Revenue Formula Review Reinforces Lagos’ Call for Special Status

Economy

The revenue allocation formula review, which commenced in Lagos last Monday has triggered a renewed call for Special Status for Lagos State. More importantly, the exercise, which is expected to cover the six geo-political zones of the country, would be a game-changer as many believe it would provide the long-sought remedies to lopsidedness in revenue sharing among the three tiers of government. Kunle Aderinokun reports

When the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) set out to review the revenue allocation formula for the three tiers of government, one main objective was to empower the states and local governments to be able to fulfil obligations and deliver the dividends of democracy to their people.

While the 1999 Constitution (as amended) empowers RMAFC to regularly review the revenue allocation formula, the last time it reviewed the ratio was over 28 years ago, specifically, in 19992. As it stands, the revenue formula, which allocates 52.68 per cent to the federal government, 26.72 per cent to the states and 20.6 per cent to local government areas, confers so much financial power to the government at the centre. This, many have argued, is lopsided and not reflecting the contribution of stakeholders to the common purse. In fact, the essence of the review is to institute a just, fair and equitable revenue formula. The review is expected to focus on the vertical allocation of the revenue allocation formula, to the federal, state and local governments.

The RMAFC has said it was determined and committed to reviewing the formula, promising to conclude the exercise creditably this December.

“I want to reiterate that the RMAFC is highly determined to produce within the shortest time possible, a new revenue sharing formula that will be fair and equitable to the three tiers of government,” RMAFC Chairman, Engr. Elias Mbam, gave the assurance.

“The commission is determined to complete its review by the end of 2021. I am glad to observe that the response so far from Nigerians is very impressive and demonstrates the importance the general public attaches to the exercise,” he added.

Though the commission had been on a sensitisation trail among government functionaries for a while, it also saw it fitting to get the buy-in of the people by conducting public hearings across the six geo-political zones of the country.

Signaling the commission’s intention to commence the review process last Monday with the South-west geo-political zone, Mbam, who paid a courtesy visit to Speaker Femi Gbajabiamila, noted the public hearing would look at the objectives and subject of the revenue formula.

“On Monday we are going to start the public hearing with the south-west zone, we appeal to state governors to attend,” he said.

“There are some concerns such as security, environmental degradation, and erosion; so there is a need to look at the sharing formula to ensure that what every tier of government gets is in line with their needs.

“This is a process, and the end will determine it. We cannot do this without seeking advice from the leadership of the House.

“Your input and advice will go a long way. When we finish, we will bring our recommendation to the National Assembly for further legislative action,” he added.

According to him, the political structure of Nigeria had since changed with the creation of six additional states in 1996, bringing the number of states to 36, while the number of local governments also increased from 589 to 774.

At the public hearing, which held at the Lagos House of Assembly, last Monday, Lagos State stressed its case for Special Status. Actually, the revenue formula review exercise provided an opportunity for Lagos to press further its demand for Special Status.

In pressing home its demand, Lagos state government asked for one per cent share in the federal revenue allocation formula. This was predicated on the state’s unique features and its prosperity bear on development in the South-west and Nigeria, generally.

In fact, the government canvassed a special status for Lagos State, while also proposing a revenue sharing formula of 34 per cent for the federal government, one per cent for the Federal Capital Territory, 42 per cent for state governments, 23 per cent for local governments, and one per cent for Lagos State (Special Status).

Speaking at the opening of a two-day South-west zonal public hearing, Governor Babajide Sanwo-Olu empasised that allocating one per cent to Lagos State (Special Status) and allowing the three tiers of government to share 99 per cent in a new revenue sharing formula was not controversial, but rather straightforward, self-justifying.

Sanwo-Olu, who said the current revenue formula review was long overdue, stressed that the best way to guarantee national progress and development was to pay attention to sub-national development since the national is a summation of the sub-national.

The governor reiterated special status in recognition of its huge financial commitments to infrastructure and provision of basic amenities for the increasing population of residents, as well as its preeminent contribution to the national coffers.

