Following the National Conference: Fiscal Federalism – Deepening Democracy by Jibrin Ibrahim

Jibrin Ibrahim-

Last Wednesday, the National Conference Committee on Devolution of Powers had a

heated debate in which they were bifurcated between those for and against resource control. The invention of the term “resource control’ is an excellent example of political branding in which an apparently neutral concept has been transformed into an effective political weapon to wrest more national resources for a particular zone of the country. It has been successful in placing a legitimacy challenge on the constitutional principle that mineral resources belong to the nation-state as a whole rather than the particular region that resource is mined from. The problem however is that the resource in question is petroleum, which more or less, all the states in the country depend on for their public expenditures. It is this dependency that makes the debate on fiscal federalism in Nigeria such an emotive issue.

Nigeria has a rentier economy, which revolve around petroleum revenues. Petroleum exports which accounted for only 10% of export earnings in 1962 rose to account for 82.7% of total export earnings in 1973 and for a period peaked at 90-93% before going down to over 80%. The price of crude oil jumped from 11 US dollars per barrel to 40 US dollars per barrel in 1980 with output reaching 2.05 million barrels a day in the same year. The country was turned overnight into a rentier State in which public expenditures became dependent on one resource. Government spending rose from N1.1 billion in 1970 to N6.5 billion in 1975, thus raising State expenditure as a percentage of GDP from 15.5% to 30.5%.

The then Head of State, General Yakubu Gowon, declared that “finance was not a problem to Nigeria” and a spending spree on cement imports, festivals of arts, sports jamborees commenced. The boom did not last long. Indeed, by 1978, an economic crisis was set in motion, due to a decline in oil exports and revenues. Income from petroleum dropped from N7 billion in 1977 to N5.9 billion in 1978 while production plummeted from 2.1 million barrels in 1977 to 1.57 million barrels in 1978 (Olukoshi, 1991:29). Oil revenues rose briefly to a record N10.1 billion in 1979 but collapsed to N5.161 billion in 1982. By 1985, oil prices had fallen to 28 US dollars a barrel and by 1986, a barrel of oil was selling at only 10 US dollars leading to the establishment of the structural adjustment programme. The problem with public expenditures however is that you can spike it up rapidly but economies do not know how to bring it down. The growth of public expenditures has continued and today, no state except maybe Lagos State, can survive without petroleum rent.

Most of the Nigerian petroleum resources are produced in the territory of the Niger Delta minorities and not surprising, they have over time developed a high “oil consciousness” directed at getting more benefits from this mainstay of the Nigerian economy. Their intellectuals developed the thesis of the Niger Delta suffering from “internal colonialism”, which at that time they argued, was not carried out through economic domination but through control of political power which has been used to transfer the resources derived from the Niger Delta to other parts of the country. Abuja became the symbol of the net transfer of resources out of the Niger Delta and for that reason, Oronto Douglas, at that time a civil society activist named it “the city of sin” where the blood, pollution and devastation of the Niger Delta is transformed into spectacular development for the others.

Today, Oronta Douglas is in the Presidency developing strategies for keeping both political power and oil revenues in the hands of a Niger Delta President. This provides an interesting context for the debate over fiscal federalism. At the beginning, the argument of the Niger Delta was compelling. They were the victims – the major providers of Nigeria’s oil wealth and the major victims of pollution due to oil spillage and gas flaring. As minorities, it appeared unlikely that they would access power so the struggle had to be focused on petroleum resources. Their movement took a radical and politically organised form with the declaration of the Ogoni Bill of Rights demanding for political autonomy in 1990 and the uprising that has since been on. Ken Saro-Wiwa, the leader of the Ogoni political struggle and eight of his colleagues were hanged by the State in November 1995 but that only provided more fuel for the struggle.

The struggle was directed at certain provisions of the Constitution. Item 1 on the concurrent legislative list of the 1999 Constitution allocates virtually all revenue allocation powers to the National Assembly:

a) the division of public revenue –

i. between the Federation and the States,
ii. among the states of the Federation,
iii. between the States and the local government councils,
iv. among the local government councils in the States;

Section 162 provides the criteria for revenue allocation for the Federation Account which shall be based on population, equality of states, internal revenue generation, land mass, terrain as well as population diversity provided that the principle of diversity shall not be less than thirteen per cent of the revenue accruing to the Federation Account directly from any natural resources. As the Niger Delta is a political minority, it is difficult to see how they can evacuate all the other criteria and get the resource control argument to win the day. Their strategic objective might therefore be to lift the 13% upwards. The problem now however is that there is a general perception that the Niger Delta dominates the political, security and patronage machines of the country and handing them more to the detriment of others would evoke strong resistance.

It is however important to recall that nowhere in the country did the Nigerian State cause havoc, repress, and oppress the people and the communities more than in the Niger Delta. The state carried out brutal operations and physically militarised the area in a fashion that is more associated with foreign occupiers. If other Nigerians have forgotten this, the people of the Niger Delta have not. The stage is set for an interesting battle. Let us not forget the words of the Kaima declaration of 1998 issued by the Ijaw Nation:

“That the political crisis in Nigeria is mainly about the struggle for the control of oil mineral resources which account for over 80% of GDP, 45% of national budget and 90% foreign exchange earnings from which 65%, 75% and 70 respectively are derived from within the Ijaw Nation. Despite these huge contributions, our record from the Nigerian state remains avoidable deaths resulting from ecological devastation and military repression.”

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