Nigeria federalism and the challenges of resources allocation in the fourth republic

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CHAPTER ONE

INTRODUCTION

1.1 Background of the Study Politics and controversy on revenue allocation and resource control are not new in thepolitical and economic history of Nigeria and such are more or less significant in every federal system. But the degree at which these issues steam differs from one federal state to another and are also dependent on the type and characters of the federalism in practice. From Nigeria’s independence in 1960 up till 1981, the country’s resource control and allocation system have neither been efficient nor popular with manifold vulnerabilities, which resulted in the establishment of several commissions, changes, increases and decreases and reviews of control and allocation principles and formulas as observed by Amuwo, Agbaru, Suberu and Herault (1998: 232, 33 & 39). At a time, Nigeria operated unitary arrangement with a central government that was constitutionally powerful in fiscal matters. However, with the constitutional creation of three regions in 1946, the fiscal responsibilities of the federal government were taken over by the regions. By 1947 as noted by Adedeji (1969:50), there were constitutionally two main sources of revenue for the regional governments as Declared and Non Declared Revenue generated from within the regions and grants from the central revenue. Efficient and popular resource control and allocation are essential to unity and stabilitybetween and among component part of every federation. It has also been critical and contentious socio-economic and political issue, especially among developing federal states. While in the developed world the main attention is on how to ensure proper exploitation andharnessing of resources, in states like Nigeria, control and sharing of these limited andunevenly endowed resources among the component parts is the bone of contention. The discovery of oil in Nigeria opened a new chapter for a marked shift from agriculture and solidminerals sectors to the fast monoculturisation of Nigerian revenue base and economy withconsistent and dislocated dependence on oil revenue (Watts, 2013:1). At the same time, themore Nigeria depended on oil, the more the conflict, controversy and politics over oil and resource control and allocation. In Nigeria’s history of federalism about nine fiscal commissions had been established tostudy or review system of revenue allocation and among the units of the federation from pre-independence to date. Many of the Commissions’ establishments were largely influenced byissues related to oil minority communities and oil resource control. Nigeria has therefore beenon a long term search for popular and viable resource control and allocation formula for itsfederal structure. These searches have been highly politicized and controversial betweenfederal (central) government and basically oil producing states and communities on oneaspect, and the federal, states and local governments on the other. It is, however noteworthythat Nigeria is a heterogeneous state, but with a monoculturised economy substantially dependent on oil, which accounts for more than two-third of its total generated revenue and foreign exchange earnings. While at the same time substantial revenue and expenditure of the tiers of the federation are dependent on the statutory allocation which is also based on sale and the price of crude oil with over 50% of the revenue being allocated to the central(federal) government. 1.2 Statement of the Study Resource control and allocation of revenue among units of a federation are very significantfor both political and economic reasons (Watts in Loughlin, et al., 2013: 29). In Nigeria, thediscovery, exploration, and subsequent realisation of huge revenue from the sale of oil,especially in the 1970’s has led to high tension, controversy, negative politics, unhealthyrivalry among the components of Nigerian federalism and peoples. These have also beenfollowed by dislocation and deterioration of economic and political development, unity andcohesion of Nigerian state; and instead of optimum utilisation of the proceeds from oil toinvest in and diversify other non-oil sectors, there lingered the problem of both inefficient useand inequity of oil wealth. With that, Nigeria became confronted by many forces among which are the units of the government (federal, states and local) which all rely near absolute on oil revenue, and non-government dissident elements and groups who also enjoy the oil money squander mania and increased animosity among its populace. The process of revenue generation and allocation has all along been defined by politicalcontentions at numerous levels, such as in the constitutions making and development, fiscaland monetary policies and programmes, political scheming, militant activities and threats of secession. The oil resources initially found in the minority areas has inNigeria’s history been held and controlled by the conglomerates of the major tribes whocontrol the state political machinery. Increase in oil revenue has similarly, led to politicalleaders misusage and more corrupt practices rather than investment and diversifications. To most oil rich economies like Nigeria, Venezuela, Angola, oil has caused a deformation toinstitutional and rational channels of socio-economic development which resulted tosuperfluous an unsustainable lifestyle and consumptions. Nigeria’s economic and socio-developmentaltrack has since the exploration and boom of oil been determined anddependent on oil revenue led to the dearth of the most vital sector of agriculture being thelargest labour employer, GDP contributor and the solid minerals (Watts, 2013:Iii). Indeed, theexisting inadequacies and problems of Nigeria’s federalism, especially on resource controland allocation have generated calls for fiscal federalism which most Nigerians commonlyrefer to as ‘true federalism’ (Suberu in Loughlin et al., 2013:426). 