A Federation without Federalism By Nasir Ahmad El-Rufai

If any questions remain as to why,
despite huge oil revenues and
massive borrowing by the
government – poverty,
unemployment and insecurity have
worsened, our detailed analysis in
this column of the 2011 and 2012
budgets of the federal government
would have provided some answers.
We raised posers on whether the
vast sums of money earmarked for
the expenditure heads – both
capital and recurrent have in any
way added value to the lives of
Nigerians, and offered alternative
spending and expenditure priorities
on how our resources may be better
managed.
Ultimately, it is a sad commentary
on the mind-set of government that
massive infrastructure development
projects to generate employment
and reduce poverty were relegated
in favour of misplaced and
ineffective security spending and
other recurrent expenditure that
mostly benefits those in power but
have near zero impact on Nigerians.
The cost of governance – never mind
it is of such a poor quality and
totally dysfunctional – has never
been higher. How can such high
levels of insecurity, fewer hours of
electricity than ever, and the hardly-
educated products of our
educational institutions cost us so
much as a country?
While the focus of this column has
been on the federal government, we
cannot escape the fact that the
dereliction and mismanagement of
our resources are not confined to
the center but replicated in all the
component units of the Nigerian
Federation: If President Jonathan
leads in profligacy, most of our 36
state governors and 774 local
government chairmen are proving
to be very good followers. From
2001 to 2011, available records
indicate that a total sum of N34
trillion accrued as revenue into the
federation account, apart from what
was paid into the excess crude
account for a rainy day. In the five
years of Yar’Adua and Jonathan at
the helm, over $200 billion have
been frittered away by the federal,
state and local governments with
pretty little to show. On monthly
basis, these revenues have been
distributed among the federating
units using the revenue allocation
formula: FGN – 52.68%; States –
26.72% and the LGAs – 20.6%. This
is apart from the 13% using the
derivation formula, which accrues to
each of the nine ‘oil producing’
States, and transfers from ecological
funds, natural resources funds and
the like, all at the discretion of the
president to favored states and pet
projects.
We must begin to ask: how have
these huge allocations and financial
transfers from the centre been
expended? Is it in the interest of
the generality of the people at the
federating units or that of a
privileged few that mostly rigged
their way into power? And we must
begin to seek answers. This is the
task to which this column will
devote itself to in the coming weeks
as we look at specific cases of
subnational revenue and
expenditure trends with data from
all of the six geopolitical zones of
the country.
In the meantime though, there is
need to assess, in real terms, what
is today referred to as the Nigerian
federation. Is it plausible to refer to
Nigeria as truly a federation or a
failing nation-state in which all the
component units were designed to
live off the federation account, and
maintained by the federal
government at the centre? Will our
current ‘federal’ structure ever
create a productive and competitive
nation? Or are we doomed to be a
nation of parasites on oil and
mineral wealth that we neither
produce ourselves nor really sweat
for? But, has Nigeria always been
structured this way?
From one perspective, there might
be a nexus between our anomalous
federal structure and the lack of
accountability, particularly at the
state and local government levels.
If we reflect on our distant past, the
1963 Republican Constitution was
close to an ideal federal structure,
with clear guidelines on how the
Nigerian federation and the
federating units were to be financed
without undue reliance of one on
the other. Unlike the 1979
Presidential Constitution and its
successors including the current
1999 version, the 1963 Constitution
set clear parameters for territorial
and fiscal federalism and carefully
avoided undue centralization. For
instance, section 140(1) (a) & (b) of
the 1963 Constitution foreclosed
any agitations in the guise of
‘resource control’. While all
minerals – solid or liquid – remain
unequivocally the property of the
government of the federation, the
Constitution provided thus: “There
shall be paid by the Federation to
each region a sum equal to fifty
percent 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 Federation
from within that Region”.
In reciprocal terms, the regions were
contributing towards the costs of
administration of the federal
government at the centre in the
proportion of what they received as
their own share of proceeds of
export, import and excise duties
collected in each region by the
region on behalf of the government
at the centre. In the case of oil
production, the same applied with
the unforeseen exception that the
federation will go into joint ventures
and production sharing contracts
that bring in revenues other than
rents, royalties and taxes. This
system was maintained until the
circumstances of the civil war
changed it radically in favour of
retention of most of the revenues by
the centre, in order to prosecute the
war. Things have never been the
same since then.
Accordingly, the fallout of military
regimes that governed the country
for the greater part of our post-
independent era; was that virtually
all those roles being performed by
the regions were overtly taken over
and centralized to the situation we
now have. We now have a federal
government at the centre that
tends to be biting more that she
could chew for instance by the
ineffective policing of the streets,
highways and borders across the
length and breadth of the vast
geographical space called Nigeria.
Prisons have been taken over from
states and local governments. Every
major interstate road is a federal
road – which then neither gets built
nor maintained when it ever gets
constructed. The Federal
Government has secondary schools,
attempted to build Primary Health
Centers, and construct boreholes –
activities best done by Local
Governments! We can go on and
on, but I believe the point is well
made. The federal government
should scale back on the breadth
and depth of its interventions.
