The Nigerian Federalism Imbroglio – A Pragmatic Approach

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By Femi Falana

Introduction

When Governor Oluwarotimi Akeredolu was sworn in as governor of Ondo state on February 2017, I had cause to send him a congratulatory message like many other well wishers. But in my own message I warned that the governor could not afford to fail as the expectations of the people were high. In order to remind the governor of the areas that have not been addressed kindly permit me to reproduce the message:

“I congratulate you on your inauguration as elected governor of Ondo State. No doubt, the task before you is gargantuan as the state has been run aground in many areas. The people are groaning in poverty in the midst the opulence of the elite as the economy is in shambles. Criminality is on the increase on the part of disenchanted youths. Law and order have broken down as the rule of law is in abeyance. Integrity and principle in politics have been sacrificed due to harsh economic conditions being experienced by the masses. The moral fabric has to be restored in the Ondo State political landscape.

Yours is a state of paradoxes. Workers are owed arrears of salaries by the state which earns resources from the oil derivation fund. Whereas it was the late Dr. Akinola Aguda, an indigene of the state, who laid a solid foundation for the judiciary of Botswana the Ondo state judiciary has not been able to address the crisis of injustice. Education is also comatose in a state that has produced not fewer than 10 National Merit Award Winners including two from the same town. Intercity and township roads are in a dilapidated state.

However, the socio-economic problems confronting the state are not insurmountable provided that you are prepared to involve the people in the planning and execution of all projects. Your government should make the people the subject and object of governance. In implementing the welfare programmes that formed the basis of your campaign you must place premium on a knowledge based economy as over reliance on oil has compounded the crisis of poverty in the state. While jettisoning the neo-liberal economic policies that have ruined the national economy you must ensure the revitalisation of agriculture, the exploitation of the bitumen resources and the development of the Olokola port in the state.

You must not only plug the leakages, but you must also frontally fight corruption so as to conserve the limited resources of the state for the good of the people especially massive investment in education, healthcare and infrastructure. You will never have enough resources to pursue the common good in a regime plagued by high level official corruption. As a senior lawyer of repute your government should take the lead in establishing an effective agency that will protect human rights and promote transparency and accountability in Ondo State. While urging you to let the sun shine in Ondo State again be rest assured that I will not hesitate to join issues with you if you fail to fulfil your electoral promises to the people.”

Three years ago, the morale of workers in the state was very low as they were owed arrears of wages for months. The entire people were frustrated as the state government was unable to provide basic social services. The Universal Basic Education Commission had withheld the federal governments’ contribution due to failure of the state government to contribute counterpart fund. But in spite of the dwindling fortune of the state the Akeredolu administration has been able to pay the salaries of workers as and when due while the state government has contributed counterpart fund which has been used for the refurbishment of about 800 primary schools. To ensure regular supply of water to the people over 2,300 boreholes have been provided by the ministry of water resources. President Buhari was at Ore in Ondo State two days ago to commission the Ore interchange. The newly-commissioned flyover is expected to prevent all forms of carnage and avoidable accidents that the section of the Sagamu-Benin expressway is notorious for.

The President also commissioned the Ondo state Industrial hub which has Automobile Assembly Plant, Paper Mill Factory, Textile Company, largest Cassava to Ethanol Factory in Nigeria, as well as the country’s first MDF Factory that produces high-density fibre and marine boards. The hub will create job opportunities for thousands of people. I am particularly delighted that the Akeredolu administration has broken the jinx that had bedeviled the development of bitumen resources in the state. The project which will soon begin commercial production will generate massive employment for the people in the state. In spite of the giant strides recorded in the area of physical development of the state I am of the strong view that there is a lot of room for improvement in the areas of health, education, agriculture, housing and economic empowerment. In order to seriously address the development of the state on a long time basis the administration must involve the people in budget planning and budget execution.

However, I was pleasantly surprised that Governor Akeredolu asked me to deliver this lecture because he knows that I am certainly going to be critical of the lackadaisical attitude of his party, the All Progressive Congress (APC) to the issue of federalism. But I believe that he deliberately invited me to provoke a debate on the imbroglio surrounding the unitary Constitution of the Federal Republic of Nigeria. Even though the Constitution prescribes that Nigeria shall be a federation the political class has decided to retain the distorted federalism bequeathed to the nation by the defunct military junta. Thus, successive civilian governments led by southern and northern political leaders have refused to allow power devolution from the center to the other federating units.

In fact, former President Olusegun Obasanjo who convened the 2005 Constitution Reform conference refused to implement the recommendations of the delegates on power devolution but he has since joined the campaign for restructuring. Not only did he carry out the restructuring of the economy through questionable privatisation and commercialisation he and his cronies bought some of the public enterprises. A number of other former public office holders who are out of power have called for restructuring or power devolution in order to restore true federalism in the country. Owing to the crises of underdevelopment, poverty and insecurity induced by the anti people’s programmes of successive regimes aided by imperialism not a few young people have demanded for the total balkanization of the neo-colonial state. To that extent, all the arguments on resource control, restructuring and federalism are meaningless to the majority of the people who are groaning in poverty in all parts of the country.