He said the call, which had been re-echoed at different forums, could not be overemphasised, especially against the backdrop of the current economic situation of the country, the aftermath of the EndSARS protests, and the devastating effects of the COVID-19 pandemic, for which Lagos had been the national epicentre.

One of the leading voices in the Lagos call for Special Status, Senator Tokunbo Abiru, representing Lagos East Senatorial District, had during his campaign, said pushing for Lagos to be accorded Special Status would be one of his priorities, if elected senator. According to him, Special Status is a necessity for Lagos having become the nation’s former federal capital.

Abiru had said being Nigeria’s former capital, there were several investments, such as the seaports and other infrastructure to cater for which the state would not be able to fund alone.

“There is need for the Federal Government to enhance the environment. We only can continue to champion special status for Lagos. I will join hands with others to champion for a special status for Lagos,” he said.

Sanwo-Olu, at the public hearing, emphasised that, “Our demand is a sharing formula that is just, fair and equitable; reflecting the contribution of stakeholders to the common purse; and also one that enhances the capacity of state and local governments to deliver high-quality services and the full dividends of democracy to the greatest number of our people.

“Lagos State is, no doubt, the nation’s commercial capital, and population centre. The level of funding required to service the state’s social and public infrastructure is so significant that it will be difficult for the state to bear the burden for much longer under the present arrangement.

“I should say that it will actually be unfair to expect the state to bear this heavy burden on its own. It is, therefore, necessary to give due consideration to all the variables that support our advocacy for a special status.

“The call for a special status for Lagos is not a selfish proposition; it is in the best interest of the country and all Nigerians, for Lagos which accounts for about 20 per cent of the national Gross Domestic Product (GDP) and about 10 per cent of the nation’s population to continue to prosper.”

Further defending the demand for special status, Sanwo-Olu said Lagos was more than just another state in the Nigerian federation, saying there is no tribe in the country without significant stake in the state.

The governor said, “As the former capital of the country for 77 years (compared to the 30 years that Abuja has been the Federal Capital Territory), Nigeria’s largest metropolis still bears the heavy brunt of being home to all Nigerians; irrespective of age, class, gender, religious affiliation or tribe.

“There are several statistics that show the number of people that come into Lagos every day, however, there are clear indications that most of these people migrate with the intention to make Lagos their new home and in pursuit of personal dreams due to the opportunities the city-state seemingly possesses, and this portends additional responsibilities on the government.

“Additionally, Lagos still harbours a huge number of federal establishments, which could not be moved to Abuja. These include military cantonments and barracks, Police, Customs, Immigration, Civil Defence, Prisons, Road Safety and security/intelligence establishments.

“There are several reasons to justify the call for a special status for Lagos apart from the aforementioned factors and by extension, a review of the Revenue Allocation Sharing Formula.”

Besides, Sanwo-Olu pointed out that it would not be fair to leave Lagos alone to bear the burden of the massive destruction experienced by the state during the EndSARS protests, which were hijacked by hoodlums, and COVID-19 pandemic.

“This month marks one year after the massive destruction experienced by the state in the violence that accompanied the hijacking of the EndSARS protests. Public buildings were burnt down, and historical infrastructure destroyed.

“Although, we have put that experience behind us and forged ahead, the reality of this unfortunate incident remains with us; resources that should be committed to other areas of need are now being used for the restoration of these public facilities. It will be totally unfair for Lagos State to be left alone to bear these huge expenses without assistance from the centre.

“COVID-19 pandemic is another issue that has once again, supported the justification for Lagos to be accorded the privilege of a special status. As much as this affects the entire country, it is a fact that the degree of havoc caused by this virus differs from state to state.

“Lagos was the epicentre for this virus, the same way it was for the Ebola virus some years ago. The management of these unforeseen occurrences comes with huge responsibilities and financial commitments on the part of the state government,” he said.