Many of these so-called federal
functions that are backed by huge
recurrent budgets and
bureaucracies in Abuja are better
handled, cheaper by State
Governments. But looking more
closely at our states, are they
capable of shouldering the burden?
These are the questions we will seek
to answer over the next few weeks.
With the possible exception of
Lagos, we currently have states,
most of which cannot survive on
their internally generated revenue
without the monthly transfers from
the federation accounts from Abuja.
The States now resemble
parastatals that wait for a monthly
subvention! Compare this with what
was obtainable under the First
Republican Constitution, there is no
incentive for the states to impose
and collect income and other taxes,
scout for mineral resources in their
domain and make efforts for the
exploration of same, and develop
their agricultural potentials. These
would have raised revenues,
created employment opportunities
and made the citizens of the states
more prosperous – and more
secure! In effect, rather than forging
a reciprocal resourceful interaction
with the government at the centre,
the states wait monthly to be
spoon-fed by the federal
government – and with that we see
the inevitable erosion of their
independence and constitutional
powers. In this fourth republic, only
Bola Tinubu and Raji Fashola as
governors of Lagos State had the
fiscal independence – and therefore
the guts – to not only stand up to
any attempted oppression by Abuja,
but tell the successive occupants of
the Villa to take a walk!
The resultant consequences of this
distortion of our federation have
now come home to roost? There are
increased agitations and hatred
among the federating units –
manifest in open calls for some
National Conference (NC), the
senseless but continued demand for
the creation of more states, and the
review of the revenue allocation
formula. It is clear to everyone that
such agitations are not borne out of
genuine developmental need but to
satisfy the territorial ambitions of
the political elite in such enclaves.
The dismal fiscal performance, poor
governance and lack of financial
accountability in the existing states
are too self-evident for any rational
person to insist on more of the
same. The case of the oil producing
states that enjoy huge derivation
windfalls from the federation
accounts does not exempt them
from this. Rather than spend the
huge monthly allocations to build
badly-needed infrastructure, create
employment opportunities and
improve the welfare of their people,
the levels of poverty,
unemployment and environmental
degradation remain largely
unchecked amidst high per capita
incomes! It is similar to the case of
Nigeria’s fast-growing economy but
with over 112 million citizens living
in poverty and tens of millions of
qualified youths looking for jobs!
Without question, I believe the
situation would have been different
if true federalism in which every
state generates the bulk of its
recurrent needs, lives within its
means and gets help from the
centre on need basis; operated as in
the 1963 Constitution. Rather than
blame the government at the centre
for the woes of the states, citizens
would have learnt to hold state
governors and local government
chairmen responsible for their
neglect, and the incessant scramble
for political positions at the federal
level would have been less
desperate and divisive. As it is, the
attitude is one of “it is our turn to
rule and chop” – with dire
consequences for national cohesion,
transparency and accountability in
governance.
A sound federal structure with
balanced devolution of powers
among the federating units would
provide a respite for the security
challenges currently facing the
country. In our pieces on the armed
forces, the Police and the
paramilitary agencies, this column
advocated reforms which would
encompass decentralization of the
police structure close to what was
obtainable under the 1963
Constitution as a panacea to the
current heightened level of
insecurity in the nation.
At the local government level, there
is virtually no infrastructural or
social development. Apart from
paying salaries of teachers, political
appointees and the overheads of
running the LG secretariats, the rest
of the allocations from the
federation account are usually not
accounted for by the chairmen. The
plight of LGAs was further
compounded by the constitutional
provisions which make it obligatory
for a State-LG Joint Account to be
established, under the control of the
State Government. This became a
conduit of a sort where funds
allocated to the LGAs for grassroots
development simply grow wings – to
land in governors’ offices. Rather
than entertain the clamour for more
non-sustainable states, this is one
area that should attract the
attention of the National Assembly
while considering further
amendments to the 1999
Constitution. To play their rightful
roles and engender true federalism,
any constitutional amendment must
clearly specify the tenure of local
government chairmen and
councilors, and entrench direct
transfer between the LGAs and the
federation account.
Dream as we may for a better
Nigeria; a country that works; a
nation with egalitarian principles of
equal opportunity for everyone and
built on peace requires
governments that are responsive
and responsible. These ideals will
remain mere dreams if we are
unable to aggregate and articulate
concerted efforts to first have
elections that really reflect the
wishes of the electorate, a decent
judiciary, and then entrench a
constitutional structure that enables
true federalism. These need to be
pursued not sequentially but
simultaneously, and immediately.
Until these are done, Nigeria will
remain a federation in dire need of
real federalism. And we will continue
our accelerated decline towards
state failure. That will be very sad
indeed.

Nasir Ahmad El-Rufai
+234 803 408 2353
elrufai@aol.com