1.3 Aim and Objective of the Study The main aim and objective of this study is to examining Nigeria federalism and the challenges of allocation in the fourth republic. And the specific objective are: 1. To find out the relationship between revenue allocation and national integration in Nigeria. 2. To discover if the operation of true federalism in Nigeria could help in tackling the problems. 3. To inquire into the impact of religions and ethnic loyalties and national integration in Nigeria. 4. To examine whether ethnic nationalism affects internal security of South east region. 1.4 Significance of the Study It has become obvious that Nigeria cannot make any meaningful progress in the absence of unity. Some founding fathers of Nigeria adopted federalism as a pragmatic instrument for the achievement of the goal of national unity. The rationale was to see if there could be unity in diversity which means that there could be ways of bringing diverse ethnic groups into a modern nation. However, amidst all the efforts, the goals of national integration are not yet possible owing to the numerous problems inherent in Nigeria federalism. It is therefore the task of this work to contribute in no little measure to the solution of the challenges of resources allocation in the fourth republic. Apart from thus, the work will equally add to the volumes of research materials available for further work on Nigeria federalism and the challengesresources allocation in the fourth republic. 1.5 Literature review Much work has been done on the subject matter federalism and its relation to resources allocation. Most of the scholarly works were unable to give a comprehensive analysis of Nigerian federalism and how it affects national integration. Though some of them made very relevant scholarly contributions to knowledge from which a number of conclusions can be drawn. Federalism as has been adopted in Nigeria found its way into our political arena during the colonial era. The concept is closely related to the various social based on coordinative, rather than sub coordinative relationship. It emphasises partnership among parties of equal claims to legitimacy who seek a common social order. Jinadu says that it is usually built as a form of government and constitutional structure deliberately designed by political architects to cope with the different task of maintaining unity, while preserving diversity, Jinadu, [1979:15]. Federalism simply refers to a system of government where there is constitutional division of power between two or more levels of government. Federalism, according to (Anyadike, 2013) refers to a political system where there are at least two levels of government. In such cases, there is the juxtaposition of two levels of power of a central government otherwise called the federal government and other states labeled variously as states, regions, republics, cantons or unions. Akindele and Olaopa (2002) opined that, one of the primary features of a federal system of government is the assignment of functions between the various components of government. This also forms the basis for the determination of revenue rights and the delimitation of tax-raising powers, which constitute the genesis Of Intergovernmental Fiscal Relations (IGFR). Most constitutional arrangements in federal systems classify the powers and responsibilities into exclusive, concurrent and residual legislative lists, as is the case in Nigeria. The basis of this classification can be historical, political or economic, among other considerations. Thus, it is generally accepted that the assignment of functions among federating units should be organized in the following ways: – Functions which can be more efficiently performed by the federal government than lower levels of government should be assigned to the former (i.e. be placed in the exclusive legislative list). These include national defense, external relations (including borrowing and external trade), banking, currency, nuclear energy, etc. – Functions whose benefits are more local than national but with the possibility of spill- over effects should be placed in the concurrent list. Such functions include industrial, commercial or agricultural development, post primary institutions, health care, etc. – Functions which are purely local in character, in the sense that the benefits accrue, in the main, to limited geographic areas within the country, are usually assigned to local authorities. Such functions would include the establishment and maintenance of markets, car parks and public conveniences, refuse disposal, primary education and the construction and maintenance of local roads and streets. It should immediately be pointed out, however, that it could be difficult, if not impossible, to put most of these functions into watertight departments. This fact underlies the principle of cooperation within federating units in the performance of a number of functions. Akujuru (2015) stated that, revenue allocation in federal system of government involves two basic schemes. The first implies the vertical sharing between the federal or inclusive government and other tiers of government. The subject of this sharing scheme is the federally generated revenue, such as loyalties, export duties, import duties, mining rates etc. The second principle of revenue sharing is the horizontal revenue sharing arises out of variations from the revenue generation capacities of component units. The logic is that, in areas where the revenue capacity is high, a relative higher tax is imposed vice versa to ensure stability. This transfer is called “equalization transfer”. The implication is that high taxation in relatively low revenue generated areas will drive away business investments and also cause further depression of the economy of such areas. To avoidthis, the federal government has to inject more funds to such areas. To avoid this, the federal government has to inject more funds to such areas to create stability (Akujuru, 