Sunday, 9 March 2014
The Fiscal Stifling Of Nigeria’s Non-Oil Producing States By Leonard Karshima Shilgba
NOPS is an acronym for Non-Oil Producing States. The Nigerian state is so presently organized in such a way that encourages dependence of the federating states on disbursements from the federation account. But what is the primary economic activity of the Nigerian state that fetches the needed revenues for the necessary developmental expenditures of states?
The answer is very obvious. Oil revenues (including oil-related taxes) account for more than 90 percent of the total revenues accruing to Nigeria. Here is a conundrum. Nigerian states, by reason of the 68 items on the exclusive legislative list in the second schedule of the 1999 constitution of Nigeria, have been handicapped and severely restricted in their vision and efforts at developing their natural resources, agricultural resources, public infrastructure, and even human resources. They are equally unable to design and enforce physical security that should attract private investments that encourage employment, with the ineluctable reduction of poverty and the enhancement of public revenues through improved public tax revenues.
Section 162 of the Nigerian constitution requires a minimum of 13 per cent derivation for mineral resource producing states. Item 39 of the exclusive legislative list includes “Mines and minerals, including oil fields, oil mining, geological surveys and natural gas” in the list of engagements that Nigerian states cannot even contemplate. And because the Nigerian government focuses primarily on oil exploration and mining, and consequently the majority of foreign direct investments is in this area, the NOP states are being incrementally starved of necessary revenues while at the same time being abused, derided, and despised. If the Nigerian federal government had given the same attention it has done to the oil industry in the development of other mineral resources that are available in all states of the federation, then there should have been a significant improvement in developmental revenues for all states including the NOPS.
We then have a situation where the hands of states are tied and yet they are required to bathe themselves. Oil producing states in Nigeria receive hundreds of billions of naira from the federation account every quarter. Whereas one oil producing state receives more than 10 times what a NOP state receives, the NOP state is expected to provide for its citizens the infrastructure for development and growth that the oil states should be able to provide because of the revenues available to them. And I agree and have written copiously that Nigerian oil producing states deserve even more than they are receiving now. My problem is that the federal government, while retaining the exclusive powers on matters of harnessing our natural resources, has failed beyond oil, and even in the oil sector, it has under-performed in the refining of crude oil, enforcing of environmental standards (as required in sections 16 (1)(a) and 17 (2)(d)), and the development of our gas resources. I am more disturbed that even the little that the NOP states receive from the federation account is generally not prudently invested on behalf of their people. But my emphasis in this essay is not on the devastation of misappropriation of public funds by the Nigerian state governors and public officials. I seek to draw attention to the self-contrived restrictions that have been constitutionally placed before Nigeria’s federating states.
Free up the states
It is my firm belief that if items on the exclusive legislative list are not significantly pruned down, and the concurrent and residual lists are not so clearly defined in phrases that completely remove ambiguities and conflicts between state and federal legislatures we will not have economically viable states.
Lagos state once was the seat of the federal government, which now is the economic center of Nigeria. Historically, Lagos colony was a separate country from the nineteenth century until 1906 when it was merged with the Southern Protectorate, and then later became part of the 1914 unilateral amalgamation. The advantage of semi-autonomy makes Lagos to be the only NOP state with a large economy, having access to huge tax revenues, without any fallback on oil or oil-related revenues. The socio-economic arrangement of Nigeria does not help the federating states to express themselves, not least the NOPS. Even Lagos has had its share of frustrations from the meddlesomeness or outright sabotage of the Nigerian state.
The on-going constitution review efforts will remain just a mollifying elixir on our national conscience if the outcome is not the whittling down of the colossal powers of an incrementally incompetent federal government. Economically viable local and state governments must be the clear objective of the exercise. There are clearly different opinions on pathways to this objective. But I think there should be preponderance of support coalescing about the focal point of state economic independence. The most indicative of such independence is the freedom to legislate on many of those items on the exclusive legislative list. And what should be the test on determination of what those should be? A simple test should be any issue that does not jeopardize Nigeria’s social existence, or which does not affect egregiously the governance of another state, or which should not require more than one state legislating upon for ease of implementation of such resulting piece of legislation.
In a diverse society like Nigeria, diverse in ethnicity, religion, intellectual and social views and beliefs, it is impossible to frame a constitution that is perfectly acceptable to all. But if we work toward one objective—the freedom, economic freedom of the federating units, we shall be able to achieve other equally important objectives, including political equality. Strong state economies with abundant opportunities for all, encouraged by more leverage and latitude allowed states to explore, experiment, and implement ideas, visions, and dreams which are presently being stifled by constitutional impediments, not least being the exclusive legislative list, will ultimately reduce the perception of political offices as trophies won by individuals on behalf of the ethnic groups and religions to which they are affiliated. The shifting politics of zoning is unutterably predicated on this political philosophy of power conquest.
In conclusion, let me remind that the federal government cannot concurrently and sufficiently harness all the resources in this country without the constitution allowing state governments to get involved in exploiting and processing of those resources in their states. If the objective of any constitutional review efforts is not to empower states economically, then let it be known that weak states equal a weak nation.
Leonard Shilgba is an Associate Professor of Mathematics with the American University of Nigeria (www.aun.edu.ng ) and Chair of the Middle Belt Alliance (www.middlebeltalliance.org )