(BACKAPGE) El-Rufai on fiscal federalism



Uba Group

Just about three weeks to the end of his tenure as Governor of Kaduna State, Nasir el Rufai seems to have suddenly gotten an epiphany that states (and local governments) should get a higher percentage of the Federation revenue than the Federal Government.

Following is the current sharing formula: Federal Government, 52.68 per cent; State Governments, 26.72 per cent; and Local Government Authorities, 20.60 per cent.

In April 2022, the Revenue Mobilisation, Allocation and Fiscal Commission recommended 45.17, 29.79 and 21.04 for the Federal Government, State governments and Local Government Authorities respectively.

Governor el Rufai is asking for a more radical shift in the revenue sharing formula, 80 per cent to favour the sub-national governments and only 20 per cent for the Federal Government. This probably assumes that the Federal Government should deal only with foreign relations, external defence, internal security, currency, immigration and the customs
His argument: “If we reverse the revenue allocation (formula) and Federal Government has only 20 per cent, and 80 per cent goes to the states (and local government authorities), then you go to the (Federal) Exclusive (Legislative) List and revert to the 1963 Constitution, where the Federal Government had limited functions and most of the (Residual) functions went to the states (and local government authorities).

“If your General Hospitals don’t work, if your primary schools don’t work, if your secondary schools don’t work, and so on, you ask your governor. Then things will begin to change and the states will have enough resources to work, just like in the olden days of regional governments.”

As brilliant as this suggestion may seem, some think it is a red herring, a subtle way to rejig revenue allocation formula so that even more of Nigeria’s commonwealth goes to Northern Nigeria.

El Rufai is probably playing a game of head or tail, Northern Nigeria will always win. In other words, when a bigger portion of the federation revenue is allocated to the Federal Government under a President of Northern Nigerian extract, that President can use his discretion to allocate more Federal Government projects to the North.

“Those advocating for a smaller Federal Government should be helped through a constitutional route to achieve fiscal federalism that vests mineral resources in states and not the Federation as Sections 29 and 39 of the Constitution have provided”

You are probably aware of the abuse and insult suffered by former President Olusegun Obasanjo because he did not fix the Lagos-Otta road that leads to his homestead while he was in office. His weak explanation was that the Minister of Works and Housing, Adeseye Ogunlewe, a Yoruba native of Ijebu Igbogbo in Lagos State, never brought him a proposal to that effect.

You may recall the report that newly inaugurated President Muhammadu Buhari in 2015 reportedly requested former Managing Director of the World Bank, Jim Yong Kim, to concentrate his development projects and initiatives in Nigeria in the North
The call for a smaller Federal Government has been interpreted as a roundabout way to starve the incoming President of Southern Nigerian extraction of funds, while placing the bulk of the resources in the hands of the Northern region that has more states and local governments than the South.

If adopted, El Rufai’s theory may just be the next building block in the attempt to skew federation funds to favour the North.

General Murtala Mohammed had laid the first block by ensuring that the number of states in Northern Nigeria are more than those in the Southern Nigerian region.

And to date, his successors, from military President Ibrahim Babangida, to maximum General Sani Abacha, have dutifully ensured that the number of States and Local Government Areas in the North are more than those in the South.

You may also be aware of recent calls by indigenes of Abuja that the Federal Capital Territory should become a full-fledged state. If that happens, there will be 20 states in the North and 17 in the South.

There is no prize for guessing correctly that more revenue will be allocated to the North as a result.

Anyone who doubts that el Rufai may get his advocacy is probably unaware that the “two-thirds majority of all members of (the National Assembly) and approval by resolution of the Houses of Assembly of not less than two-thirds of all the States,” required in Section 9 to amend the Constitution is in Northern Nigeria that can wield the stick whichever way it wishes.

Some observers are of the opinion that recent struggle by the North to snag both the presidency of the Senate and speakership of the House of Representatives of the approaching 10th National Assembly is part of a grand plan to take advantage of the numerical strength of the North to ram down the “restructuring” that Governor el Rufai is advocating.

It is not for nothing that the drafters of the 1999 Constitution listed the names and headquarters of all the States and Local Government Authorities in Nigeria in the Constitution. They know that individuals, like Bola Tinubu, who may want to tweak the Constitution for the purpose of equity, may one day emerge as President of Nigeria.


To place a wedge in the way, they listed those sub-national governments in the Constitution, so it will require the “consent” of Northern Nigeria to change them, regardless of the urgency of the circumstances.

It is so ridiculous that even if it became necessary to have another State or Local Government Area headquarters because of environmental disaster, the way the Atlantic Ocean recently swept off Aiyetoro Community in Ondo State, it would have been impossible to relocate the headquarters else unless the cumbersome conditions in Section 9 of the Constitution were met.

So if the allocation of the Federal Government is reduced, Northern Nigeria, with the highest number of States, local government and population, will receive even more with more burdens shifted from the Federal Government to the states.

It is however, fair to recognise that a smaller Federal Government with smaller financial resources will translate to bigger and richer sub-national governments that will assume more governance responsibilities.

Rauf Aregbesola, Minister of the Interior has hinted that soon, inmates of prisons will be fed by the states that incarcerated them. President Muhammadu Buhari recently signed an enabling constitutional amendment to transfer prisons from the Federal Exclusive Legislative List to Concurrent Legislative List.

Those advocating for a smaller Federal Government should be helped through a constitutional route to achieve fiscal federalism that vests mineral resources in states and not the Federation as Sections 29 and 39 of the Constitution have provided.

The current revenue allocation arrangement is an administrative arrangement that is neither good enough nor adequate. It can be changed by the whim of a government. For instance, there should be a constitutional arrangement to allow states to manage their oil resources the same way Zamfara State manages its gold resources.

If Northern Nigerian Development Corporation has shareholding interest in the oil fields of Gombe and Bauchi States, Odua Investment Company of South West and its South East and South South counterparts should have interest in Niger Delta oil fields.

In other words, Gombe, Bauchi, Nasarawa and the states of the Niger Delta should be allowed to keep revenue from their oil fields and only pay tax and make other statutory remittances to the Federal Government.

Thus, the “feeding through” Federation Account Allocation Committee and the Excess Crude Account, that warehouses the excess above the budget benchmark price of crude oil, will no longer be necessary.