As the debate on political restructuring has become opportunistic, diversionary and misleading I intend to demonstrate that the powers vested in state governments by the unitary Constitution have not been fully exercised. Hence they have been hijacked by the federal government. But since power devolution without economic empowerment of the people is meaningless we shall challenge state governments to jointly manage the national economy with the federal government in line with the letter and spirit of the Constitution. Having used the instrumentality of the law to reclaim powers from the centre in the recent past, state governments will be called upon to intensify the struggle for more power devolution and redistribution of the commonwealth in the overall interest of the majority of our people who are victims of economic marginalisation. In my conclusion, I shall support the demand for the devolution of political powers from the centre to the other federating units provided that the economic empowerment of the people through the democratization of all political structures will be guaranteed.

The basis of Nigerian Federalism
Federalism is a political concept in which political and economic powers are shared between a central government and the constituent units by a covenant or agreement under a governing representative head. It is also defined as a type of government in which sovereignty is constitutionally divided between a central government and political constituent units or between national and regional units. The union is often called a federation. At the constitutional conference held by Nigerian politicians at the Lancaster House in London in 1957, the nationalist politicians opted for federalism as the best form of government for our multi-ethnic, multi-religious and multi-lingual society. However, on the eve of political independence the departing British colonial regime influenced the entrenchment of a Bill of Rights in the Constitution. It was not done to allay the fears of the minority ethnic groups in the country but to prevent the nationalisation of foreign economic interests in Nigeria upon the attainment of independence. After all, the guarantee of the right to private property in a Bill of Rights was a sine qua non conditio in the national constitutions in India, Ghana and other states which had been granted independence before Nigeria.
From 1951 to 1959 the governments of western, eastern and northern regions led by Chief Obafemi Awolowo, Dr, Nnamdi Azikwe and Alhaji Ahamadu Bello respectively introduced welfare policies which were funded from the revenue generated from taxes and agriculture in the regions. Even though the colonial regime was firmly in charge of the economy the regions carried out development programmes. In particular, public buildings and roads were not constructed by contractors but by the Public Works Departments of each government. It is pertinent to note that majority of schools were built by communities and faith based institutions. At the material time, Nigeria was ahead of many Asian nations and was competing with some western countries in human development index. Both the 1960 and 1963 constitutions confirmed the federal status of the country. In particular, the regions were entitled to 50% derivation. The role of the federal and regional governments was dominant and visible in the management of the economy.

But with emphasis on neo-colonial development plans there was lack of industrialisation which reduced Nigerians to mere producers of raw materials for Euro-American markets. Owing to the mismanagement of the post independence conflicts the premier of western region was removed while he was replaced by an administrator. However, the rigging of the 1964 general elections led to large scale violence in western region and other parts of the country. Under the pretext of restoring law and order and stopping corruption the military struck on January 15, 1966. The Unification Decree promulgated by the Aguiyi Ironsi regime was alleged to have formed the basis of the counter coup of July 29, 1966 as it was interpreted by a section of the political class as an attempt to turn Nigeria into a unitary state. But the counter coup led to enactment of the Supremacy Decree which turned Nigeria into a unitary state under the Yakubu Gowon regime. The mismanagement of the political crisis by the military dictators led to the 30-month civil war which ended in January 1970.

The Gowon regime was removed in July 1975 due to corruption and the refusal to restore democracy in the country. Although the military dictators voluntarily transferred power to the political class in October 1979 other military adventurers returned to power in December 1983 and did not relinquish power until May 1999. At the end of almost three decades of military rule the federal republic of Nigeria had been turned into a unitary state. Thus, the 1999 Constitutions was promulgated by General Abdulsalami Abubakar and imposed on the Nigerian people. For the avoidance of doubt, the 1999 Constitution is a schedule to the Constitution (Promulgation) Decree No 24 of 1999. In spite of the controversy surrounding the emergence of the Constitution it is expressly stated therein that Nigeria shall be a federal state. This was confirmed in Olafioye v. Federal Republic of Nigeria when the Supreme Court held that, “A federation can take its branches from the tree of a unitary government. In such a situation, the historical ties may make it impossible for the federal Constitution to entirely and totally strip off its relationship with unitarism. That could be the Nigerian experience for now.”

Owing to the crisis traceable to the unitary Constitution imposed on the Nigerian people by the defunct military junta every successive civilian government in Abuja has set up one panel or another to review the structure of the country. Such panels have produced reports which culminated in four alterations of the Constitution. But since such alterations have not substantially addressed the structure of the country the demand for power devolution has not ceased. Section 1 of the Constitution provides that Nigeria shall be a federal republic while Section 2 thereof provides that “Nigeria is one indivisible and indissoluble sovereign state to be known by the name of the Federal Republic of Nigeria” which shall be a federation consisting of states and a federal capital territory as well as 774 local governments and area councils.

