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Statement: Remarks By Hon. Oseloka Henry Obaze Secretary To The Anambra State Government At The Interactive Session On The Review Of Revenue Allocation Formula Women’s Development Centre, Awka, 20 July 2013

By Mazi Odera
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[Protocols]

On behalf of H.E. Gov. Peter Obi, CON, I wish to once again welcome the members of the Revenue Mobilization Allocation and Fiscal Commission (RMAFC) from Abuja to Anambra State – The Light of the Nation. His Excellency had earlier on, received the RMAFC team led by my dear friend and brother, Commissioner Ezennia Nnamdi Ekweogwu at the Lodge. At that meeting, our governor set the tone for this interactive session.

May I also welcome our revered Traditional Rulers, our House of Assembly members and other political leaders, Town Union Executives, Transitional Council members, and my dear colleagues from the State Executive Council.

So why are we here?

We are here to interact in a constructive engagement with a view to ensuring that our national fiscal policies are proactive, purposeful and that Anambra State's fiscal and fiduciary interests are duly represented and respected. We need to make our case to members of the RMAFC on matters that are germane to the interests and welfare of Anambra State. We in Anambra have many reasons for seeking a revenue formula review.

Certain facts relating to the revenue allocation formula are incontrovertible.

Our extant Revenue Allocation Formula (RAF) is well over 21 years old and needs to be fixed. The formula is begging for urgent attention and review, since the country has grown exponentially, both is its demographics and governmental structures. Today we have 744 local government areas as opposed to 589 in 1992; and we have 36 States as opposed to 21 and our overall national population has grown from 140 million to almost 160 million people.

Anambra State, for its part, is still listed as having a population of 4.5 million when in reality; we have well over 6 million people. Another heady fact is that since 1946 when Nigeria became a political entity, we have had eight (8) revenue sharing review exercises. Still, we have not found the correct fix and revenue sharing quotient.

The ninth review exercise is therefore long overdue and inevitable.

What we seek is equity. For example, in the general ballpark, Anambra gets some N3 Billion monthly compared to Akwa Ibom's N17 billion and Delta's N13 billion from the federation account. There are states that receive far less than Anambra. The dichotomy, in this instance, arises from oil revenue derivation, but states, regardless of the disparate federal allocations, are expected to pay the nationally prescribed minimum wage. They are also expected to make mandated contribution toward shared responsibilities.

A key reason why we seek an urgent review is that though we are into the second decade of our democracy, the extant revenue formula was not set by consensus; was not negotiated, and was not legislated by a representative body. Rather, it was done by a military regime, and by a decree.

Furthermore, there is a stark dichotomy in the number of Local Government Areas (LGAs) in different states. Kano State for instance, has forty-four (44) LGAs as opposed to Anambra's twenty-one (21). No long ago, Lagos State unsuccessfully tried to increase its LGAs as a means of addressing this disparity, and also devolving developmental and dividends of democracy to its grassroots.

The challenge we face, however, is that the extant formula takes into account, LGAs when their status as autonomous federating units are still unclear and not well defined in the 1999 Constitution. From my vantage position, it is beyond debate that we urgently need to sort out our constitutional arrangement, of what our federating units are; we must determine if it is two-tiered – Federal and State – or if it three-tiered – the Federal, State and Local Governments?

As His Excellency Gov. Peter Obi said earlier, we are convinced that the States are the main drivers of our federal system and the fulcrum for our national development. Collectively, the 36 states hold 98.5 percent of the national population and similarly, about 98 percent of the national territory. The extant revenue formula, however, tells a very contrasting story.

Today, based on the so-called Vertical Revenue Allocation Formula, the Federal Government gets some 52.68%; the State Government 26.72% and the Local Government 20.60%. This dichotomy is further exacerbated by the variables for determining the Horizontal Formula, used for State and Local Governments. The threshold equality share is pegged at 40%; population 30%, landmass and terrain, equal share of 5% respectively, social development factors (education, health, and water) 10% and internally generated revenue 10%.

Our grouse with this formula is that you cannot assign such a huge percentage to landmasses that are vastly uninhabited or sparsely populated. Human indices remain the core variable for development and therefore, for revenue sharing.

