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Confab Committee Proposes New Revenue Sharing Formula

Scrap House of Representatives - Ekpu Tells Committee
By James Akpandem
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A new revenue sharing formula was on Monday proposed by the Committee on Devolution of Power at the on-going National Conference in Abuja. The aim is to empower the states and local governments in their development efforts.

The Committee, after four hours close-door session announced a unanimous decision to trim the existing Federal Government revenue allocation by 10 per cent, thus bringing it down from 52 per cent to 42 per cent.

If the proposal receives the consent of the Conference in plenary and is used to amend existing sharing formula, the 36 states of the federation will receive 35.0 percent allocation from the Federation Account while local governments would receive 22.5 percents.

Co-Chairman of the Committee and former Governor of Akwa Ibom State, Obong Victor Attah, told journalists at the end of the meeting that the decision of the committee was guided by the belief that some funds must be devolved to states and local governments for greater development impact.

This did not take away the understanding and acceptance of the fact that the Federal Government, at present and until decided otherwise, still has the military, the police and the entire security machinery to fund.

Attah observed that during the Committee's deliberation on the Exclusive and Concurrent Legislative Lists, some items hitherto funded exclusively by the Federal Government had been moved to the Concurrent Legislative List for involvement of state governments.

He said in taking the decision on the revenue sharing formula, consideration was given to certain decisions that might be taken by other committees, particularly regarding the status of the local government.

The Co-Chairman said for instance, that if the committee directly responsible for political restructuring recommends the sacking of existing 774 local government areas, then the revenue allocated to the local governments will go to the states.

Shortly after the media briefing by the former governor, the Committee shut its door and went into another session of deliberation and debate on the derivation formula.

It was observed that after three hours of heated debate by the members, no decision could be arrived at on the issue as both the delegates from the south and others from the north were said to have taken to incompatible positions on the issue.

In a brief chat with journalists after the close-door session, Attah said he was optimistic that a unanimous decision would be taken by the Committee on the issue on Tuesday.

He noted that all the delegates had different opinions on how much the derivation formula should be benched; and that while some suggested 100 per cent control of resources, others said there should be no such thing.

Attah said the Committee's decision would be guided by certain provisions in the extant laws including the 1999 Constitution which have left ownership of mineral resources no matter where they are found in the custody of the Federal Government.

Meanwhile, veteran journalist and member of the Committee on Politics and Governance, Mr. Ray Ekpu, has advocated scrapping of the House of Representative leaving Senate to be the only national law-making chamber.

He was opposed to the present arrangement where there is a Senate and House of Representatives; describing it as wasteful and overburdened.

Ekpu informed the Committee that the two chamber parliament is a breeding ground for discord and disagreement as there are endless supremacy battles between the Senate and House of Representatives and called for increase in the number of senators from each state to four and one for the Federal Capital Territory.

His words, “I will like to vote for unicameral legislature because at present, we are already overburdened. We have 774 parliaments in the local government. We have 36 States Houses of Assembly. And we have two at the national level.

“I am advocating the scrapping of the House of Representative. I will vote for having the Senate. We can increase the number of Senators to four per state. In that case, we will have 144 Senators plus one representing the FCT. We will reduce the cost. We will reduce the friction that currently occurs between the House of Reps and the Senate.

“The House of Reps is called the lower house; they said they are not lower house. We are equals. But the constituencies are not equal. The salaries that they earn are not equal.

“Nobody in the House of Commons will say Members of Lords, we are equal. They do different things. The Senate does confirmation hearing, but the House of Representative don't, but they say we are equal.”

On the issue of state police, Mr. Ekpu supported it and went on to advance reasons for aligning himself with the clamour: “My position (on state police) is not an armchair presentation. I am speaking because I was a member of the Police Service Commission for five years. And I have knowledge about how the federal police work.

“If you have true federal system, you will have state police, state courts etc. These all go with true federalism. We are complaining already with the problem we have in security. And look at the blame game going on between the federal government and the Borno State government.

“If you have a police service that is close to the people; that nearness provides protection. It provides cover for the rural populace. Local police will know the territory.

