Pitfalls of our fiscal federalism
By Abiola Ajimobi
It is a great delight for me to be here today. That our state is playing host to this all-important and epoch-making occasion, will no doubt, excite recorders of commendable dates in history, otherwise called historiographers.
The South West Geo-political zone has always been identified with strategic planning, focused development and methodical care for the future endeavours of its people. The
enduring developmental impacts of our forebears in government were predicated on their intense passion for the socio-economic welfare of the people, as well as their development of marshal plans for the future of their people.
In spite of the series of political challenges and geographical re-adjustments over the years, the South-West remains the hub of progressive politics. As we all know, the hallmark of progressive politics is to proffer antidotes to the menace of mass poverty. Progressive leaders, vision-driven and passionate about the future of their people, are fired by the zeal to always prosecute causes that engender socio-economic emancipation of the downtrodden and the common man in their governmental environment.
We are not oblivious of the fact that the Revenue allocation formula being employed for the distribution of our national resources among the federating units took its premise from the 1999 Constitution of the Federal Republic of Nigeria. We are also aware that the formula took its essence from the modification orders which came about as a result of the Supreme Court Judgment of April 2002 in the case between the Federal Government and the 36 States.
However, it is becoming evident by the day that the current fiscal structure which favours the Federal Government with 52.68% of the total national revenue is at variance with, and certainly not in consonance with the reality of responsibilities of the other tiers of Government.
Cries against this inequitable distribution have been strident among federalism experts and nationalists. Yet, there is no respite at the moment. Efforts, severally and individually, had in the past been made to make the federalist avowal of the Nigerian Constitution to reflect its fiscal disposition accordingly. However, this desired result and effect have been elusive.
The effort of the Revenue Mobilization Allocation and Fiscal Commission (RMAFC) to use the power conferred on it by the Constitution to review the revenue formula and principles in operation is commendable. It could not have been done at a better time, in order to have our fiscal regime conform with changing realities.
Without prejudice to the would-be report of RMFAC, after this exercise, the realities of the contemporary challenges at the grassroots level would, no doubt, be unassailable to all. I am convinced that the challenges would force out the unison of opinion of all stakeholders that there is an urgent need for an equitable and a more acceptable revenue allocation formula. A formula that will be directed towards the economic imperatives of the nation, further its oneness and eschew unfairness among the various tiers of Government, is no doubt a sine qua non for an equitable nation.
Oyo State Government, like other States in this zone, would make her own presentation in the cause of this 2-Day sensitization programme. It would not be different from the corpus of agitations for fiscal equity. As articulated by federalists and as witnessed by us in the administration of our respective tiers, the responsibility of governance, both at the State and Local Government levels, have become so enormous but frustrating for the operators. This has been necessitated by inadequacy of resources.
One sole incubus implicated in this is the primary responsibilities of States and Local Governments that is being unnecessarily competed with by the Federal Government. Since the States and Local Governments are positioned strategically to identify the critical needs of the people at these levels of governance, duplication of efforts on the concurrent list should be reviewed, so as to allow each tier of Government to concentrate on areas that will better touch the lives of the governed.
Since the inception of this administration in Oyo State, efforts are daily being made to put human faces imprints on all the socio-economic welfare programmes and policies implemented by government, with a view to bringing governance and its essence closer to the people. This we started by advocating a style of governance and politics that is devoid of subterfuge and violence which we inherited, but rather a focus on development. We have spared nothing to ensure that security is not compromised as only peace can engender development. Earlier in the life of this administration, a joint security outfit named Operation Burst, comprising all the security agencies in the State, was launched and, by now, its tentacles have spread to all the geo-political zones of the State. What we have now in Oyo State is a rest from the hitherto disorder and violence that stuck to us and our well-advertised pedigree like a leech.
The State Government is also hosting foreign investors more than ever before and yet almost on daily basis, new proposals are received to do business with the serene and peaceful New Oyo State. Just recently, a Canadian team signed a Memorandum of Understanding with the State to invest over $1b in agriculture in our state. This could not have been possible in the hitherto atmosphere of brigandage and disorder. The attraction is also the massive infrastructural rehabilitation and construction being embarked upon throughout the length and breadth of the State.
Investment in the future of our teeming youths has also evolved several youth empowerment programmes. Apart from the initial 20,000 youths employed by us almost two years ago, many more youth have passed through our skill acquisition centres. Both the education and health sectors of the State are also witnessing a revolution of massive rehabilitation and infrastructural development that is aimed at bringing back the old glory of the Western Region.
While this is not a forum for blowing the trumpet of achievements of this administration in the State, driving round the capital city, Ibadan and our major cities will confirm that, like our forebears, we are driven by a vision to bring the condition of living of our people to the acceptable standard for humans in the world.