In light of recent revelations where students from Anambra and the southeast zone who did well in JAMB were being unduly punished by being assigned a far higher cutoff threshold of 139 points, compared to 2 points for some student from Northern States, we are left no option to demand equity in revenue sharing so that we can develop and expand our universities to cater for students for our catchment area. No serious or purposeful leadership at the state level can ignore these vexing realities or for that matter, the need to redress them.


So what do we think should be the right formula?

Across board and all factors taken into account, we see the need for a reform that should realign the present allocation formula and bring them closer to the realities on the ground—including demographics, developmental needs, socio-economic imperatives and internally generated revenue (IGR) realities.

Hence, as Gov. Peter Obi advocated this morning, we feel strongly that the most preferable and equity-based formula should be the 40-40-20 percent ratio for federal, state and local governments. We also need a baseline for every state, which should be covered from the reduction from the present federal allocation. We therefore advocate the setting of a guarantee minimum allocation to the states, regardless of their IGR or derivation earning capacities.

It is noteworthy that Anambra State is further shortchanged because it belongs to the cluster of states within southeast geopolitical zone. Whereas others zone have six states apiece and one zone has seven states, the southeast has only five states. Invariably, the zone is collectively shortchanged and placed at a severe disadvantage.

Let me also cite an example of an unseen disadvantage. Today, the most noticeable bad roads in Anambra State are the federal roads, notably the Onitsha-Enugu Express road. Federal roads in other parts of the southeast zone are similarly in an utter state of disrepair. The paradox we face is that every year, huge sums are voted for the maintenance or construction of federal roads in these parts, yet we do not get the funds. Our Governor has even volunteered to fix federal roads in Anambra, with a guarantee of a refund, all to no avail.

Although we practice a democracy fashioned after the United States, we have wittingly failed to adopt or adapt to their best practices. In the USA for instance, federal roads once built are handed to the States to maintain their portions, thus ensuring ownership with a modicum of pride as well as direct responsibility and oversight. Thus federal revenue allocated for the maintenance of federal highways is shared to the states based on the length of the road. The funds are shared at the beginning of each fiscal year and the responsibility for maintaining federal roads within any state becomes the task of that states. A state stands to lose or by choice forfeit its share, if it does not comply with the federally established speed limit.

In the forgoing context, we urge RMAFC to consider as part of the revenue allocation reform to give directly to Anambra and other States as part of the revenue allocation process, any funding due to us for the maintenance of federal highways within Anambra State.

We can go on and on to elucidated ideas, compelling reasons and areas of revenue allocation formula reforms. But we are gratified that the dialogue has commenced and that members of the Commission took time to come here to engage our people and stakeholders directly, on this very important issue. We have stated our position and concerns openly and the Commission will hear directly from our traditional rulers and stakeholders, and I can assure you it will be in very clear, unvarnished and unambiguous language.

It may please the Commission members to know that the participation of our traditional rulers and stakeholders in this session is not a novelty or a one-off event. They also participate in our budgetary forum with a view to ensuring that we have e needs-based and result-oriented budget driven by the beneficiaries rather than by politicians and bureaucrats alone. Such processes guarantee transparency in policy making and governance methods.

In asking for the revenue formula to be reviewed, we do so not for the sake of a review. The Peter Obi administration has shown a commitment to transparency and his has brought good governance to the grassroots. We continue to exhibit an unwavering commitment to fiscal prudence and accountability and responsibility. We not only manage our resources well, but find numerous ways our augmenting our lean revenue. It is because we adopt the best good governance practices, including our MDG-driven ANIDS policy that we manage to save well and indeed, can afford to pay our bills fully and give vehicles to our house members, traditional rulers, vigilantes groups, judges, commissioners, and permanent secretaries. Just this morning Gov. Obi gave the go ahead for the purchase of vehicles for the chief registrars, magistrates, and civil service directors.

In all, the Anambra State Government is committed to collaborating with federal entities on this and other matters of mutual interest. Our Governor for his part has been an illustrious, visionary, focused and selfless leader, who understands the imperative of prudent and fiscal management of lean resources for the common good fully. He is an exemplar of what purposeful leadership is all about.

In closing therefore, let me borrow a line from the old but famous football song; “all we are saying is give us our dues”. We do not ask for what is due to others. We need what is due to us so as to ensure continuity of the good work being done by our amiable governor. Thank you. And God Bless us all.