA BACKS RESOURCE CONTROL BY STATES. 7 An opinion poll conducted by the Guardian has indicated that a good majority of Nigerians across the six geopolitical zones of the country representing 47.77% of the survey were positive when asked: “Do you support the idea of resource control by the state”.
However, an equally 44.48% of the poll disagree with the idea championed by the south. But 7.46% declined comment.
Having had an in-depth analysis on the force of resource control, the owns is one- one to have an idea of what is expected of a true federalism. In that concept, the work of S.C Ugwu quickly comes into focus in which he in his “federal system” the Nigeria experience where he adopted the Wheare’s view on what a true federal structure should look like thus he opined interalia:-
The general accepted nature of federalism which has endured for long time is the one given by K.C. wheare. He said that the most fundamental and distinguishing characteristic of a federal system is that neither the central nor the region all state government are subordinate to each other, but rather, the various levels of government are coordinate and inter-department. 8
Each level operates directly with the people and helther may arrogate power to its power assigned to the other.
Also in the same work, Ugwu quoted Elaigion who pointed out that in a federal system, the nature and pattern of power sharing between the centre and sub-regional units differ from one country to another, depending on the nature and agreement reached by the multinational units. To K.C wheare, everybody regards the U.S.A as example of federal government. He made U.S.A federal system as a reference point and a model. In Ugwu’s work, he reveals that federalism is a kind of compromise between advocates for a strong central government and those who push for autonomy respect for the right of the sub-regional units. 9
He identified some countries that operates federal system of government which includes, U.S.A, Canada, U.S.S.R, Nigeria, Switzerland and India etc. units of federations are called different names in various countries, while the centre government is usually referred do as federal government. In the contemporary Nigeria components governments are called states likewise U.S.A, but in pre-1967 Nigeria and former U.S.S.R, they are called regions, in Canada and India they are called provinces while in Switzerland they are called cantons.
Ugwu revealed that the existing in balance in the relationship between the federal and the component units has eroded the Nigeria federal system and rendered it defective and perfunctory. So in his own analysis and findings Nigeria federalism does not the principle of true federalism.
In the same vain, Nnokedi in his own findings in revenue allocation and resource control in Nigeria federation opined thus,
It is obvious from the structure of the federation in Nigeria and existing constitutional functions and source of revenue are very much circumscribed and that more powers and revenue are concentrated in the central of federal government. 10
So, the federal government controls virtually all the major source of revenue like the mineral resources including oil, while the state governments are left with grants or allocation that come from the federal and other minor revenue source to work with.
In the other hand, the constitution of federal republic of Nigeria 1999 Amendment Bill of 2001, chapter 1 part 1 section iii part 1 subsection provides thus, “Nigeria is one indivisible and indissoluble sovereign state to be known by the name of the federal republic of Nigeria”.
Sub section 2 “Nigeria shall be a federation consisting of states and a federal capital territory. In relation to the structure, the committee made their recommendations thus;
That Nigeria should continue to remain a federation, clearly recognizing states as a federating units and Abuja as a federal capital territory, but with much power devolved to the federating units with the federal government enjoying a minimum of important powers transcending states jurisdiction. 11
On the issue of revenue, section 162 (2) of 1999 Nigeria constitution provides that;
In determining the formula the national assembly shall take into account the allocation principle especially those of population, equality of states, internal revenue generation provided that the principle of derivation shall be constantly reflected in the approved formula as being not less than 13% of the revenue accruing to the federation account directly from any natural resources. 12
The committee equally recommended
It urged the government to commence full disbursement of the derivation funds to the beneficiary states and thus should apply to all natural resources as prescribed in the constitution.
Meanwhile, the recommendation of the committee was informed by the proposal and petition as well as memoranda sent to them by Nigerians. So based on their observation, findings and judgment they now saw the dive need for restructuring which they made.
Emeka Anyoku in a lecture delivered at the Institute for Policy and Strategic Studies Kuru oh November 1st 200 as published in the Guardian newspaper, he posited that;
The idea of revising constitution should be encouraged and the revised constitution must also contain provision for federalism, decentralization and devolution of power, which can be developed, to accord with the emerging needs for greater autonomy and responsibility at the state and local level. 13
Furthermore, Dafinone David, a senator writing on true federalism and resource control in a paper presented in an international conference defined federalism;
As a system of government where more than one level of government. (Federal, state and local government) the federating units that state government exercise independent jurisdiction within their defined territories these federating units are not sub-ordinate to the central government. 14
He equally stated that “a federation is coming together of different entities for the good of all but not the less of their respective independence. He supported the establishment of true federalism in the country and equally demands for 100% resource control by the ethnic nationalities with appropriate tax paid to the federal.
In the same vein, Abdul Oroh an executive director of C.L.O in an interview with the Guardian newspaper made his views clearly that, “we have a federal system that is not in every way you would want to look at it, operating as a federal structure, now we have a government that is very powerful a federal government that controls all the resource: 16
He further argued that the federal government should increase the 13% derivation to 50%. Oh the issue of resource control, he justified it as being a legitimate demand.
