Nigeria’s Federal Structure Making States Perpetually Poor-AfDB President

President of the African Development Bank Group, Akinwumi Adesina, has picked holes in Nigeria’s federalism, stating that the system as currently constituted, does not grow its constituent entities but makes them perpetually dependent.

Adesina spoke as a guest lecturer, on the theme, “Towards a new Nigeria, From Federal Fatherism to a Commonwealth”, at the second inaugural lecture of Governor Rotimi Akeredolu in Akure, Ondo State.

He said states in Nigeria were poor in the midst of plenty, owing to their inability to maximally explore or leverage resources they had in abundance.

Nigeria runs a federal structure that allows revenue to be shared from the federation account on a monthly basis.

The Federation Account is currently being managed on a legal framework that allows funds to be shared under three major components.

They are statutory allocation, Value Added Tax distribution; and allocation made under the 13 per cent derivation principle.

Under statutory allocation, the Federal Government gets 52.68 per cent of the revenue shared; states, 26.72 per cent; and local governments 20.60 per cent.

The framework also provides that Value Added Tax revenue be shared thus: FG, 15 per cent; states, 50 per cent; and LGs, 35 per cent.

Similarly, extra allocation is given to the nine oil producing states based on the 13 per cent derivation principle.

But Adesina said that like a pendulum, ever moving from side to side in constant motion, so too has the unfortunate dependency of states on the centre become seemingly unstoppable.

The AfDB President said, “The federal system of monthly grants has paralysed them. With stupendous resources, all concentrate at the centre, States are ever dependent on the centre.

“With the magnetic field of federal revenue allocations, states are constantly pulled, powerless into perennial dependency.

“This financial pilgrimage creates a sense of helplessness and overt dependency on the centre. State governors now spend more time in Abuja than they do in their own states, seeking the monthly ‘federal manna.”
He added, “The truth, however, is that to survive and strive, states must become financially independent of the center in Abuja. This is federalism of fiscal dependency. It is federalism that’s fiscally unhealthy for the states and the Federal Government.

“Because Nigeria depends on oil for over 70 per cent of government revenue, any decline in the price of oil creates fiscal and economic volatilities that reverberate across the states.”

Adesina said what Nigeria needed was greater economic and fiscal autonomy for the states.

He said the issue is less about states or regional autonomy, but the financial and economic viability of Nigeria’s constituent states.

The AfDB Boss added, “lf Nigeria were to be a conglomerate firm, it would not be economically viable because 92 per cent of its constituent ‘subsidiary companies’ are not viable without the support of the holding company.
“Nigeria’s federalism doesn’t grow its constituent entities. It simply makes them perpetual dependent. The Nigeria system is therefore not federalism…but “fatherism,” he added.

The AfDB boss noted that the agitations for decentralisation could be understood when viewed in the light of a craving for greater autonomy.

“But let us face it, political autonomy is meaningless unless it is backed by greater fiscal self-reliance at the state level.

“We tend to copy systems that are not well suited to our context. The United States that we copied from does not control resources at the state level. Instead, the states generate the bulk of their income from taxes,” Adesina said