In its manifesto, the (APC) had promised to “initiate action to amend our Constitution with a view to devolving powers, duties and responsibilities to states and local governments in order to entrench true Federalism and the Federal spirit.” The party also undertook to “restructure government for a leaner, more efficient and adequately compensated public service.” But upon taking over the enormous powers at the centre the APC has turned deaf ears to the demand for restructuring. It has equally refused to implement the recommendations of the Nasiru El-Rufai Committee on power devolution. But the Chairman of the Nigerian Governors Forum and a member of the APC, Governor Kayode Fayemi has said that the report would be forwarded to the 9th national assembly which has set up another constitutional review committee. So far, there is no indication that the proposed amendment of the Constitution will address the control of the economy by imperialism and its local lackeys.

Federalism and social justice under the 1999 Constitution

Proponents of restructuring have contended that a return to true federalism will enable the federating units to control their resources with a view to funding infrastructural development while the provision of social services will be handed over to the private sector. But in making a strong case for federalism, Chief Awolowo had insisted on the provision of social services for the people. Thus, in defending the budget of his government while he was premier of western region, Chief Awolowo stated that “as far as possible within the limit of our resources, expenditure on social services which tend to be the welfare, the health and the education of the people should be increased at the expense of any expenditure that does not answer to the same tests”. It is on record that the administration voted more than 50% of the annual budget to social services. Ironically, the political disciples of Chief Awolowo who are campaigning for restructuring are only interested in power devolution alone without economic empowerment of the people. Convinced that the society could not make any substantial progress under the capitalist system Obafemi Awolowo had advocated for democratic socialism. The details of Awolowo’s ideas can be found in his book entitled “People’s Republic”.

Agitators of restructuring have demanded that the exclusive legislative list in the Constitution be limited to the country’s external trade, customs duties, export duties, tax on incomes, profits and capital gains, interstate commerce, external borrowing, mining rents and royalties from mineral resources etc. The demand has been rejected because the status quo favours the central government. This is partly due the distorted revenue allocation formula which has allocated 52% of the revenue accruing to the federation account to the federal government while the remaining 48% is shared among the 36 states and the 774 local governments. At the 2014 national conference many delegates proposed 18% derivation for the oil producing communities. But as the conference delegates could not reach a consensus on the matter the proposal was shelved. It is submitted that since the payment of 13% derivation to the oil producing states has not improved the quality of the lives of the people in the Niger Delta region any increase in revenue allocation that is not tied to the development of the area under the direct supervision of the accredited of the communities will further enrich members of the ruling class.

Section 14 of the Constitution states that the Federal Republic of Nigeria shall be a State based on the principles of democracy and social justice. Accordingly, the Constitution has made it clear that sovereignty belongs to the people from whom government shall derive its powers and authority and that the security and welfare of the people shall be the primary purpose of government in a participatory democracy. A duty has been imposed on the government to control the economy in such a manner as to secure the maximum welfare, freedom and happiness of every citizen on the basis of social justice and equality of status and opportunities. To prevent the criminal diversion of public funds by a few people the State shall abolish all corrupt practices and abuse of power. Having realised that the breach of the fundamental objectives entrenched in the Constitution has compounded the crisis of underdevelopment of the country the delegates to the 2014 national conference unanimously recommended that the provisions be made justiciable. But the recommendations were not implemented by former President Goodluck Jonathan who convened the conference.

Legal battle for autonomy of state governments
No doubt, successive military regimes usurped the powers hitherto exercised by the regions and concentrated them in the centre. Hence, the perennial fight over the control of the enormous powers in the centre has frustrated the resolution of the crisis plaguing the federation. The overbearing attitude of the federal government is manifested of federal public officers who bear the titles of the Attorney-General of the Federation, Solicitor-General of the Federation, Secretary to the Government of the Federation, Head of Service of the Government of the Federation, Accountant General of the Federation and Auditor-General of the Federation. These are misnomers because these are officials of the federal government and not officials of the Federal Republic of Nigeria. After all, there are public officers recognised by law to perform similar functions in the public service of each state of the federation.

