Giving bite to the concept of true federalism

For a country that calls itself a federation, it was not a pretty sight to see state governors queuing to beg President Buhari for bailout. Almost all of Nigeria’s 36 states are suffering severe cash crunch occasioned by the crash of oil prices and the consequent reduction in the federally distributable revenues to states. Surprisingly, at the front of the queue are former ACN states – one of APC’s legacy parties, which have always called for the institution of true federalism where states enjoy reasonable fiscal autonomy and control over police and local governments. Osun state and its loquacious governor, Rauf Aregbesola has been particularly hard hit by the dwindling federal allocation to states as he has been unable to pay workers’ salaries for such a long time now and workers are placed on half salaries.

This is expected anyway since the Nigerian state and its component units depend almost entirely on revenues from sale of crude oil. This is against the classical dictates of federalism where the component units enjoy fiscal autonomy and revenue flows from the component units to the centre. That order was reversed by the military, which centralized oil revenue collection and its consequent redistribution to all tiers of government in Nigeria. Consequently, states in Nigerian came to depend almost exclusively on the federally distributable revenues for survival.

Despite that, the constitution still left much powers to the states within which they could raise revenues independent from the federal government to concretise and justify their existence as semi-autonomous units within the Nigerian federation. However, states almost never utilize such powers until their share of the federal distributable revenue is threatened. Lagos state presents an example here.

In 2004, former President Obasanjo arbitrarily ordered the stoppage of constitutionally guaranteed local government funds to Lagos state for unilaterally creating additional local governments without the necessary approval from the National Assembly. Lagos was not the only state affected. Other states like Katsina, Nasarawa, Ebonyi and Niger were also affected. However, while the others quickly backtracked and abrogated the councils, in total acquiescence to the former President’s imperial dictates, the then governor of Lagos, Bola Tinubu, refused to accept what he regarded as a flagrant disregard of the constitution and usurpation of the powers of the state and instead headed for the courts. The Supreme Court ruled in his favour but Obasanjo would have none of it and continued to withhold the funds.

Not wanting to bastardise the idea of federalism that he has always preached and defended, Tinubu decided to call Obasanjo’s bluff and look inwards for survival. This meant fast-tracking and deepening the fiscal and tax reforms his government has started since 1999. From a meagre N600 million in 1999, internally generated revenue rose steadily to N2 billion monthly in 2003, N3 billion in 2004, N4 billion in 2005, 5.57 billion in 2006, and N7.90 billion in 2007. As at 2015, the collectible internal revenue of the state stands at N30 billion per month with a goal of reaching N50 billion in 2019. Already, by 2012, federal allocation represents only 30% of Lagos state budget while tax revenues account for the rest 70%.

Certainly, not all states have the same revenue generating capacity as Lagos. But they all have revenue-generating capacities. Perhaps, they should read the Lagos state reform manual for useful advices. But the practice of depending sorely on federal allocation is not federal and outdated. Perhaps, the constitution should be amended to make economic and revenue viability one of the irreducible criteria for remaining a state in the Nigerian federation.