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AGAIN, RUMPUS ON REVENUE SHARING FORMULA

By NBF News

Once again, there is raging controversy on the formula for sharing of national revenue. This age-long controversy that had been rested for some years following the allocation of 13% derivation to oil producing states in 1999, is firmly back on the front burner of public discourse. And, we have none other than the Governor of the Central Bank, Sanusi Lamido Sanusi, to thank for it.

Sanusi, in a recent interview with Financial Times of London, kicked off the argument that Boko Haram, poverty and the general unrest in the Northern part of the country is a result of the lower sums they get from the Federation Account compared with the oil producing states. According to him, 'there is clearly a direct link between the very uneven nature of distribution of resources and the rising level of violence.'

The Northern Governors Forum chaired by Niger State Governor, Babangida Aliyu, took the argument up from there last week when it unequivocally demanded more funds for the Northern States.

Aliyu, speaking for governors of the Northern States, last Thursday, called for a review of the revenue sharing formula to 'reflect current realities.'

The North, apparently, is beginning to see the extra funds allocated to oil producing states under the 13 per cent derivation allocation as an injustice that ought to be redressed, and a direct cause of the Boko Haram onslaught. Governors in the region believe sharing of oil receipts on the basis of equality of all states will make more money available to non-oil producing states, especially those in the Northern part of the country.

The South South is unimpressed with this position. Governors in the region have rejected this clamour for more funds by Northern States, outright. State governors in the South have lined up arguments against the position of the Northern governors. Rivers State says every state has resources such as agriculture which proceeds are not shared among states. Abia hinges its argument on the fact that it is the oil producing states that bear the brunt of oil production through environmental degradation, while Ondo State says 13 per cent derivation is the oil producing states' statutory right.

Akwa Ibom agrees with Rivers that oil producing states are the goose that lays the Nigerian golden egg, hence there is no basis for equal sharing of oil revenue with non-oil producing states, because the producing region does not share degradation of its environment with them.

One clear message that runs through the responses from the South South state governments is that the Northern States that contribute nothing to oil revenue generation should not be talking about injustice in the sharing of revenue that accrues therefrom.

Many hinged their argument on the fact that the oil actually belongs to the oil producing areas, which should be commended for accepting only 13 per cent derivation approved for them only in 1999, when the revenue sharing formula in the country before the intervention of the military in governance in 1966, was 50 per cent to the region that generates it, and 50 per cent to the Federal Government.

The arguments, both for and against allocation of more revenue to the Northern and other non-producing areas of the country, are compelling.

On face value, on one hand, it is very easy to regard Sanusi and the Northern governors who want a greater share of the revenue from oil for the North, as greedy and insensitive. It may be okay to ask some questions. Why, for instance, should a section of a country which contributes little or nothing to national revenue be demanding for more funds from the centre? Why can't states in such areas generate more revenue internally, instead of sitting, hands down, waiting for financial handouts from Abuja? Why can't they harness the potentials of their areas, be it agriculture, solid minerals or industry, and earn enough to support their population?

On the other hand, it may be easy to query, also, the seeming injustice of one single state, such as Rivers, receiving N1.053 trillion (a billion in a thousand places) between 1999 and 2008 from the Federation Account while two states in the North-East, Yobe and Borno, received N388 billion only, within the same period. Well meaning people may ask if this is not a great injustice that needs to be urgently redressed, especially in a country that claims to be united.

The two arguments above may, indeed, be valid, but they do not go to the heart of Nigeria's problem on revenue allocation and utilization.

The nation's major problem with revenue allocation formula is not so much the amount that goes to the individual states, as the disproportionate huge chunk that goes to the Federal Government, and the way it is utilized.

Under the present formula, the Federal Government gets 52.68 per cent (more than a half) of all national revenue. The 36 states share N26.32 per cent (a little over a quarter), while local councils that are notorious for not doing much to improve the fortunes of their areas, get 20.6 per cent.

Oil producing states began getting 13 percent derivation in 1999 to redress the neglect of the region by succeeding governments over the years.

This distribution formula is unduly lopsided in favour of the Federal Government, while the states, which bear the greater brunt of responsibility for the people, take only a quarter, and mostly indolent local governments take a whole 20% of national revenue!

This sharing formula is inexpedient to the quest for even development of the country. This is even more so as much of the funds are not committed to projects that have direct bearing on the welfare of the people. It is also likely partly responsible for the jumbo pay of political office holders at the national level.

Again, the linking of Boko Haram attacks to poverty occasioned by a revenue allocation formula that is skewed against the North, is tendentious. For one, Boko Haram operatives have at no time left anyone in doubt of their agenda - which is to institute Sharia and Islamic rule, initially in some states in North, but, as it would seem now, throughout the country.

At no time has the sect said anything about poverty. Where then did Sanusi get his poverty + Northern Nigeria = Boko Haram theory? Moreover, a number of persons identified to be involved in the Boko Haram terror campaign are not poor. President Jonathan, himself, has said they can be found in the military, the police, judiciary, legislature and, indeed, every area of government. Is it poverty that pushed such ones into sympathy for the sect? That is certainly not so!

The Christmas Day underwear bomber, AbudulMuttalab, who was recently jailed in the United States for attempting to detonate an explosive device on an American airliner, is the son of a notable, well-educated and rich Nigeria. Is it poverty that drove him to the terrorist adventure?

While many states in the country can very well do with increased revenue, increased funding from the Federal purse is not the solution to the Boko Haram problem, unless the campaign of the sect is just another pressure tool in the hands of Northern leaders.

Let all state governments seek ways to increase Internally Generated Revenue (IGR). Let them stop being appendages of the government. Let a higher percentage of federal revenue go the states. Let there be greater accountability from local governments for the 20 per cent of national funds that they collect. Also, let the huge financial gulf between oil producing states and their non-oil producing counterparts be redressed. But then, we should not turn poverty and Boko Haram into bedfellows.

Poverty is a global, social phenomenon that is as serious in the North as it is in some of the states in the oil producing part of the country. The Boko Haram onslaught is the result of skewed thinking and reasoning fired by misguided religious fervor. More money to the states may help address the peculiar Nigerian poverty debacle. It will not resolve the Boko Haram challenge.


Eating gluttonously does not make one fat so do it nutritiously by diet-balancing.
By: Sir Roy Kelly, Avian