FEATURE: Fiscal Federalism – Now Or Never!

Date Posted: July 29, 2015 at 7:24 am

Regional-AutonomyThe lesson to be learnt from the present predicament is unambiguous. This is that Nigeria has no choice but to return to the basis of the fiscal arrangements upon which a federal system rests. The arrangement was the basis upon which independence for a multi-ethnic society was negotiated and obtained.

The unfortunate events of January, 1966 and the aftermath which culminated in the proclamation of the absurd Unification Decree 34 of the same year truncated the federalist state of the country. And ever since then the basis of Nigeria’s federalism had become eroded – as we have been operating federalism only in name – but not so in practice. In the light of events it must be restored and urgently too!

For a start, the empirical evidence is incontrovertible. This is that during the competitive fiscal federalism of the first Republic, the country enjoyed profoundly balanced, sustainable development. The trend has been the other way since the truncation of the federalist tenor. For example, the so called ‘federating units’ can hardly be compared to the much acclaimed Regions of the first republic.

This is the genesis of the current dysfunction. For this reason the status of the state governments as proper federating units must be restored. The right to take care of putting their own resources into production is key here. The state of Osun for instance, ought to be able to mine its deposits of gold and other mineral resources and pay taxes to the centre. Ditto for the mouth-watering bitumen deposits in Ondo state and other states of the federation. There is of course no state in Nigeria that does not have a resource to exploit profitably. It is a win/win situation. Not least for the central government which will stop to be seen as a big brother/nanny state.

The country cannot continue with this kind of arrangement whereby the states are completely dependent appendages of the central government. It is unsustainable, unproductive and has to stop. A return to real federalism will unleash tremendous, hitherto suppressed creative energies. Jobs will be created, the tax base widened, and a sustainable development model induced. Not until this is done it will continue to be absolutely difficult for our federating units to survive.

The awkward nature of Nigeria’s federalism continues to bug the mind. In all the countries of the world where federalism is being practised, the scenario we painted above is the ideal practice. The federating units have the statutory rights to tap the resources in their soils and contribute a certain percentage to the centre. This makes it easy for the states to survive on their own without the need – at all – to be going caps in hands to the centre every month to collect dole for survival as we experience in Nigeria.

If we are to turn the present economic downturn into an opportunity for national rebirth, the restoration of fiscal federalism must be an integral part of the Change we clamoured and voted for.‬ We just cannot continue like this. As a country that professes federalism we cannot afford to do it different from what obtains in the rest of federal worlds. Presently our federalism is a far cry from what obtains in other federal countries of the world. This, no doubt, is an aberration which must be corrected.


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