721 views | Stanley Duruibe | September 18, 2020
“No one is more hated than he who speaks the truth”. Plato.
As a recap, those few words below in quotation mark summed up the ‘Part 1’ of this treatise:
“…In summary, the provision of a professional police force, an efficient legal system and a comprehensive and coordinated national database will be the turning point of reforms that will herald a new and prosperous Nigeria”.
In the wee years of the fourth coming of democratic governance into Nigeria’s post-independence polity after successive years of different military juntas, I can still vividly recall the reservations and fears expressed by one of my mentors and a renowned Professor of Development Economics, E.J. Nwosu – of blessed memory. Like a prophet and a lone voice in the wilderness, the baritone voice of the late erudite Professor still echoes in my memory to date as he habitually decried the 1999 constitution which birthed the present structure of the country’s economy and political leadership during his lecture sessions with us, as well as in the several media interviews he did granted at that time.
He had once asserted that, “The 1999 constitution which gave birth to the structure of the Nigerian economy, including its political leadership thereon is a residue of military diktat; it is a ticking time- bomb waiting to implode the polity”
Twenty-one years on, inquiring if the late Prof’s assertion has come to pass or not is another subject matter left to contemporary Political Scientists, Political Economists and Sociologists to scrutinize. Whatever may be the conclusion of their scrutiny, be it known that the following political and socioeconomic problems are staring us right in the face: The agitation, in several quarters, for resource control and true fiscal federalism; struggle for the devolution of more powers from the center to the states; clamour for state policing; and, at the extreme point, agitation for secession by various groups of freedom-fighters in the South-East and South-South geopolitical zones of Nigeria among others.
These agitations precipitated the 2014 National Conference, also known as “2014 CONFAB”, which came up with far-reaching recommendations, amongst which are: creation of 18 more states spread equally among the six geopolitical zone – in addition to one more state for South East region; increasing the percentage of the derivation principle, as well as solid minerals development; reformulation of the revenue sharing model such that federal, state, and local governments will earn 42.5%, 35% and 22.5% respectively from the federation account; adoption of home-made model of government that effectively combines the presidential and parliamentary systems of government; reduce cost of governance; adoption of bi-cameral legislature were every elected member of the legislative arms of all the tiers of government should serve on part-time basis; rotation of presidential power between the North and South and among geopolitical zones, while governorship position will alternate among the three senatorial zones in each state; removal of immunity clause in offences bordering on criminal charges to foster transparency and accountability by those handling the economy – and if I may add, laws such as death sentence and life imprisonment should be enacted as punishments for bribery and corruption by public office holders in order to make public offices virtuous and less enticing ; abolition of government sponsorship of Muslim and Christian pilgrimage to the holy lands; resolution that churches and mosques should begin to pay tax to the government; among others.
As superb as these recommendations may seem to be, few of them are flawed. Experience has shown that revenue allocation signifies the most complex problem in Nigeria’s fiscal federalism. An acceptable revenue sharing formula has never come into play, instead what has been in existence over time are measures of revenue allocation which are based on primordial considerations rather than logical considerations. Hence, whether or not they consensus revenue sharing formula recommended by 2014 CONFAB gets adopted, it wouldn’t change the system of revenue mobilization and allocation in Nigeria which has weakened the capacity of states to develop their revenue bases and generate revenue; thus most states complacently rely on the monthly allocations from the federation’s account. Obviously, this situation has apparently made some states technically unviable and willfully unproductive. Moreover, state creation over the years which birthed the current 36 state structure in Nigeria was not, in most cases, done based on rational consideration; little wonder some of these states can barely survive without allocations from the federation account. Given these facts, what should have been the central topic of discussion at the 2014 CONFAB are state mergers and resource base development and control by states as was practised in the First Republic of Nigeria rather than more states creation and reformulation of revenue sharing formula. It can be recalled that the federal system of government which Nigeria operated in the pre-military period – a period now described as the First Republic – was basically distinct from the post-military federal system of government. In the First Republic, the three and later four regions of the country were totally independent federating units. Every of the region had a premier as head of government, as well as operated its own laws and constitution. More so, each region had native authority police while the federal government takes care of the Nigerian police. None of the regions was absolutely dependent on the central government for its fiscal needs. In all, each region was self-sufficient.