Notwithstanding the over concentration of powers in the centre the federal government has made further efforts to acquire more powers by operating outside the exclusive and concurrent legislative lists. But such efforts have been vehemently resisted by some state governments that have resorted to litigation. Thus, state and local governments have recovered some of the powers which had been hijacked by the defunct federal military government. In particular, the courts have upheld the power of state governments to control the following items:

1. Control of land located in states;

2. Maintenance of law and order in the states;

3. Collection of entertainment taxes and levies;

4. Ratification of federal government in Lagos State;

5. Abolition of onshore / offshore dichotomy;

6. Power to legislate on sports and lottery operations;

7. 13% derivation for oil producing states;

8. Operation in inland waterways;

9. Control of physical planning;

10. Setting up of commission of inquiry;

11. Operation of the Public Order Act;

12. Conduct of local government elections;

13. Right to determine the structure and tenure of elected local governments;

14. Payment of statutory allocations of local governments to state joint local government accounts;

15. Monitoring of local government funds;

16. Licensing of vehicles;

17. Power of state governments to establish anti graft agencies to fight corruption and other economic crimes;

State government have also won the battle against the suspension of democratic structures during a state of emergency imposed by the President and impeachment of governors instigated by the federal government. Oluwarotimi Akeredolu SAN was among the lawyers who successfully fought in the courts for the reinstatement of former Governor Rasheed Ladoja when he was impeached in 2006.

Operation in the exclusive legislative list by state governments
Whereas, there were 45 items in the exclusive legislative list under the 1963 Constitution they have been increased to 67 under the 1999 Constitution. Issues relating to elections of governors and members of the Houses of Assembly of states, pension and gratuities, police, prisons, airports, public holidays, labour including trade unions, stamp duties etc are in the exclusive legislative list. While both the federal government and state governments can make laws in the concurrent legislative list the federal government has continued to erode the powers of the states and local governments under the doctrine of covering the field. On account of the complacency of state governments the residual area completely reserved for them have been encroached upon by the federal government.

But having realised that the nation cannot make appreciable progress under the extant unitary constitution the federal government has not challenged some state governments that have decided to operate in the areas exclusively reserved for the federal government by the Constitution. In other words, the need to promote economic development and integration has compelled the federal government to encourage state governments to operate in the exclusive legislative list despite the vehement opposition of President Buhari to power devolution. Below is a list of such areas:

1. Item No 3-Aviation including airports safety by aircraft and carriage of passengers and goods by air:

The governments of Akwa Ibom, Delta and Imo States have established airports in Uyo, Asaba and Owerri respectively. Even though Nigeria has no airline the government of Akwa Ibom state has set up an airline called Ibom Air while Kaduna state government has signed an agreement with a company called Quorum Aviation Limited to operate air shuttle from Kaduna to Abuja and Lagos.

2. Item No 11 – Construction, alteration and maintenance of federal trunk roads

The Federal trunk roads which have been abandoned by the Federal government in many parts of the country are usually fixed by state governments. The cost of the repairs is reimbursed by the Federal government upon the verification of the bills submitted by state governments. Since the Federal government has said that it would no longer bear the cost of the repair of such roads state governments may wish to take appropriate legal action in the circumstance.

3. Item No 28 – Fingerprint, identification and criminal records

With the establishments of state security agencies and prosecution of state offences, state governments are not precluded from obtaining the fingerprint, identification and compiling the criminal record of criminal suspects prosecuted by state attorneys-general.

4. Item No 29 – Fishing and Fisheries other than fishing and fisheries in rivers, lakes, waterways, ponds and other inland waters within Nigeria.

The Federal government does not have exclusive control of fishing and fisheries in inland waters in view of Item 64 in the Exclusive Legislative List which has limited the power of the Federal government to “water from such sources as may be declared by the National Assembly to be sources affecting more than one state.”

5. Item No 30-Immigration and Emigration from Nigeria:

On account of the influx of refugees from the war torn Southern Cameroon the Cross Rivers State Government has established a Directorate of Migration Control Service headed by a Director-General.

6. Item No 39-Mines and minerals, including oil fields, oil mining, geological survey and natural gas:

Some state governments are involved in the exploitation of solid minerals. Governor Bello Matawale has recently signed an agreement with a group of Chinese investors for mining of solid minerals and power generation in Zamfara State. The Ondo State government will soon commission the first phase of bitumen development, a project that the federal government could not carry out for several decades.

7. Item No 45-Police and other government security service established by law:

Item 45 in the exclusive legislative list provides for “police and other governmental security services established by law”. But due to the worsening security situation in the country the federal government has allowed state governments to establish security outfits such as Vigilante Groups, Hisbah Commission, Civilian JTF etc. The federal government has been compelled to drop its vehement opposition to the establishment of the South West Security Initiative otherwise code named ”Amotekun”.

8. Item No 51-Public holidays:

Notwithstanding the provisions of the National Holidays Act, state governments declare public holidays from time to time. Since the restoration of civil rule in 1999, the states in the south west region have been observing June 12 as a public holiday in honour of the late Chief M.K.O. Abiola who won the 1993 presidential election annulled by the Ibrahim Babangida junta. In 2018, the federal government adopted June 12 as a public holiday throughout the country.

9. Item 63-Traffic on Federal Trunk Roads –

The traffic agencies established by state governments have ensured that traffic is maintained on all roads including federal trunk roads which are not covered by the Federal Road Safety Commission officials and Police Vehicle Inspection Officers.