This forum is premising its gathering on the last presidential debate organized by the Broadcasting Organization of Nigeria (BON), where the President had promised to present whatever are the views of the general public on the subject of the proposed review of revenue allocation formula to the National Assembly, as would be submitted through the report of the Revenue Mobilization Allocation and Fiscal Commission. This has given a hope that the age-long yearnings and aspirations of the federating units of this nation, in term of availability of resources for the respective responsibilities of governance, would soon be met.
This is also the forum for all stakeholders to lend their voices to the desired devolvement of more financial resources from the center to the States and Local Governments. There is no doubt that some of the issues that would lead to the realization of this dream would require constitutional amendments. Necessary steps should therefore be taken to correct the present imbalance and unfair distribution of our financial resources. Both the existing vertical and horizontal allocation formula should be discussed for review.
Apart from the vertical method which has favoured the Federal Government with 52.68% of total revenue, the 7 indices currently in use for the horizontal formula deserve particular attention. It is hoped that indices of general concern like equality and population (including density) is reviewed upward.
I wish to particularly point out that the issue of crises of population, for example, should be given a proper attention as one of the relevant determining factors for revenue allocation. For instance, the last census figures which controversially puts Oyo State at 5.6m is grossly understated and this might have been responsible for the unfair treatment meted to the State in terms of allocation from the Federation Account. In reality, the population of Oyo State is close to 7 million, with a high range of density.
It must also be mentioned that Oyo State has deposits of minerals in commercial quantities, with the Federal Government undertaking mining activities in the various parts of the State, albeit without the State benefiting from the 13% derivation due to states where mining activities are taking place.
I know that the South Western zone will have a coordinated view on this subject matter by the end of this sitting. I wish to assure the Commission that the 6 States in this region will do everything possible to ensure that the objective of this sensitization exercise is realized. Our hope will then be for justice to be done.
Once again, I thank the Chairman and Commissioners of the Revenue Mobilization and Fiscal Allocation Commission (RMFAC) for bringing hope that will improve the economic future of all the federating units of this Country through this conference.
Thank you and God bless.
.Being a keynote address delivered by the governor of Oyo State, Sen. Abiola Ajimobi, at the opening ceremony of the 2-day South West sensitization on the proposed review of the revenue allocation formula in Ibadan on Monday October 7, 2013.
It is a great delight for me to be here today. That our state is playing host to this all-important and epoch-making occasion, will no doubt, excite recorders of commendable dates in history, otherwise called historiographers.
The South West Geo-political zone has always been identified with strategic planning, focused development and methodical care for the future endeavours of its people. The
enduring developmental impacts of our forebears in government were predicated on their intense passion for the socio-economic welfare of the people, as well as their development of marshal plans for the future of their people.In spite of the series of political challenges and geographical re-adjustments over the years, the South-West remains the hub of progressive politics. As we all know, the hallmark of progressive politics is to proffer antidotes to the menace of mass poverty. Progressive leaders, vision-driven and passionate about the future of their people, are fired by the zeal to always prosecute causes that engender socio-economic emancipation of the downtrodden and the common man in their governmental environment.
We are not oblivious of the fact that the Revenue allocation formula being employed for the distribution of our national resources among the federating units took its premise from the 1999 Constitution of the Federal Republic of Nigeria. We are also aware that the formula took its essence from the modification orders which came about as a result of the Supreme Court Judgment of April 2002 in the case between the Federal Government and the 36 States.
However, it is becoming evident by the day that the current fiscal structure which favours the Federal Government with 52.68% of the total national revenue is at variance with, and certainly not in consonance with the reality of responsibilities of the other tiers of Government.
Cries against this inequitable distribution have been strident among federalism experts and nationalists. Yet, there is no respite at the moment. Efforts, severally and individually, had in the past been made to make the federalist avowal of the Nigerian Constitution to reflect its fiscal disposition accordingly. However, this desired result and effect have been elusive.
The effort of the Revenue Mobilization Allocation and Fiscal Commission (RMAFC) to use the power conferred on it by the Constitution to review the revenue formula and principles in operation is commendable. It could not have been done at a better time, in order to have our fiscal regime conform with changing realities.
Without prejudice to the would-be report of RMFAC, after this exercise, the realities of the contemporary challenges at the grassroots level would, no doubt, be unassailable to all. I am convinced that the challenges would force out the unison of opinion of all stakeholders that there is an urgent need for an equitable and a more acceptable revenue allocation formula. A formula that will be directed towards the economic imperatives of the nation, further its oneness and eschew unfairness among the various tiers of Government, is no doubt a sine qua non for an equitable nation.