Against the background of resource control by states, the Kaduna state governor Alhaji Almed Markifi who was reported by African today magazine vol. 7 No 9 as an antagonist of the idea. He argued that federal resource including oil is invested in the development of the federation, that it is wrong to hand it over to area of derivation. But a critical inquest on his stand tends to reveal that he is mixing the issue with sentiments.
Also Bala Usman a radical historian from the Northern zone, in his monograph published in Africa today magazine, he made claim that the agitation of resource control by states is baseless. His stand is being informed by ethnic prejudice.
If we have been following the argument of analyst and scholars with sound intellect, we can easily deduce that there’s every need for a restructuring of the statusquo. In doing this, the constitution should be made to reflect the principle of true federalism, which facilitates stability and development in the federation.
1.5 SIGNIFICANCE OF THE STUDY:
As indicated in our literature review and purpose of study, quite a lot of literal work has been devoted to the subject “ANALYSIS OF REVENUE ALLOCATION PRINCIPLES” both in its general sense and with particular reference to the case of Nigeria’s federalism. Most of these dealt with either the various theories of federalism and resource control, the need for a true federalism, the prospects and problems of revenue allocation in a federal system. However, it remains that not much has been done in the area of the contending issues involved. It is in this direction therefore that we would like to view the significance of this study. It is a contribution to the appraisal of the principles of revenue allocation in Nigeria under review 1954 –
1.6 THEORETICAL FRAMEWORK:
In short, knowing that any political inquiry without a conceptual or theoretical frame is usually conceived as an exercise in futility in our discipline, the essence of theories and concepts need not be overemphasized here.
In a work of this nature, it behoves one to adopt David Easton’s System Analysis as one’s tool of analysis in this piece of work. Accordingly, the system theorists defined it as “A system is anything that comprises more than one part with distinct boundaries which are interrelated in an organized unitary whole with more than one distinguished parts that are connected. 15 Systems Theory was first adopted and developed by a German sociologist Von Bertalanty (1991). But David Easton is the first major political scientist who has developed a systematic frame on the basis of the system analysis approach for the study of politics instead of merely adopting it from Sociology and Anthropology.
(Varma. S.P.1999 RVSD)
Easton defined political system as “that system of interaction in any society through which binding or authoritative allocations are made and implemented. 16
David Easton in his analysis treated all political systems as both open and adaptive systems and focused mainly on the study of the nature of the exchanges and transaction going on between the political systems and its environment.
He pointed out that political system accumulate large repertoires of mechanism by which they try to cope with their environment and through which they regulate their own behaviour, transform their internal structure and even to remodel their fundamental goal.
The system operates through the process of input – output mechanism. The system received demand or supports in form of input and pass through conversion process within the system and then take the form of output.
This is followed by feedback mechanism, through which the effects and consequences are put back to the system as input.
Therefore based on the analysis so far, Nigeria federation is a system comprising of many sub – systems or units interrelated and contributing in distinctive manners to the development and stability of the system.
The “Revenue Allocation principle” is a demand from the environment in which the system will put through the conversion process within the system and then take the form of output, which will sustain the system to contribute to the sustenance of the polity.
Meanwhile, in Nigeria federation, the revenue allocation which is supposed to be the lubricant to the system being controlled by the federal government has become the object of conflict in the system. This is consequent upon the failure of the federal government to live up to its functional expectation to the federating units.
The agitation for states’ control of natural resources in their jurisdictions is the consequences of the demand of the federating units for a better deal from the federal government that authoritatively allocates the values for the system.
Therefore, should the federal government maintain equity and fairness in allocating the revenue accruable from these federating units? It will always enjoy the support of the sub systems i.e. component units and the system will be stable.
So system approach becomes a veritable tool in a discussion of this nature.
1.7a METHOD OF DATA COLLECTION:
In the course of this academic exercise, the writer / researcher depends heavily on content analysis hence various text on federalism, Government, Politics, Seminar paper, Journals, Daily News print and Electronic media. Also the U.N.N, E.S.U.T, I.M.T, National- National Archives were of immense importance.
1.8 HYPOTHESIS
The following hypothesis is being formulated.
H1. The inadequacy of the present revenue allocation principle to address the plight of the oil producing areas causes the socio – political crisis for the control of resources by states.
H2. An upward review of the derivation and even development allocation to the oil producing states bears potential to check these centrifugal forces.
1.8 METHOD OF DATA ANALYSIS.
As earlier stated the content analysis of the available data in respect to this work is the method I used in the data analysis. The “CONTENT ANALYSIS” is what the researcher used.
1.9 SCOPE OF STUDY
This study will be confined to the various causes of the agitation of state control of resources and sequence of agitations from Raisman Commission of 1958 till 2002.
The principle in which there are two or more levels or units of government with federal authority representing the whole and act on behalf of the whole on certain matters assigned to it by the constitution. 17
Lucidly, Ibori James; “……to be substantially involved in the activities involving in the extraction of natural resources in their region and if possible to control a major percentage of stake. And like it happens elsewhere in the world taxes can then be paid to the central government. 18
The practice where one level of government turning over a portion of the revenue it receives from taxation to another level of government usually a lower one. 19
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