By Chidi Anselm Odinkalu
A mere four years after emerging from a civil war, in 1974, Nigeria was at the beginning of an oil boom. Then, as today, the country was in the middle of a debate about fiscal federalism and revenue allocation.
Unlike today, however, there were significant differences: the country was under military rule and the men leading the debate were all soldiers. In the fifty years since then, the structure of this debate and the geo-political symmetries that define it have evolved only a little.
The immediate spark for the
debate fifty years ago was the publication of the statutory allocations to the
twelve states of the federation then for the fiscal year 1974-75. With a
population of 2.5 million, Mid-West State received 139.9 million Naira or 23.7%
of the allocation. Rivers State, whose population was 1.5 million, received
101.1 million Naira.
Isawa Elaigwu,
semi-official biographer of Yakubu Gowon, the army general who was Nigeria’s
military head of state at the time observed about this that “while both Rivers
and Midwestern States, comprising 7.3% (4 million) of the country’s total
population, shared between themselves 40.83% (N241.00 million) of the total
allocation to the states, the ten other states which accounted for 92.7% (51.6
million) of the country’s population, shared among themselves 59.17% (349.2m)
of the statutory allocation.”
Usman Faruk, the Commissioner of
Police who governed the North-Western State was unhappy with the dissension
over the sharing of the allocation because, he said, all of them in the Supreme
Military Council then agreed it. Joseph Gomwalk, another Commissioner of Police
and then military governor of Gowon’s own Benue-Plateau State; and Jacob
Esuene, who governed the South-Eastern State called for a more objective system
of revenue allocation. If they knew what such a system looked like, they didn’t
say. Kwara’s military governor, David Bamigboye as well as General Abba Kyari
of the North-East went on record to call for a review of the allocation
formula. For their part, Oluwole Rotimi and Mobolaji Johnson, military
governors respectively of the Western and Lagos States advocated for “a revenue
allocation formula that would guarantee responsible and stable government for
Nigeria.”
Nigeria’s search for a workable
federalism in many ways can be reduced to the search for precisely such a
formula. It has proved elusive. If anything, it may have got even more so. In
the 36 years between 1946 and 1980, spanning the colonial and post-colonial
periods and including military as well as elected civilian regimes, the
country burnt through the reports of at least eight blue ribbon panels on the question of
fiscal federalism.
On the eve of independence in
1958, the report of Raisman Commission recommended the creation of a Distributable
Pool Account (DPA) into which was to be paid 30% of revenue from mineral rents
and royalties and from import duties. The regions retained 50% of the revenue
from mineral rents and royalties from their region while the central government
took 20%. 70% of the revenue from import duties went to the central government.
Six years later and four years after independence, the Binns Fiscal Commission increased the DPA share of the income from import duties from 30 to 35% at the expense of the share of the central government. Importantly, the report set its face against the principle of derivation, replacing it with that it called the principle of “financial comparability.” On this basis, it recommended the sharing of the DPA receipts as follows: Northern Region 42%; Eastern Region 30%; Western Region 20%; and Mid-Western Region 8%. Lagos was then the federal capital. Up to this point, the fiscal balance largely favoured the regions who contributed resources to the central government.
In 1968, Nigeria’s post-colonial
crisis of state legitimacy had already exploded into a year-old civil war.
Under pressure from both the economic costs of the war as well as its
structural antecedents, Yakubu Gowon, the war-time Supreme Commander (as he was
then known), called upon Chief I.O Dina, a former history lecturer at the
University College Ibadan, to lead what the regime called an Interim Revenue
Allocation Review Committee.
The legacy of the Dina Committee recommendations was
very far reaching and suited the regimental mood of the military. The Committee
addressed frontally the issue of taxation and public goods. It recommended a
centralization of taxation as well as the harmonization of the produce
marketing boards which were until then mostly regional. The Dina Committee also
recommended a centralization of the funding of higher education and the
replacement of the DPA with what it called a State Joint Account. Additionally,
the committee recommended that states should retain 100% of rent from onshore
extractive operations on the basis of derivation and also receive another 10%
of royalties revenue as derivation.
Even in the midst of an
existential conflict at the time, the fuss that followed in the wake of the
Dina Committee report was deafening. Officially, the Federal Military
Government rejected the Dina Committee Report. In reality, Isawa Elaigwu
recalls that “….Gowon did not raise dust over the issue but quietly implemented
most aspect of this report through the back door at the appropriate time.”
The result is that the Dina
Committee Report has been quite influential in shaping Nigeria’s version of
federalism.
Gowon enjoyed three advantages at the time in his handling of the unitarising tendencies that underpinned the recommendations of the Dina Committee. First, the civil war was an extenuating circumstance. Second, the regimental traditions of military government limited the degree of elite dissension. Third, as a military ruler, he ultimately did not have to suffer any institutional constraints similar to those imposed by a parliament or its equivalent under elected civil rule.
For the current incumbent fifty
years later, a civilian seeking to accomplish what would be the most
far-reaching restructuring of Nigeria’s fiscal fundamentals in 110 years, none
of these advantages exists and he suffers many more debilitations besides.
By some coincidence, in the year
that Gowon constituted the Dina Committee, the celebrated Kenya political
scientist, Ali Mazrui, explained
the challenges of structural stability in post-colonial African states in terms
of two underlying crises of state legitimacy and of regime legitimacy.
Fiscal reform on the ambition
evinced by the proposals now under consideration in Nigeria assumes the
existence of a capable state which enjoys affinity among citizens, an
overwhelming percentage of whom should be documented. None of these can be
taken for granted in Nigeria. The evidence from across the fields of financial
inclusion, electoral participation, and taxation suggests that the proportion
of documented Nigerians does not exceed 40%. It will take more than a few
convenient ebullitions to address this.
Any government will be
challenged in addressing it. An administration that suffers from manifest
issues of legitimacy lacks the currency to trade with in this situation. The
crisis that afflicts the current proposals is that of a government unwilling to
put in the work required to redress deficits of state and governmental
legitimacy around the country. To address what is evidently a political
problem, the government has chosen instead to escape into self-inflicted
technocratic gobbledygook.
Fiscal governance and reform is
not as complex as the administration and its mouthpieces would like to suggest.
Taxation is more than mechanical computation. It is the centrepiece of the
social compact between a state and its citizens. With considered inadvertence,
the administration of Bola Ahmed Tinubu has done itself a world of good by
inspiring these increasingly raucous debates about the state of that compact in
Nigeria or the lack of it. It will be best served by listening to the
debate in humility while it learns.
*A
lawyer and a teacher, Odinkalu can be reached at chidi.odinkalu@tufts.edu
No comments:
Post a Comment