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Published On: Thu, Jul 31st, 2014

Controversy at National Conference over revenue sharing formula

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Confab DelegatesBy Obike Ukoh

Unarguably, the most controversial topic that was debated by delegates at the National Conference was the issue of revenue sharing formula for the country.

The contentious revenue sharing formula and derivation principle split delegates along regional lines, as they failed to reach a consensus on the issue.

Observers say that the deadlock tends to reinforce the widespread notion that the country’s leaders are more interested in sharing the national cake than in baking the cake.

The recommendation that pitched the country’s geopolitical zones against each other was the increase of derivation percentage, payable to mineral producing states and the stabilisation, rehabilitation and reconstruction fund, proposed for areas affected by terrorism and insurgency.

To tackle the ensuing crisis situation, the conference’s chairman, Justice Idris Kutigi, summoned a meeting of the chairmen of the 20 standing committees and their deputies.

Yet, the delegates failed to conclude voting on the recommendations of the Devolution of Power Committee, led by former Gov. Victor Attah of Akwa Ibom and former Inspector-General of Police, Ibrahim Coomasie; following sharp disagreements between delegates from the northern and southern parts of the country.

To resolve the stalemate, a committee was set up and the committee recommended the increase of the derivation percentage from 13 per cent to 18 per cent.

The committee also proposed that 50 per cent of the proceeds from the 18-per-cent derivation must go directly to communities where the mineral resources are extracted.

The committee, headed by Prof. Ibrahim Gambari, also recommended the establishment of a National Intervention Fund, which shall be five per cent of the annual revenue of the Federal Government, for the stabilisation, rehabilitation and reconstruction of areas affected by terrorism and insurgency.

The fund would be used for the North-East, in the first instance, and other parts of the country eventually.

Three out of the 37 members of the elders’ committee did not endorse the report.

Delegates from South-South, South-East and South-West geopolitical zones kicked against the intervention fund, insisting that “if there must be a fund of that nature; it must be set up for the entire country and not for a section of the country or the North alone’’.

Coomasie, a member of the elders’ committee, said that the committee failed to reach a consensus on the issue.

“I am one of the delegates from the North involved in the discussion on derivation, and I want to say that we had discussions which ended in a stalemate,’’ he added.

However, Chief Olu Falae, a member of the committee, said that the committee reached a consensus, while Chief Raymond Dokpesi, another member of the committee concurred, saying that the recommendations were agreed upon on principle.

He said that the bone of contention was whether the committee should include the North-West and North-Central geopolitical zones in the areas affected by the insurgency.

“All the Southern leaders, North-Central leaders made sacrifices, but there are some people who never wanted this conference to succeed and these people were the ones shouting today,” Dokpesi said.

The impasse was not resolved on Monday, Feb. 14, when the delegates resumed plenary, compelling the conference to recommend that “government should set up a technical committee to determine appropriate percentages on the three issues and advise government accordingly.”

There were, however, mixed reactions about the inability of the national conference to resolve the issue of revenue sharing via consensus.

Sen. Anietie Okon, a delegate from Akwa Ibom, said: “We are merely postponing what will come to pass. There is no question about the fact that we are in fiscal federalism and the basic principles of fiscal federalism are that there will be resource ownership and that attribution will be to those states which own the resources.

“We have a reverse arrangement of federalism here; states own the resources but the Federal Government collects revenue on their behalf and begins to allocate funds.

“We have a situation where a lot of states don’t contribute anything to the Federation Account. Now, what we are trying to do is to engineer a situation where revenue contribution to the national treasury will be widespread.’’

On his part, Chief Sola Ebiseni, a delegate from Ondo State, faulted the decision of the conference to refer decision on the matter to the government, saying that it shirked its responsibility.

“As far as I am concerned, there was no decision taken today. What we did today was simply to abdicate our responsibility by throwing the issue back at Mr President, who sent us here to assist in proffering solutions to some of our national challenges.

“What we fully failed to appreciate about what a national conference is that it is an extra-constitutional assembly of the people convened to critically examine all the issues that were pushed to us in a federation like ours, where we have to constantly review the terms of our national engagement as a country.

“We now come to the tail end of considering a critical issue and then, we say we couldn’t take a decision and push it back to the President. That is a crafty way of maintaining the status quo and refusing to talk about it,’’ Ebiseni added.

Analysts say that the derivation principle has always been a thorny issue in the country, describing the recent development at the National Conference as a mere replication of what happened at the 1995 Constitutional Conference.

The current 13 per cent derivation for oil producing communities was agreed upon at the 1995 Constitution Conference, after a heated debate and threats from the mineral producing areas.

All the same, concerned citizens advise state governments to exploit other sources of revenue, instead of depending solely on monthly allocations from the Federation Account for their survival.

They insist that the current bickering at the National Conference would have been minimised if the states have been able to boost their internal revenue generation sources.

Commenting on the impasse at the National Conference, Mr Issa Aremu, the Vice-President of the Nigeria Labour Congress (NLC), urged the delegates to refrain from taking hard-line positions on the country’s revenue sharing formula.

Aremu, who is also a delegate, said that the impasse could have been avoided if the delegates allowed patriotism to replace parochial sentiments, while allowing national solidarity and cooperation for development to supersede unhealthy competition.

“Delegates must look beyond the divisive revenue sharing formula to arrive at all-inclusive revenue growing/production formulae.

“The truth of the matter is that we must grow this economy before revenue can be shared.

“Oil and gas, which constitute the base of the derivation principle, is weak due to oil theft and relatively low exploration.

“The challenge for delegates, including myself,

therefore, lies in not just sharing what is not enough, but in growing what will be enough to build prosperity for our people.

“We must complement distributive approach with production component to fiscal federalism,” he noted.

Nevertheless, Chief Elias Mbam, the Chairman of the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), emphasised the need for all the states to reduce their dependence on monthly allocations from the Federation Account.

Mbam, who spoke at a zonal workshop organised by RMAFC on “Economic Diversification and Enhanced Revenue Generation for the South-South Zone’’ in Asaba in 2012, also underscored the need for Nigeria to reduce its over-dependence on oil revenue.

He stressed that the goals of development programmes such as the Vision 20-2020 and the Transformation Agenda of the Federal Government could only be attained via the adoption of effective economic diversification strategies which could provide steady, sustainable sources of revenue.

He, nonetheless, urged the three tiers of government and the private sector to make pragmatic efforts to exploit the vast natural resources which abound in all parts of the country.

He also noted that tangible emphasis should be placed on the development of the agriculture, manufacturing, solid minerals and tourism sectors, stressing that the sectors held the key to Nigeria’s economic prosperity.

Besides, Mbam stressed that challenges facing the country such as poverty, unemployment and insecurity, could be effectively tackled via the diversification of the economy to expand access to extra resources for the development of basic infrastructure and provision of vital social services.

Experts, therefore, urge the federal, state and local governments to adopt sound economic proposals, particularly those that would enable them to diversify their revenue sources and depend less on monthly allocations from the Federation Account. (NAN)


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