In dire straits, Nigeria cannot afford to continue to resist the popular pressure for fiscal autonomy to unlock the potentials of the federating units, writes Vincent Obia

Officials of the federal and state governments spent the desperate three months of this fiscal year pondering how to overcome the dire economic circumstances in the country. The difficult economic situation has been brought about by Nigeria’s near total dependence on crude oil export and the awful crash of oil prices. Nigerian leaders have not really found a way round the problem yet, but they have learnt to think again about their revenue generation capabilities. And they are thinking more and more towards efficient utilisation of the country’s natural resource endowments. They are considering how to unlock the economic potentials of the federating units.

On Tuesday, the Lagos State House of Assembly called on the federal government to allow states to hold 40 per cent of federal taxes and other revenues generated in them as derivation. The call was contained in a motion co-sponsored by nine lawmakers and moved by the deputy speaker, Mr Wasiu Eshinlokun-Sanni.

The motion, which was unanimously adopted, also called on President Muhammadu Buhari and the National Assembly to consider again the questions of fiscal federalism and state police and change the federal government’s seeming antagonism towards the two ideas.

“If the federal government gives other states derivation, we should also get derivation from what is generated from Lagos. The House calls on the National Assembly to review the Exclusive List in the constitution with a view to devolving more powers to the states for greater development,” Eshinlokun-Sanni said while moving the motion.

Elsewhere, in Ilorin that same Tuesday, the Kwara State governor, Alhaji Abdulfatah Ahmed, spoke in a similar vein. Ahmed called for a review of Section 44 (3) of the 1999 Constitution to allow state governments to own solid mineral resources in their territories. The governor spoke while declaring open the 52nd Annual National Conference of the Nigerian Mining and Geosciences Society.

Ahmed called for a review of the Second Schedule, Part1 (39) of the Exclusive Legislative List in the 1999 Constitution, which restricts state governments from developing their mineral resources. He said such restriction was stifling the capacity of the states to grow their economies and create jobs.
Many people from different parts of Nigeria have advocated similar changes in the political and economic structure of the country.

Classical political science defines federalism as a system of government in which sovereignty is shared between the national and sub-national governments, which are the federating units. Nigeria chose this system at independence in 1960. A system that imbues and equips states with ample political and economic clout to have the greatest influence on the citizens, as the states handle most of the issues that affect the lives of the people within their jurisdictions.

With adequate legislative and fiscal independence, the states are expected to make and implement economic laws and policies, according to their diverse capabilities, for the good governance of their people without undue interference from the distant and largely unwieldy behemoth that is the central government.
The federalism Nigerians elected for themselves at independence, certainly, does not envisage the current structure where the states – the federating units – go cap in hand to the federal government to seek sustenance. Federalism envisions a system in which states in the country would have control over their individual own affairs and resources.

Calls for a system that guarantees resource control for the states and fiscal federal had seemed to be the familiar refrain of the oil-producing South-south.

But several decades after, other sections of the country have taken up the refrain, a clear indication that the pseudo-federal system has become anachronistic and needs to be done away with. The federal government’s domineering posture in the exploration of natural resources is a fundamental setback to growth and positive change in the country.

There is an urgent need to amend section 44 (3) of the 1999 Constitution to return Nigeria to the 1960 and 1963 constitutional provisions, which empowered and encouraged the federating units to exploit their own advantages for development, while paying taxes to the federal government.

The 1963 Constitution recognises the federating units as the owners of the resources found in their territories, including mineral resources. It provides in Section 140 for the sharing of the proceeds of minerals, thus, “There shall be paid by the Federal Government to a Region, a sum equal to fifty per cent of the proceeds of any royalty received by the Federation in respect of any minerals extracted in that Region and any mining rents derived by the Federal Government from within any Region.”

But that provision was expunged from the constitution since 1979 and substituted with a provision that gives the federal government absolute right over mineral resources in every part of the country. Section 44 (3) of the 1999 Constitution states, “Notwithstanding the foregoing provisions of this Section, the entire property in and control of all minerals, mineral oils and natural gas, under or upon the territorial waters and the exclusive economic zone of Nigeria shall rest in the Government of the Federation and shall be managed in such manner as may be prescribed by the National Assembly.”

This system of absolute federal rights over resources located in the states has been tried and proved to be a terrible setback to economic and political development.

There is an urgent need to return Nigeria to the 1960 model of fiscal federalism. It is a system that will encourage fair competition and independent development. It will encourage creativity, as the political leaders at various levels would be saddled with the responsibility of generating resources for running the affairs of their people.

Fiscal federalism will also help to reduce the deadly competition for power and improve the quality of politics in the country. The fertility of the politicians’ imaginations, particularly in terms of wealth creation, would become a critical qualification for those seeking political power. And this would ushered in the transformational leadership that Nigeria badly needs.