The National Conference, which is billed to end on August 4, ended its plenary last week without reaching a consensus on the derivation principle that is of great interest to Nigerians. Unarguably, this is a crucial matter that has been agitating the minds of the people for a long time. But sadly, the discussion of the issue at the Confab degenerated into a rowdy session that ended in a stalemate.
After the stormy session, the Conference Chairman, Justice Idris Kutigi, advised the Federal Government to set up a technical committee to resolve the controversy on the percentage of oil revenue to be paid to oil producing states. It will be recalled that the revenue allocation formula controversy has dominated virtually all major political conferences in the country, before and after independence.
That the topic raised the tempo of debate at the Confab to a disturbing crescendo, pitting the delegates from the North against their Southern counterparts, is a testament to its touchy nature. It is regrettable that the meeting of a broad spectrum of Nigerians at the Confab failed to lead to an agreement on this contentious issue. Unfortunately, the inability of the Confab to agree with the recommendation of the consensus building body made up of zonal leaders and some other groups, that the allocation to oil producing states be increased from 13 to 18 per cent, has led to the passing of the buck on the issue to the president and the technical committee that he would set up to deliberate on it. This is a loss of a golden opportunity for more Nigerians to have an input in the resolution of the debate on revenue sharing formula in the country. The hurried recommendation that a technical committee be set up to decide the matter appears to be a subtle way of avoiding one of the major issues that informed the convocation of the Confab in the first place.
To properly situate the controversial derivation debate, Niger Delta leaders had, in an amended presentation to the Confab, demanded that “no less than 50 percent of the total derivation fund accruable to a mineral bearing state shall be due and payable to host oil communities where the resources are derived in accordance with the production quota contributed by such communities”. But, the Confab delegates rejected the recommendation of 18 per cent by the consensus building group.
The case for a higher percentage of oil revenue for oil producing states is a compelling one, especially because of the degradation of the environment of the producing communities. The states are the geese that lay the golden eggs, and no amount of additional revenue can adequately compensate for the negative impact of oil exploration on the communities. But then, the huge reduction in revenue allocations to states in recent times, ostensibly on account of increasing oil theft, makes the position of those who are opposed to increasing the percentage of revenue to oil bearing states, understandable.
Certainly, the lack of a consensus on this issue is a result of some fundamental flaws in our federalism. What should be paramount in the consideration of this debate is the need for equity, justice and fairness in the distribution of revenue based on the spirit of fiscal federalism.
This controversy, it must be said, has remained a subject of intense national debate and agitation mainly because our country has a mono-product economy that is dependent on crude oil. In the past, it was not so. Prior to, and after independence, each region was known for producing a particular agricultural product. We had the groundnut pyramids in the North, cocoa in the West, palm oil in the East and rubber in the Mid-west. These products sustained the regional economies, with each region making a return to the centre but retaining the bulk of its revenue. There is need for Nigeria to think beyond oil and diversify its economy. The idea of states waiting for revenue allocations from Abuja every month encourages laziness. Most of the developed nations run knowledge-based economies, and only countries that can think outside the box and generate revenue on a sustainable basis, beyond finite natural resources like crude oil, can make progress.
Now that the derivation issue will likely be addressed by a technical committee to be set up by the Federal Government, we advise that we consider how other countries with similar situations as ours deal with their revenue allocation issues, especially with regard to their oil producing communities.
All said, our country is yet to strike a balance between what the centre should keep to maintain a stable federation and what the oil bearing states should take. Finding this balance requires clarity of purpose and political maturity. Sadly, the National Conference missed the opportunity to stand up and be counted on the resolution of this matter.