Appointment of board members of federal agencies

The appointment of federal executive bodies shall be in accordance with the provisions of section 153 of the Constitution while the enabling laws of federal agencies provide for the constitution of the members of their boards.To ensure that the appointments reflect federal character the Constitution has tasked the Federal Character Commission with the responsibility to “promote, monitor and enforce compliance with the principles of proportional sharing of all bureaucratic, economic, media and political posts at all levels of government.” In view of the controversy which has trailed some appointments in recent time we set out to review three of them:

1. Board of the Nigerian National Petroleum Corporation

Under Section 1 of the Nigerian National Petroleum Corporation Act there shall be a board of directors which shall consist of a Chairman, Permanent Secretary, Managing Director of the Corporation and three persons to be appointed by the President. The Chairman of the Board shall be the Minister of Petroleum Resources. The President may also appoint an Alternative Chairman for the Board. But contrary to the clear provisions of the NNPC Act the Board has been constituted by nine members (including the Chief of Staff to the President, Mr. Abba Kyari) instead of six members together with the Alternative Chairman. It is submitted that unless the Board is properly constituted its decisions may be set aside with dire consequences for the national economy.

2. Board of Niger Delta Development Corporation (NDDC)

The Niger Delta Development Commission (NDDC) Act provides for a board of 19 members. Pursuant to the Act the Senate had screened and confirmed the nomination of the members of the board forwarded to it by President Buhari last year. But instead of inaugurating the board the President has constituted an interim committee to manage the affairs of the commission. There has been no protest from the oil producing states including Ondo State which are represented in the NDDC board. Even the Senate that initially challenged the appointment of the interim committee members has since passed the 2020 budget of the NDDC! Since the appointment of the members of the interim committee cannot be justified in law they should be dissolved while the President should be compelled to constitute the Board without any further delay.

3.National Economic Council

The National Economic Council (NEC) is one of the federal executive bodies established pursuant to Section 153 of the Constitution. As stakeholders in the management of the national economy the 36 state governors and the Governor of the Central Bank are members of the NEC. The Vice President is the Chairperson of the NEC. In accordance with paragraph H of Part 1 of the Third Schedule to the Constitution the NEC “shall have power to advise the President concerning the economic affairs of the Federation, and in particular on measures necessary for the coordination of the economic planning efforts or economic programme of the various Governments of the Federation”.

Sometime in August last year, President Buhari was reported to have appointed some Nigerians into another body called the Presidential Economic Advisory Council (PAEC). The body which was inaugurated on September 6, 2019 has been vested with power to advise the President on the management of the national economy. With respect, the usurpation of the powers of the NEC by the PAEC is illegal and unconstitutional. In the circumstance, the PEAC ought to be dissolved without any further delay. In the alternative, the PAEC may be constituted into a sub-committee of the NEC.

Abdication of police powers of the federation to the President by state governors
The Nigeria Police Council is a federal executive body established by section 153 of the Constitution. The President is chair person of the Council while other members are the 36 state governors, the Inspector-General of Police and the Chairman of the Police Service Commission. Pursuant to 216 (2) of the Constitution the President shall not appoint or remove an Inspector General of Police without consulting the Nigeria Police Council. The Council is empowered to administer, organise and supervise the Nigeria Police Force. But state governors have completely abdicated the police powers of the federation to the President. This has been the practice since 1999. Our call on state governors to requisition regular meetings of the Council to review the security challenge facing the country has been ignored.

Limit of security outfits established by state governments

Since the security architecture of the country has virtually collapsed the decision of state governments to establish security bodies has been supported by the Nigerian people. But it ought to be pointed out that physical security without social security will not guarantee law and order in the society. Therefore, in addition to the enactment of laws for the establishment of such security bodies each state government must establish a social security fund and and a functional health insurance scheme. In addition, credit facilities should be provided by governments to promote economic empowerment of the people. However, there is the urgent need to ponder the position on the indigenization of state policing. The key factor should be residency and not nativity or to be more charitable, indigeneity, as vulgarly put by some irredentists in the south west region.

It is unfortunate that the most cosmopolitan region in Nigeria is recoiling into provincialism in devising instruments of the modern state for security. Instead of making the modern security apparati of the Nigerian state more functional, efficient and fit for purpose, the Yoruba elite is trying to reinvent the security arrangements of the defunct Oyo Empire and other expired kingdoms. Why should an Emeka born and bred in Surulere with all his business and property in Lagos be excluded, in principle, from the security arrangement for the state? How can any rational person say that Adamu, a third generation Hausa man in Sango, Ibadan, who pays his tax to the Oyo state government, is not a stakeholder in Amotekun security outfit being put in place? Ironically, the same opportunistic elite celebrates the election of members of parliaments and mayors of Yoruba origin in Europe and America while denying the reality of integration in Nigeria. The logic of capitalism is that the richest African who has the largest property in the south west region is a Fulani man!

