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Fiscal Restructuring Is The Only Meaningful First Step To Achieving The Nigerian Dream



Map of Nigeria fiscal federation
Map of Nigeria fiscal federation

Map of Nigeria

The annual report by Economic Confidential magazine that tracks the financial viability of states through the correlation between internally generated revenue (IGR) and allocation from the Federation account crystallized in a perfect way the fiscal imbalance among the federating units.

Known as the Annual State Viability Index (ASVI), it highlights the reason why some people have been calling for restructuring for so long. The report is grim. It shows that most states of the federation would be totally bankrupt without income from the nation’s account.

In point of fact, only two states in the country, Lagos and Ogun States, generated more revenue internally that what they get from the Federation account in 2017.

Last week, Nigeria News published a piece on the link between population and how revenue in the nation’s account is shared among the states.

The data compiled in the ASVI report helped to solidify the point made that revenue sharing is in the heart of why Nigeria’s population figures are always inflated to favor a section of the country.

For instance, some of the states in the North, with the least economic activities, get more federal allocation than many states in the south. The level of economic activity in a state is easily determined by IGR of the state.

Katsina State, with one of the lowest IGR in the country, gets more money than every single state in the southern part of the country bar Lagos State and the oil-producing states.

Even Niger State that is known more for producing two heads of state with hilltop mansions gets more money than most states in the south bar Lagos and the oil-producing states.

Similar federal allocation profile applies to other states in the core North like Sokoto, Bauchi, Jigawa, Borno, etc. relative to the southern states.

Take a trip to all these states in the north; they have the highest levels of poverty in the country. All indices used in measuring economic development are the lowest in these states.

One could argue that giving them such a huge chunk of the federal allocation is a good way to address the poverty levels in those areas. But after so many years of getting humongous free cash annually, the levels of poverty keep getting worse.

We all know that is down to corruption and mismanagement of the funds. But let’s not make the mistake of trying to gloss over why after so many years of getting this huge allocation, these states are still wracked by poverty and underdevelopment.

The leaders do a thorough job of stealing the funds at all levels. Simple.

Putting aside the injustice of how the most federal funds are given to the least deserving, the pertinent issue is how to address the problem.

This brings us nicely to the problem of the restructuring of the country. Presidential hopeful, Atiku Abubakar, recently spoke about how he would restructure the country within six months if elected president.

In the speech at Chatham House London, Atiku did not go into the specifics of what and how he intends to do that. You suspect he only said that to appeal to the sentiments of people in the southern part of the country.

To Atiku and his ilk in the north, restructuring would never include how federal funds are shared among the states. People from the North hate the idea of fiscal federalism where states are allowed to control their resources for obvious reasons. They don’t have the resources to compete with the south.

For the northern elites, the only sort of change they can allow is political along religious or ethnic divides. That is the reason we have 36 unwieldy states with most of them financially unsustainable.

States are created not because it is financially prudent, but because some politicians feel they have the numbers to deserve a state. For example, the people of Southern Kaduna want a state because they want to be separated from the Moslem north of the State.

Some tribes in any part of the country agitate for their own state based on the same logic. Nobody cares what would happen if, suddenly, there is no oil money to share: that is, would the state be financially independent of the federal purse?

As long as Nigeria sticks to the current model, there won’t be any basis for creating real wealth and taking the masses out of poverty in most of these states. We all know the governors treat the state treasury as their personal purse.

And why not, the Constitution makes it virtually impossible to punish a thieving chief executive.

And even when a rogue governor is arraigned before the courts, a conspiracy of the judges and lawyers ensure a conviction is always hard to get.

The ASVI report and similar ones only serve to remind us of the sort of dysfunctional system we have embraced. As for making concrete changes, fiscal restructuring, for instance, it is never going to come from the politicians or people who have benefited from it.

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