(BACKPAGE) Wean states off FAAC feeding bottle



Uba Group

The Federation Allocation Accounts Committee is the special purpose vehicle that the indulgent Nigerian state uses to keep the sub-national levels of government in Nigeria non-viable and retains the citizens in poverty.

The disbursement of free funds from FAAC in Abuja removes incentives for states to think out intelligent economic plans for themselves and grow their economies and raise their internally generated revenue base through legitimate taxation.

Citizens have switched off their enterprising mode and now only seek sinecures from state governments in order to gain access to the crumbs that come to their states from the national commonwealth, which cynics have described as “national cake.”

States have become so dependent on the allocations from the Federation Account that their capacities to meet their statutory obligations to their constituents are limited to what they receive from Abuja every month.

See the seesaw of the fortunes of the states in the last few years: In 2017, 2018, 2019, 2020, 2021 and 2022 the respective allocation to all the states was N1.7 trillion, N2.29 trillion, N2.40 trillion, N2.23 trillion, N2.42 and N3.16 trillion.

By contrast, the total internally generated revenue of all the states in those years is as follows: 2017 was N936.47 billion; 2018 was N1.103 trillion; 2019 was N1.25 trillion; 2020 was N1.21 trillion; and 2021 is N1.89 trillion.

Though the figures for 2022 are not ready yet, you can see a trend; the allocations from the Federation Account are usually about twice the internally generated revenue of the states. Nearly all the states, except for one or two, like Lagos State, cannot be truly independent of the Federal Government.

Someone has argued that the seeming increase in the allocations from the Federation Account and the internally generated revenue is a result of inflation and not necessarily because of a nominal increase in federal and states revenues
It is unacceptable for nearly all the states in a federation to depend on freebies from the dole account of the Federation.

You are very likely aware that most states cannot pay the salaries of their workers.

You may recall that on more than one occasion President Muhammadu Buhari had to fish for funds, like the refund of the Eurobond loans, so that the poor states can pay the salaries of their workers and meet other obligations.

In such situations, won’t the states fall for the whims of an Almighty Federal Government? It gets even worse under a military government where the military chain of Command-and-Control prevails.

The states are really no more than agencies of the Federal Government.

“Many may not know that the building that currently houses Nigeria’s High Commission in London was once a property of the Western Region of Nigeria. It was so good that the Federal Military Government, headed by General Yakubu Gowon, appropriated it”

While the Federation Account receives revenue from oil sales, customs and excise duties, company income tax and sundry other revenue sources, states (and local government authorities), receive their revenues from personal income tax, sundry sales taxes, property tax (and, sometimes, death tax).

Section 1(A, I) of Part I of the Fourth Schedule of Nigeria’s 1999 Constitution raised the hopes of Nigerians by stating that “The functions of the local governments are: the consideration and the making of recommendations to a state commission on economic planning… on the economic development of the State.”

However far-fetched the intention of this provision may seem, you must acknowledge that states, in conjunction with their local government areas, are expected to be the engine rooms of economic growth within the Nigerian federation.

But alas, the dampener to this lofty idea is Section 2 of the same Fourth Schedule of the Constitution which limits the local governments to the provision of only education, exploitation of agricultural and natural resources (minus mineral resources that naturally include petroleum), healthcare services; and whatever else the State House of Assembly directs.

Indeed, Section 39 of the Federal Exclusive Legislative List specifically excludes mines, minerals, including oil fields, oil fields and natural gas from commercial enterprises that states can own or even regulate within their borders.


Why would the Constitution bar states from participating in the oil business whose resources lay under the soil and within their borders? If private and foreign International Oil Corporations can participate in the oil business, why are states not allowed to participate in the industry?

The answer is that state actors in military uniform who created new states for Nigerians have a patriarchal orientation which assumes that states and commercial enterprises cannot control the commanding heights of exploitation of mineral resources of the country.

If you go through the Exclusive Legislative Powers of the Federal Government as enumerated in the Second Schedule of the Constitution, you will observe that aviation and airports, commercial enterprises, labour and trade unions, telephone, railways, broadcasting and waters that run through more than one state, are firmly held in the hands of the Federal Government.

This suggests, for instance, that states that own airports and airlines or establish intra-state or inter-state railway lines are probably running afoul of the Constitution, though they may have been licensed by the Federal Government.

Also, the telecom companies, that operate the telephone and internet service providers, are breaching the Constitution, though it is common knowledge that they duly obtained licenses from the Federal Government, which is a constituted authority.

Part II of the Fourth Schedule of the Constitution, which bears the title, “Concurrent Legislative List,” comes with the understanding that to the extent that a Law made by a State Assembly contradicts a National Assembly Act, the Act will supersede.

You want to ask, why is Section 13(b), which says “The National Assembly may make laws for… the generation and transmission of electricity in, or to any part of the Federation and from one State to another,” whereas Section 14(b) already provides that “A House of Assembly may make laws for… the generation, transmission and distribution of electricity to areas not covered (in) that State.”

Why would the Federal Government have to regulate electricity that the Constitution already provides for State Assemblies to legislate over? And now that electricity has even been privatized, why doesn’t the Constitution allow the State governments to regulate them as long as they operate within the borders of those states?

And why should the Federal Government, in the guise of the Federation, own 100 per cent of the national grid, 60 percent of the electricity generation companies and 40 per cent of the electricity distribution companies when the government claims that the sector has been privatized?

States should be configured in the manner of regions of the First Republic that prospered and flourished and could make remittances to the center, for the upkeep of the Federal Government. Those regions were so viable and prosperous that they could maintain agents in London to take care of their businesses in the United Kingdom and other parts of Western Europe.

Many may not know that the building that currently houses Nigeria’s High Commission in London was once a property of the Western Region of Nigeria. It was so good that the Federal Military Government, headed by General Yakubu Gowon, appropriated it.

It is time to return Nigeria’s economy to the days when regional (now state) governments made regular remittances to fund the Federal Government, whose business should not exceed external affairs, central banking and currency, and protection of Nigeria against external aggression.

States, and not the Federal Government, should power the economy.