From a comparative viewpoint, in an empirical study titled: “A comparative study of fiscal federalism in Nigeria, the United States of America and the United Kingdom”, which was published in the European Scientific Journal, October 2019 edition, volume 15, number 28, Duruibe et al (2019) observed that legal right to own and control natural resources in Nigeria lies with the federal government, while in the United Kingdom, apart from oil, gas, coal, silver and gold which are owned by the central government, all other natural resources are owned privately; in the United States of America, on the other hand, onshore natural resources ownership normally resides with the states. The study further observed that the situation where the control of natural resources in states is being vested on the federal government is the precursor of the agitation for resource control in the Niger Delta region of the country. Thus, the study recommended that states should control their natural resources and use same to develop their regions while they remit returns to the federal government. In their exact words:
“…This study does not consider it appropriate a situation where resources emanating from one state or region are used to develop another state or region at the detriment of the state that owns the resources. This scenario tends to make some states unproductive and, thus, make them rely on other states for succour and means of their survival. In Nigeria, states run to Abuja monthly to grab their share of the national wealth even when some of these states contribute little or nothing to the national wealth. One notable, as well as worrisome, case at hand is where tax revenues raised from sales of alcohol from liberal states that permit the sale and intake of alcohol is shared among all states – together with some states that prohibit the sale and intake of alcohol due to religious ideology (Duruibe, et al 2019, p.210)”.
The preceding assertion by these researchers also conforms to assertions by several other public pundits who have earlier thrown their weight behind what they often call ‘restructuring’; however, not much has been said by them about the nature of restructuring required.
Apart from restructuring the mode of resources management in the country, it is imperative to state that if the nation wishes to toe the line of sustainable growth and development, then there is an urgent need to also restructure the nation’s public expenditure framework. Over the years, public expenditures in Nigeria have been largely skewed to recurrent expenditure rather than capital expenditure which hold more prospects for economic growth and development. The reader should note that government capital expenditure is primarily expenditures on the creation of fixed assets such as power, roads and other infrastructural facilities that will generate future benefits and value, whereas recurrent government expenditure refers to expenditures on salaries, current grants, administration, debt servicing, subsidy payments et al.
Several empirical studies have shown that recurrent consumption expenditure impacts negatively on economic growth and development. In another empirical study titled: “An evaluation of public expenditure and economic growth in Nigeria using the sectorial economic function approach”, which was published in the European Scientific Journal, volume 16, number 17, March 2020 edition, Duruibe et al (2020) found government expenditure on administrative services- a recurrent aspect of government expenditure – to have a negative impact on economic growth and development in Nigeria. Curiously, the study further observed that between 1999 and 2016, federal recurrent expenditure increased by 829 percent while federal capital expenditure grew by only 27 percent. Ordinarily, this scenario is not in conformity with mainstream economic principles, especially for a developing nation like Nigeria. Earlier before this study, it would be recalled that Sanusi (2010) asserted that the share of National Assembly budget in the federal government overhead budget was 25% in 2010, while in 2012 the former Minister of Finance, Dr. Ngozi Okonjo Iweala, maintained that government spent 74.4 percent of its budget on recurrent expenditure. Even more, the 2019 and 2020 budget estimates were heavily tilted towards recurrent expenditure – doubling what the executive presented for capital expenditure.
No doubt, any effort aimed at restructuring the public expenditure framework in Nigeria by re-channelling funds from recurrent expenditure to capital expenditure would, to say the least, ‘rock the boat’ as this effort will probably tantamount to taking tough decisions such as reducing public sector workforce, reducing the ‘untouchable’ emoluments of public office holders, reducing the number of public office holders, jettisoning subsidy payments, among others. Be that as it may, the sad fact still remains that Nigeria is running an over-bloated public sector which tend to be counter-productive, as well as not been in tune with the acceptable economic dynamics for attaining sustainable economic growth and development.
The acceptable economic dynamics for attaining sustainable economic growth and development stresses the pivotal roles which the private sector plays in propelling the engine of economic growth and development of a nation. Prosperous businesses boost growth, creates jobs, and pay taxes to the government; the government in turn uses these taxes to finance services and investments. This is the kind of economic model obtainable in other emerging economies such as some of the BRICS and ASEAN countries where the private sector creates more than 90 percent of jobs, funds more than 60 percent of all investments and provides above 80 percent of government revenue. Hence, the role of the government in this process should only be limited to providing the enabling environment; putting in place the right regulations and intervention strategies in the event of market failure; reducing the costs of doing business; and providing the requisite infrastructures such as power, good roads, adequate security, sound legal system, functional health system, comprehensive and coordinated national database, among others for the private sector to thrive.
What’s more, the education sector in Nigeria needs to be overhauled so that it can support the imminent economic growth and development that will come in place in all sectors of the economy –should all these highlighted reforms come to fruition. The tertiary education sector should be well funded and rightly positioned to produce ground-breaking researches and innovations that can accelerate the technological progress in the economy. More so, 21st-century courses should be introduced into our tertiary education curriculum; and, if need be, universities in the country can get affiliated to top-notch universities around the word –at all costs- in order to facilitate superlative knowledge transfer.
As a final remark, these proposed compendiums of reforms, which form my own submission on this subject matter, is neither comprehensive nor conclusive; this submission is open for debate.
God bless the Federal Republic of Nigeria.
The writer of this article, Duruibe Stanley Chigozie, is an author, researcher and an economic and financial analyst. Email: email@example.com