Joint management of the national economy by the President and state governors

As far as the Constitution is concerned the management of the national economy is a joint responsibility of all tiers of government and the national assembly. Hence, section 16 (1) of the Constitution has imposed a duty on the State (the federal, state and local governments) to harness the resources of the nation and promote national prosperity and an efficient, a dynamic and self-reliant economy and control the national economy in such manner as to secure the maximum welfare, freedom and happiness of every citizen on the basis of social justice and equality of status and opportunity; Accordingly, the State shall direct its policy towards ensuring the promotion of a planned and balanced economic development and ensure that the economic system is not operated in such a manner as to permit the concentration of wealth or the means of production and exchange in the hands of few individuals or of a group.

Section 16 (3) (a) empowers the national assembly to set up a body which shall review, from time to time, the ownership and control of business enterprises operating in Nigeria and make recommendations to the President on same and administer any law for the regulations of the ownership and control of such enterprises. But the national assembly and the state governments have not discharged their constitutional duty in the management of the economy. For instance, state governments have never demanded for accountability in respect of the privatisation of the public enterprises valued at $100 billion but sold for less than $1 billion by the federal government. Although the Obasanjo administration had spent billion of dollars on the energy sector without any tangible result state governments allowed the federal government to privatise and commercialise the 18 electricity companies owned by the people of Nigeria. Apart from the huge fund allocated to the Gencos after the privatisation exercise the Buhari administration has released additional sum of N1.7 trillion to the sector.

Since 1999, the nation has lost trillions of Naira due to indiscriminate duty waivers illegally granted to all manners of importers of goods by the Federal Government. From time to time, governors complain about the illegal withdrawal of billions of dollars from the federation account but no action has been taken to arrest such constitutional violation. State governments lack financial resources as majority of them depend on the meagre rents otherwise called statutory allocations collected from the Federation Account on a monthly basis. Such allocations are not sufficient to pay wages and fund socioeconomic development. While the allocation of 52% of the revenue of the federation to the federal government cannot be justified the demand for an equitable revenue allocation formula should be tied to commitment of state governments to provide education, health, housing and other basic amenities for the people and invest in infrastructural development, job creation and industrialization.

By virtue of section 44(3) of the Constitution the mineral resources in any part of Nigeria have been taken over and vested in the federal government on behalf of the Nigerian people. But the President of Nigeria usually leases oil blocks to certain individuals and corporate bodies. Some of the licenced owners of the oil blocks usually sublease them to offshore companies as they lack the fund and the technical expertise to develop the oil industry. By subleasing the oil blocks the lessors collect huge rents from the sub-lessors and become stupendously rich. Such unlawful enrichment of a few persons at the expense of the majority of citizens has aggravated inequality in the country. While a few individuals are enriched by the system the federal, state and local governments depend on loans and bailout to pay salaries and carry out basic infrastructural development of the country.

It is submitted that pursuant to article 22 of the African Charter on Human and Peoples Rights (Ratification and Enforcement) Act which has imposed a duty on the Government to freely dispose of the wealth and national resources of the nation in the exclusive interests of the Nigerian people the federal government lacks the power to allocate oil and blocks to a select group of Nigerians and foreigners. We are compelled to call on the Buhari administration to restrict the allocation of oil blocks including marginal fields to the federal government and the governments of the 36 states of the Federation. The practice of allocating oil blocks and marginal fields to private individuals and corporate bodies which commenced under the defunct military junta should stop forthwith.

In restructuring the economy state government should monitor the budgets of agencies of the federation. Elsewhere I had cause to review the manipulation of the budgets of the agencies by the executive and the national assembly when I said “After the enactment of the Appropriation Act, 2020 the national assembly has been passing the budgets of about 65 agencies of the federal government including NNPC, CBN, FIRS, NDCC, NIMASA, NPA etc. The NFIU has challenged the CBN for budgeting the sum of N1.1 trillion which is 10% of the nation’s annual budget. During the defence of the 2010 budget of the of the Central Bank by the a Deputy Governor of the Bank, Mr Adamu Edward, the House of Representatives had to send media men and women packing from the house because the figure of N1.3 trillion was outrageous One of the concerned legislators, Honourable Gadaji Kazure had during a press briefing said that “In 2019, budget of the CBN was N420 billion, but the same CBN brought a budget of N1.3 trillion for 2020. What are they producing? Which revenue are they generating?”

