Enhancing national fiscal responsibility – National Mirror

The Ekiti State governor, Dr. Kayode Fayemi, recently raised issues on the fiscal and financial management of the nation’s resources, drawing attention to the growing depletion of funds in the Federation Account. Fayemi lamented on the floor of the Ekiti State House of Assembly that the development has created huge financial burdens for state governments. He also critiqued the fiscal propriety of certain deductions being made from oil earnings before the balance is remitted into the Federation Account. The governor stated that about N4.92 trillion had not been remitted into the Federation Account in three years, imploring the Supreme Court to expedite actions on all pending cases bordering on such illegal deductions.

The Federation Account remittance question has been a vexatious issue between the federal and state governments. There have been lingering contestations on revenue sharing between these two tiers of government. The resultant politics of revenue sharing has fostered continuous struggles on which tier of government should appropriate a greater share of the nation’s resources. Indeed, the federating units are critical of the concentration of resources at the centre, which is the case presently. The component units insist on the devolution of greater responsibilities and resources to them with a view to evolving a balanced federation. Critics also argue that the concentration of responsibilities and resources at the centre has led to the erosion of coordinate status and relationship between the FG and the federating units. The de-federalizing impact has made the federating units as somewhat subordinates to the centre.

The 1981 case between the defunct Bendel State Government and Alhaji Shehu Shagari-led Federal Government was occasioned by a dispute on revenue allocation formula. Till date, the contentious nature of revenue sharing in the land has not abated. It has continued to undermine inter-government relations. The recent Governor Babatunde Fashola’s criticism of one per cent deduction from monthly statutory allocation to Lagos State equally underscores the contentious nature of revenue sharing in the country. Fashola had threatened to sue the FG on the deduction. Yet the concept of Federation Account, we dare say, is an anathema in a federal state. The federating units ought to control their resources and pay royalties to the centre as was the experience in the First Republic until the military turned the nation into a unitary state after the first 1966 coup.

The management of the Federation Account by the centre gives it leverage to alter the balance in its favour. The foregoing also strongly suggests government’s emphasis on revenue sharing as opposed to revenue mobilization. Crude oil, which is the mainstay of Nigeria’s economy, is a dwindling resource. It is subject to price fluctuations as well. Therefore, it has become absolutely necessary to diversify the nation’s economy, develop alternative revenue sources and foster autonomous federating units. The federal system in Nigeria will not be enhanced through the heavy dependence of federating units on the centre. The huge resources at the federal level have created a somewhat unitary system and perversion of federal principles in the country.

Indeed, the crisis is occasioned by revenue sharing points at the federalist hypocrisy in Nigeria. More specifically, the imbalance in federal fiscal relations has often heightened centrifugal forces that undermine the country’s stability. Consequently, the forthcoming national conference on the national question should address the distortions in fiscal relations in the country. It is imperative to reduce the constitutional responsibilities of the FG, and a concomitant reduction in its share of the nation’s revenue. The federating units are the building blocks in a federal state. They should earn more resources for development. The absence of growth or development in the federating units is worrisome; and might eventually occasion their demise.

It is important to re-federalize the polity in a sense that balances the federal system, engender coordinate relations between the centre and units and reverse the de-federalizing tendencies in the polity. We are firmly on the side of the re- structuring of the country’s federal architecture and the re-cultivation of federal principles. Efficiently managing the country’s oil wealth is very crucial in order to develop fiscal buffers that can withstand external shocks. Again, it is high time the relevant authorities arrested the vulnerability of Nigeria’s oilbased economy to price shocks and fluctuations that undermine economic planning and development, through the diversification of the country’s income sources.

 

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