“If I post a policeman from Abuja to my village; he doesn't know the arrangement, he doesn't know the terrain. If you don't have a local police, you will be denied of local knowledge of happenings – customs and people and so on.”

Also on Monday, delegates in the Committee on Politics and Governance have mourned the death of eminent jurist, Justice Chukwudifu Oputa, describing it as a great loss to the legal profession.

Moving a motion under matter of national importance shortly before the committee moved into the business of the day, the Co-chairman of the Committee, Prof. Jerry Gana called on Chief Mike Ahamba, SAN, to officially intimate members of the death of Chief Oputa.

Chief Ahamba described Justice Oputa as an eminent jurist who dispensed justice without fear or favour. Continuing, he submitted that Justice Oputa as not only an eminent judge; but a teacher of great repute. After the motion, members stood for one minute in honour of Chief Oputa.

The issue of the country's rising debt profile was the major concern of the Committee on Public Finance as members sought to know the level of control the Debt Management Office (DMO) has on state governments as regards to borrowing.

The Director General, Dr Abraham Nwankwo, insisted that borrowing and debt management are part of modern economy. He gave examples of countries like Germany and UK that have strong and frugal economy but still borrow. He was the first guest of the Committee.

In his presentation, he put the nation's external debt at 9.16 billion dollars, with the states having approximately 2.8 billion dollars. According to him, States account for 18 per cent of domestic debts while the federal government accounts for 82 per cent.

The laws guiding borrowing, he said, stipulate a that no state can borrow except with the expressed permission of the National Assembly; and any state that does not conform with the stipulation would be seen as committing an illegality. States also require the approval of the Finance Minister to borrow from the capital market, he added. For States to borrow in whatever form, there must obtain the approval of their respective Houses of Assembly.

Dr Nwankwo explained that it was the responsibility of SEC to ensure that the money borrowed from the capital market by the States is judiciously utilised.

He said in 2007, the DMO took a decision to help states establish debt management departments to reconstruct their debt profile, particularly domestic debt which he put at N8.7 trillion, excluding debts owed local contractors. Contractor's debt is not included because it is a structured debt and usually provided for in the budget.

The Committee Chairman, Senator Adamu Aliero, expressed concern over the action of State governments who borrow money indiscriminately from foreign sources without due process. He sought explanation from the DMO why it was so.

The Director General's response was that relevant agencies of government saddled with the responsibility of tackling states that violate the laws regarding debt management and borrowing should take appropriate action.

While Nigeria's cumulative debt at N10.1 trillion, about 10 per cent of the nation's GDP, Dr Nwankwo, insisted that the Nigeria has been consistent in servicing all its loans.

A member of the Committee, Col Bala Mande expressed worries over the tripling of the nation's debt and wanted to know the relationships between the DMO and other relevant agencies like EFCC and ICPC

Another member, Chief Dipreye Alamieyeseigha wanted to know how effective the control mechanisms are regarding borrowing given that most States do not conform with laid down prescriptions.

Dr Nwankwo explained that the DMO works with State governments but has no relationship with either EFCC or ICPC, since the DMO was not a law enforcement agency

On the effectiveness of the mechanism to control State governments, he said the DMO could do anything once the State Assemblies okay such loans as stipulated by the law. He said the citizens have the responsibility of ensuring that state government use borrowed money judiciously.

The committee also met with the delegation of the National Planning Commission led by Mr. Tunde Lawal, a Director of Micro Economic Analysis, who represented the Minister of National Planning, Shehu Yuguda. Mr Lawal briefed the committee on the state of the nation's public finance and the role of national budget in public finance management.

He said deficit financing was inevitable for a developing nation like Nigeria and listed the major sources of Public Finance to include Federation Account, Value Added Tax and oil revenue which constitute about 76 per cent

He said the net federally collected revenue in 2013 was N6 trillion, while oil revenue accounted for 76 per cent of all net revenue accruing to federal government.

- The GDP in 2013 was 9.8 per cent
- Value added tax 16 per cent customs 9'percent

- Non-oil tax increased from N1.5 trillion in 2010 to 2.1 trillion in 2013

He stressed the need to tackle issues of waivers and exemptions, and said government was working towards reducing recurrent expenditure.


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