For effective management of the national economy state governments should collaborate with the Revenue Mobilisation Allocation and Fiscal Commission which is constituted by a chair person and one member from each state of the federation and the federal capital territory. The Commission must be encouraged by state governments to perform its constitutional duties which include the monitoring of the accruals to and disbursement of revenue from the Federation Account; reviewing, from time to time, the revenue allocation formulae and principles in operation to ensure conformity with changing realities and advise the Federal and State Governments on fiscal efficiency and methods by which their revenue can be increased. The Commission should therefore restrain the Central Bank from imposing the imperialist inspired monetary policies on the nation. As a matter of urgency the Commission ought call the Central Bank to order with respect to the illegal substitution of Naira for the revenue earned in foreign currencies, payment of Naira for foreign remittances of over $25 billion by banks per annum and fixing of interest and exchange rates by the so called market forces.

It is however my submission that the nation’s unitary constitution has not prevented state governments from investing in education, agriculture, transportation, industrialization etc. The regional economic unions should be structured to promote the economic viability of the states. Some political commentators have contended that states cannot be economically freed from the stranglehold of the federal government unless the country is restructured. With respect, the statement is not correct as some state governments have improved their internally generated revenue through effective taxation. Others have invested in agriculture which has significantly improved their revenue base. For instance, the total statutory allocations received from the federation account by Kebbi State in 2017 was N40 billion. But during the same period the state government was able to generate N150 billion from the sale of rice. On account of substantial investment in agriculture Ebonyi state has targeted revenue of N48 billion annually from rice production.

Constitutional validity of spending recovered loot to fund federal budget alone

Even though it is not in dispute that the bulk of the money stolen by indicted public officers and contractors was either taken from the Nigerian National Petroleum Corporation, Central Bank of Nigeria or from money paid for the execution of government contracts. For reasons best known to state governments they have never demanded that the loot recovered from such persons be paid into the federation account for distribution to all tiers of government. Only some progressive human rights bodies have mounted pressure on the federal government to account for the $4 billion recovered from the Abacha loot. Since the management of the recovered loot has been left completely in the hands of officials of the federal government the $308 million from the Abacha loot which is expected to be repatriated, any moment from now, has been earmarked to fund part of the budget of the federal government.

During a recent meeting with President Buhari by members of the Presidential Advisory Council Against Corruption it was disclosed that the sum of N1 trillion had been recovered from local looters by the anti graft agencies. Although the recovered loot is part of the common patrimony the President has ordered that it be paid into the Treasury Single Account of the federal government instead of the Federation Account. In addition, the Minister of Finance has announced that the sum of N605 billion had been recovered through the whistle blower policy of the federal government. The money is also likely to be paid into the TSA for funding the budget of the federal government. All efforts made by a consortium of lawyers to persuade the Nigeria Governors Forum to demand for the share of the state and local governments in the recovered loot have proved abortive. In fact, but for a group of local governments which successfully sued the federal government the refund of the London / Paris Club loan to the other federating units would not have been possible.

$25 billion and 481 billion withheld by NNPC from Federation Account

The Nigeria Extractive Industry Transparency Initiative (NEITI,) has disclosed that the Nigerian National Petroleum Corporation and other stakeholders in the industry have yet to remit $22.06 billion and N481.75 billion to the Federation Account. Out of that figure the sum of $18.9 billion represents the dividend earned from NLNG from 2004-2014. An additional sum of $3.1 billion dividend was paid from 2015-2018. Altogether, the NNPC has withheld a total sum of $25.1 billion and N481 billion from the federation account. It is the view of the NEITI that NNPC and NPDC owe the Federation Account more than $20 billion which could help to jump start the economy and that beyond the golden opportunity for economic recovery, there is also a compelling case for deepening transparency and accountability in improving the oil sector. But the Nigerian National Petroleum Corporation (NNPC) has justified the withdrawal of $2.201 billion from the Nigerian Liquefied Natural Gas (NLNG) fund, saying the corporation has the power and the legal backing to carry out such withdrawal.

According to the Chief Financial Officer of NNPC, Mr. Isiaka Abdulrazaq, “There are two reasons. First one is, the 2018 Appropriation Act is very clear on this. The second is the Nigeria NLNG Appropriation Act Section 7, sub-section 4(b) makes it very clear. And what the National Assembly is saying is that we don’t have the legal authority to use this fund. We have provided them with those legal authorities …” It is however submitted that since the NNPC is an agency of the Government established by law to manage the petroleum industry on behalf of the people of Nigeria it cannot spend any money earned from its operations without a money bill presented to the national assembly by the President and passed into law. Therefore, section 7 of the NNPC Act being relied upon by the NNPC management has to be read subject to section 59 of the Constitution. Apart from calling for a probe of the diversion of the total sum of $18.9 billion dividend by the NNPC the NLNG should be directed to make further payment directly to the federation account. The authorities of the state and local governments ought to institute a suit at the federal high court to challenge the illegal decision of the NNPC to withhold the fund payable to the federation account.