Oyo State Government, like other States in this zone, would make her own presentation in the cause of this 2-Day sensitization programme. It would not be different from the corpus of agitations for fiscal equity. As articulated by federalists and as witnessed by us in the administration of our respective tiers, the responsibility of governance, both at the State and Local Government levels, have become so enormous but frustrating for the operators. This has been necessitated by inadequacy of resources.
One sole incubus implicated in this is the primary responsibilities of States and Local Governments that is being unnecessarily competed with by the Federal Government. Since the States and Local Governments are positioned strategically to identify the critical needs of the people at these levels of governance, duplication of efforts on the concurrent list should be reviewed, so as to allow each tier of Government to concentrate on areas that will better touch the lives of the governed.
Since the inception of this administration in Oyo State, efforts are daily being made to put human faces imprints on all the socio-economic welfare programmes and policies implemented by government, with a view to bringing governance and its essence closer to the people. This we started by advocating a style of governance and politics that is devoid of subterfuge and violence which we inherited, but rather a focus on development. We have spared nothing to ensure that security is not compromised as only peace can engender development. Earlier in the life of this administration, a joint security outfit named Operation Burst, comprising all the security agencies in the State, was launched and, by now, its tentacles have spread to all the geo-political zones of the State. What we have now in Oyo State is a rest from the hitherto disorder and violence that stuck to us and our well-advertised pedigree like a leech.
The State Government is also hosting foreign investors more than ever before and yet almost on daily basis, new proposals are received to do business with the serene and peaceful New Oyo State. Just recently, a Canadian team signed a Memorandum of Understanding with the State to invest over $1b in agriculture in our state. This could not have been possible in the hitherto atmosphere of brigandage and disorder. The attraction is also the massive infrastructural rehabilitation and construction being embarked upon throughout the length and breadth of the State.
Investment in the future of our teeming youths has also evolved several youth empowerment programmes. Apart from the initial 20,000 youths employed by us almost two years ago, many more youth have passed through our skill acquisition centres. Both the education and health sectors of the State are also witnessing a revolution of massive rehabilitation and infrastructural development that is aimed at bringing back the old glory of the Western Region.
While this is not a forum for blowing the trumpet of achievements of this administration in the State, driving round the capital city, Ibadan and our major cities will confirm that, like our forebears, we are driven by a vision to bring the condition of living of our people to the acceptable standard for humans in the world.
This forum is premising its gathering on the last presidential debate organized by the Broadcasting Organization of Nigeria (BON), where the President had promised to present whatever are the views of the general public on the subject of the proposed review of revenue allocation formula to the National Assembly, as would be submitted through the report of the Revenue Mobilization Allocation and Fiscal Commission. This has given a hope that the age-long yearnings and aspirations of the federating units of this nation, in term of availability of resources for the respective responsibilities of governance, would soon be met.
This is also the forum for all stakeholders to lend their voices to the desired devolvement of more financial resources from the center to the States and Local Governments. There is no doubt that some of the issues that would lead to the realization of this dream would require constitutional amendments. Necessary steps should therefore be taken to correct the present imbalance and unfair distribution of our financial resources. Both the existing vertical and horizontal allocation formula should be discussed for review.
Apart from the vertical method which has favoured the Federal Government with 52.68% of total revenue, the 7 indices currently in use for the horizontal formula deserve particular attention. It is hoped that indices of general concern like equality and population (including density) is reviewed upward.
I wish to particularly point out that the issue of crises of population, for example, should be given a proper attention as one of the relevant determining factors for revenue allocation. For instance, the last census figures which controversially puts Oyo State at 5.6m is grossly understated and this might have been responsible for the unfair treatment meted to the State in terms of allocation from the Federation Account. In reality, the population of Oyo State is close to 7 million, with a high range of density.
It must also be mentioned that Oyo State has deposits of minerals in commercial quantities, with the Federal Government undertaking mining activities in the various parts of the State, albeit without the State benefiting from the 13% derivation due to states where mining activities are taking place.
I know that the South Western zone will have a coordinated view on this subject matter by the end of this sitting. I wish to assure the Commission that the 6 States in this region will do everything possible to ensure that the objective of this sensitization exercise is realized. Our hope will then be for justice to be done.
Once again, I thank the Chairman and Commissioners of the Revenue Mobilization and Fiscal Allocation Commission (RMFAC) for bringing hope that will improve the economic future of all the federating units of this Country through this conference.
Thank you and God bless.
.Being a keynote address delivered by the governor of Oyo State, Sen. Abiola Ajimobi, at the opening ceremony of the 2-day South West sensitization on the proposed review of the revenue allocation formula in Ibadan on Monday October 7, 2013.
Senator Ajimobi is the Governor of Oyo State, Southwest Nigeria.