2015). Speaking about Nigeria federalism two schools of thought emerged on its evaluation. The first school comprising of the nationalist believed that British imposed federalism on Nigeria in order to maintain the neo colonial control of the country after the lowering of the mantle. Chief Obafemi Awolowo, a convinced federalist described the British imposed federal structure as an abominable destructive and divisive British heritage, Awolowo, [1968:69]. They also believed that the colonial power made sure that there was enough structured imperfection left behind to bedevil inter-ethnic relations after independence. However, this view of imposition held by this school is not exactly objective as Nigerians involved gave consent for her to become a federal state. The second school of thought is of the opinion that historical and geographical factors determine the political evolution of Nigerian federalism. Nigeria being a large and culturally variegated country could not have been governed for a long time from one centreAkinyemi, [1979:91]. This view is not quite correct, as it is time that factors of history and geography more than anything else determines the constitutional evolution of Nigeria. Ethnicity is one concept that cannot be over looked in the discussion of the structure of Nigerian federalism and national integration as a whole. It has been defined as the social phenomenon associated with interaction among members of different ethnic groups refer to social formation distinguished by the communal character of the boundaries of which their common factors may be language, culture or both, Nnoli, (1973:58). Nigeria is one country that comprised various ethnic groups with physical or different backgrounds, ancestry and tradition. Nnoli goes further to mention some characteristics that distinguish one from ethnocentrism which simply connotes pride in ones group, a hampering that makes the members of the group inward looking. According to him, ethnicity exists in a political society consisting of diverse ethnic groups. It is also characterized by a common consciousness of being one in relation to the other groups. Impulsiveness can be sighted as an attribute of ethnicity which says, is normally accompanied by nepotism and corruption. Conflict is also seen as important aspect of ethnicity. As he says, it is inevitable under conditions of inter-ethnic competitions for scarce valuable resources particularly in a society where inequality is accepted as natural and wealth is greatly exchanged. Several efforts have been made to adjust these social abnormalities and as Ibrahim Babangida said from anthropological and sociological viewpoint, Nigeria is a complex country, therefore nation building in Nigeria context must be of necessity because it is a complex and expensive enterprise. Eleigwa, (1995:5), Nnoli 1978, also believed that the recovery of Nigeria will not be an easy task. He says adequate solution to the ethnic problems of Nigeria must stern logically from rigorous scientific analyses of the causes of the emergence and persistence and growth of ethnicity in the country. Ojukwu in his lecture, towards a greater Nigeria, said that national integration cannot be achieved by giving setaceous speeches; rather appropriate steps will include de emphasising tribe and ethnic origin in all official documents that no Nigeria should offer instability whatsoever. However Ema Awa, [1976] has noted that federalism involves corporation between the two levels of government and such cooperation increased in scope and quantity as the federation matures. Bargaining also assumes more important as the federation becomes more highly developed. As he further explained, there are always some conflicts in the relation between the regions and federal government and among the regions and themselves. After going through the available literatures on federalism it was observed that the writers made relevant contributions, they did not give a comprehensive analysis of the problem of Nigeria federalism as they affect national integration. Sequel to this, in exploring the meaning of federalism, the issue of national integration must inevitably arise. In line with this, it became germane to review the contributions made by some scholars on national integration. Duuelger defines national integration as building up solidarity and breaking down antagonism among the people in a political system. It refers specifically to the creation of a sense of territorial rationality which overshadows parochial loyalties. Chime sees national integration as a process of cohesion between two or more social units whereby those units come together to constitute a political whole, which can in some cases be described as community. Ali Mazrui in his book cultural Engineering and nation building in East Africa 1902, sees national integration as the process of merging sub going entities into a shared sense of national consciousness. In the same vein De Uree also defines integration as the combination and autonomous social and political problems arising among its members, for controlling their behaviour and the processes occurring among them, for keeping peace among them and or mobilizing their power or resources for making collection decision and as a result of all things, acting as a new unit with respect to its social or physical environment. Prior to these definitions, integration will be conceived as the process of increasing a social or political system capacity based on decision making process. National integration is relation to national development. It usually constitutes a platform for national development. Development can only be achieved in an atmosphere of cooperation and unity. Where everybody feel a sense of belonging and wants to contribute his own quota to the development of national goal. According to O. Aboyade in his book, issues in the development of tropical Africa (1976:16), he observed that development is essentially a continuous process of generating