Illegal allocation of N3.2 trillion annually on fuel subsidy by NNPC
Apart from the hundreds of millions of dollars spent on the so called turn around maintenance of the nation’s refineries the federal government spends trillions of Naira on the importation of refined petroleum products from Europe and America. According to the data provided by the Petroleum Products Pricing and Regulating Agency (PPPRA), which was verified and validated by the Nigeria Bureau of Statistics (NBS), Nigeria imported 22.5387 billion litres of petroleum products worth over N3.24 trillion from refineries abroad in 2017. The waste which is no longer called subsidy but under recovery cannot be sustained for too long. Therefore, the crisis calls for urgent review by all the tiers of government. The labour unions ought to pressurize the federal government to expand the use of Compressed Natural Gas in order toimportation of petroleum products from abroad stop spiraling subsidy payment in the country.

Based on the rising cost of importing petroleum products from abroad the minister of state for petroleum resources, Chief Timipre Sylva, recently declared 2020 as a gas year for Nigeria to extend the frontier of the Compressed Natural Gas (CNG) for vehicles. The decision of the federal government should be supported CNG is cheaper and a more environmentally clean alternative to petrol and diesel fuel. Used by many countries it was launched in Nigeria since 1989 but its use has been restricted to a few vehicles in Edo and Lagos states. It is high time the planned re-invigoration of the CNG project by the federal government was taken seriously. Apart from stopping the importation of petroleum products from abroad and saving N3 trillion per annum it is said that Compressed Natural Gas can earn the Federal Government over N200 billion from over one million cars converted into CNG from petrol engine.

Loss of $500 million due to illegal suspension of Cargo Tracking Note by the federal government

Cargo Tracking Note scheme was conceived following the 9/11 terrorist attack on the United States of America, which led the International Maritime Organization to introduce a security framework for enhancing the protection of international shipping and the prevention of the movements of dangerous cargo and arms shipments in all the maritime regions of the world. The system, with numerous advantages such as plugging revenue leakages, putting end to under-declaration of cargoes, importation of arms, ammunition, banned drugs among others, was even at no cost to shippers, importers, governments and shipping lines.

The Cargo Tracking Note system was introduced in Nigeria in 2010 via an Agreement signed between the Nigerian Port Authority and TPMS, a private company. Barely a year later, the agreement was illegally suspended indefinitely by the federal government. When our attention was drawn to illegal suspension of the Cargo Tracking Note system we protested to the federal government. The suspension was lifted on May 28, 2015. But the company was not allowed to resume work as the contract was again suspended in 2016 on grounds of fraud. The Economic and Financial Crimes Commission investigated the allegation and found that the sum of €70 million was generated when the system was implemented for only 15 months. Two officials of the company indicted in the investigation for diverting part of the fund that ought to have been paid into the federation account have been charged before the Lagos high court by the EFCC. Thus, on account of the illegal suspension of the Cargo Tracking Note system the country has lost not less than $500 million.

Additional revenue of $1.5 billion annually from Amendment of Deep Offshore and Inland Basin Production Sharing Contracts Act
In July 2015, we drew the attention of the Federal Government to the fact that the 15-year fiscal incentives given to the oil and gas companies operating under the Deep Offshore and Inland Basin Production Sharing Contracts Act had expired in June 2014. When the federal government ignored our request we drafted a Bill for the amendment of the law and forwarded it to the executive and legislative organs of the federal government. Even though the Bill had scaled the first reading in the Senate it was not passed into law before the dissolution of the 8th National Assembly. But it was the same Bill that was adopted, modified and passed by both Houses of the 9th national assembly and assented to by President Buhari on November 4, 2019. In justifying the passage of the Bill the President of the Senate, Senator Ahmed Lawan had announced that the amendment of the Act would increase the revenue of the nation by not less than $1.5 billion per annum.

The demand of $62 billion from OICs by federal government

In the course of campaigning for the amendment of the Deep Offshore and Inland Basin Production Sharing Contracts Act we accused the federal government of deliberately sabotaging the national economy by not implementing the law and thereby denying Nigeria the royalties payable by the International Oil Companies. While blaming the non implementation of the law on some unscrupulous officers the then Minister of State in the ministry of petroleum resources, Dr. Ibe Kachukwu admitted that the country had lost a whopping sum of $60 billion. My demand for the collection of the huge fund was ignored. It was at that stage that the governments of Akwa Ibom, Bayelsa and Rivers State filed a suit at the Supreme Court seeking to compel the federal government to collect all outstanding royalties under the Deep Offshore and Inland Basin Production Sharing Contracts Act.

The parties to the suit entered into some terms of settlement which informed the judgment of the Supreme Court delivered on October 20, 2018. In granting the reliefs sought by the plaintiffs the apex court ordered the federal government to collect the outstanding royalties for the past 18 years. Based on the judgment the federal government has directed the oil companies to pay the sum of $62 billion into the Federation Account. Even though the oil companies have challenged the demand of the federal government at the federal high court the royalties will be eventually collected in view the aforesaid judgment of the Supreme Court.

Illegal sharing of CERPAC Fees by federal government and a private company