and more efficiently allocating resources for achieving greater social satisfying ends. While political development relates to the overall capacity of a people to govern them efficiently, this ability to govern relates to the capacity to extract resources, make and regulate behaviours. It also means the ability to resolve societal problems and manage conflicts. If the society is able to do all these things mentioned, it will certainly lead to economic development for that nation. Conclusively, after going through the available literatures on federalism and national integration, it was observed that some of them were able to explain to an extent the feasibility of achieving national integration. However in this study, we shall attempt to explore the suitability and adaptability of federalism to the excruciating task of building a coherent nation out of desperate and antagonistic people in Nigeria. 1.6 Theoretical Frameworks Theoretical framework is indeed very useful in a research work in the sense that it enhances its internal activity. With this in mind, there are lot of theories used in the field of political science for research analysis; however, we will adopt the system theory by David Easton. This theory is seen by scholars among who is Ifesinachi as a set of related elements and interrelations among them, which are disintegrated from those elements not in the system by ambiguous analytic boundaries. The theory explains the component of the system made up of groups, persons or areas where the frequency of a particular pattern of interaction falls to an observable degree. Interdependence is the uniting force in the system; this is because stability and subsequently growth can only be achieved when all the components of a system work together. As a way of using the system theory by David Easton to analyse this work, Easton, [2002], defines a political system as that system of interacting in any society through which binding or authoritative allocations are made and implemented.’[Easton in Okere 2002:98] this implies that an organization interacting with an environment, influencing it and being influenced by it and there also many interacting internal parts which constitutes parts of the arranging that the society employs in formulating and pursuing its collective goods [Almond and Powell 1980:4]. The three vital components of Easton definitions of political system constitute authoritative allocation, values and society. At this point, it becomes necessary to make a brief application of this theory to the Nigerian political scene, before and after independence. The theory would be employed in this study because in Nigeria, like any other third world federative system, the power to allocate the resources available in the country is essentially concentrated at the central government, [federal level] that is the hierarchy of authority [federal level, state and local government], with the central government sitting on top of other levels in the allocation of revenues. This is basically due to the prolonged military rule in the country, and this has been one of the banes. For the country to experience genuine unity and subsequently development, all the groups and cleavages have to come together since no part of the system can function effectively and maximally without depending on the other components. 1.7 Methods of Data Collection/ Analysis In this study we adopted the use of secondary source of data as the main method. This is justified due to its intrinsic values. For any research to be meaningful, reliable and scientific fact and ideas must be supplemented with empiricism. Secondary materials like textbooks, research papers, government publications, newspapers, magazines etc will be seriously put into use. 1.8 Limitation of the Study The basic problems which were encountered during this study were the scarcity and inaccessibility of materials. However the study was successfully done because of the extra efforts made to get more resources and procure the materials for analyses. 1.9 Conceptual Definitions Citizen: Is an individual who has full political and legal rights in a state by birth,naturalization, marriage, registration, and conferment. Ethnic: Ethnic is derived from the Greek word “Ethnos” meaning tribe or race (Wikipedia). Ethnicity: As a social phenomenon associated with interaction among different ethnic groups(Aiyede, 2006). It is a social phenomenon associated with the identity of members of thelargest possibly competing communal groups (Ethnic groups) seeking to protect and advancetheir interest in a political system (Nnoli, 1978). Self-Determination: The principle that peoples should control their political destiny, a rightrecognized in many antique and modern political treatises enshrined in the United Nations. Federalism: Federalism means an arrangement whereby powers within a multinational country are shared between a federal or central authority and a number of regionalized governments in such a way that each unit, including this central authority exist as a government separately and independently from the others. Division of power among the levels of government by the constitution is explicit. The centre and the component unit [regions, states] have defined spheres of authority, powers and shared among the levels of government which are coordinates. Powers shared among the various levels could be categorized as exclusive list, concurrent list and residual list. A. Exclusive list Subjects on this list are reserved for the centre [federal government] examples here are, defence, internal affairs, national currency, immigration, maritime activities, aviation, etc. B. The Concurrent List Subjects here are to be exercised both by the federal and the state. Example includes agriculture, health, commerce, education, works etc. C. Residual List This comprises functions to be exercised by the state/ unit government alone, example includes chieftaincy title etc.

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