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Editorial

Expectations From New Revenue Formula

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Thursday, April 7, 2022, the Chairman of Revenue Mobilisation, Allocation and Fiscal Commission
(RMAFC), Elias Mbam, presented the report of the proposed new revenue allocation formula for Nigeria to President Muhammadu Buhari. This is coming 30 years after the last exercise was carried out in 1992, during the military regime of Ibrahim Babangida.
Highlighting the key recommendations in the report, Mbam said the proposed vertical revenue distribution formula suggested 45.17 per cent for the Federal Government, 29.79 per cent for state governments and 21.04 per cent for local governments. Under the current sharing arrangement, the Federal Government receives 52.68 per cent of the revenue share, the states get 26.72 per cent and the local governments 20.60 per cent.
Under the special fund, the commission’s report recommended 1.0 per cent for ecology, 0.5 per cent for stabilisation, 1.3 per cent for natural resource development and 1.2 per cent for the Federal Capital Territory (FCT). According to him, the new sharing formula was reached after extensive consultations with key stakeholders, public hearings across the country, administering of questionnaires, and a study of several other countries with similar fiscal structures to draw useful lessons from.
The commission also visited the 36 states, the FCT, and all the local government areas including the six area councils in Abuja to sensitise and obtain inputs from stakeholders, according to the RMAFC chairman. The chairman added that literature reviews were conducted on the revenue allocation formula in Nigeria dating back to the pre-independence duration.
Memos were reportedly received from the public sector, individuals and private institutions across the country. Mbam further noted that the country’s political structure had altered since the last review in 1992, with the addition of six more states in 1996, bringing the number of states to 36. At the same time, the number of local government councils also increased from 589 to 774.
The revenue allocation formula is the fraction of resources accruing to the federation that goes to each component of the nation. It also specifies the resources conserved in the areas where they are produced, as well as the proportions of the revenue accruing to the collecting agencies of government. The lack of justice and fairness in the distribution of the resources often results in tension and controversies in the polity.
President Buhari’s reaction to the new income distribution formula is commendable. In particular, he said he would await the outcome of the constitutional review process before submitting the report to the National Assembly. He assured the commission’s members that the Federal Government would conduct an internal review and approval process for the report shortly.
Buhari said, ‘‘Considering the changing dynamics of our political-economy, such as privatisation, deregulation, funding arrangement of primary education, primary health care and the growing clamour for decentralisation, among others, we must take another look at our revenue sharing formula, especially the vertical aspects that relate to the tiers of government.”
If the new revenue-sharing procedure gets approval, the Federal Government will have its allocation reduced by 3.33 per cent. However, the most important issue with Nigeria is not how revenue is shared, but the revenue itself. Nigeria’s revenue to Gross Domestic Product (GDP) is about 8 perc ent while the average for Africa is 18 perc ent. Hence, it is more productive to concentrate efforts on improving revenue generation across the board than the fixation on sharing. We have a huge revenue problem.
The National Assembly should step up efforts to amend the relevant section of the Constitution for quick implementation of the new revenue formula. The Federal Government must immediately subject the report to its review and approval processes. We hail RMAFC for the meticulous work in carrying out its constitutional tasks. Nigerians, particularly state and local governments, are applauded for contributing to this development through the extensive stakeholder engagement processes.
At the height of the negotiating process of the current minimum wage of N30,000, the states (under the aegis of the Nigeria Governors’ Forum), proposed a fresh formulation to give them more resources. Governors cited their inability to pay. However, most of the governors have been reckless with the allocations they have been receiving, resulting in several states owing workers’ salaries and pension arrears. While state and local governments deserve to get more, the derivation on natural resources should also be jacked up with legally binding provisions on regular upward adjustments.
Nevertheless, the new sharing format is not the universal remedy for Nigeria’s stunted economic outlook. For now, Nigeria is a poor country. The World Bank estimates its Gross Domestic Product at $375.8 billion, the largest in Africa, but it is a deceptive narrative. At 200 million, its population far outstrips that of any other country on the continent. Our nation has been described by the World Poverty Clock as the global poverty capital, where 93 million people live below the $1.90 per day threshold.
The continuous sharing of oil resources currently generated will not be of significant help. The three tiers of government will permanently be bogged down in a financial crisis, primarily because Nigeria’s current structure is a dangerous aberration. For the nation to be progressive and dynamic, equity and justice have to be promoted in our federal system. Also, the retrogressive culture of entitlement to oil revenue should end. Ideally, the states should strive to become centres of development.
Across Nigeria today, the consensus is that there is an urgent need to devolve more financial resources from the centre to the states and local governments. This is to ensure that the tiers of government can carry out their functions and improve economic growth and development. While we endorse that agitation, we strongly believe that Nigeria could only attain its dream of development by operating true fiscal federalism, where every tier of government generates its revenue and controls the bulk of it, just as it was in the First Republic.

 

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Editorial

Emefiele, Resign Now

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The ambition of the Central Bank of Nigeria’s (CBN) Governor, Godwin Emefiele, to participate in the
party primary towards the presidential election in 2023 has been eliciting mixed reactions from both politicians and industry watchers, as concerns mount over possible conflict of interest on his regulatory and supervisory role on Nigerian banks.
In his suit confirming his political ambition, Emefiele sued the Independent National Electoral Commission (INEC) and the Attorney General of the Federation (AGF) asking the court to restrain them from compelling him to resign as the CBN governor to run for office in 2023. His lawyer, Mike Ozekhome, expressed fears that the INEC and the AGF were making “frantic efforts to disqualify” Emefiele “from participating in the presidential primaries scheduled for June 3, 2022, for not resigning from his office before the parties’ primaries.”
Emefiele was reported to have joined the list of presidential aspirants who had picked the expression of interest form of the ruling party, the All Progressives Congress (APC). Although the form was said to have been picked on his behalf by a group, the apex bank governor had gone to the Federal High Court in Abuja seeking to retain his office as the Central Bank governor while pursuing his interest in the presidential race.
Emefiele, through his counsel, Ozekhome, is seeking the court’s interpretation as to whether by the provisions of Section 84 (3) of the Electoral Act, 2022, a political party can by its constitution impose any nomination qualification criteria or measures on aspirants or candidates, including him who is in centrally the constitutional provision.
He is also seeking the court to clarify whether he can be compelled to resign his position as Governor of the CBN earlier than 30 days before the political party primary, in line with the provision of Section 84 (3) of the Electoral Act, which is against Section 137 (1) of the Constitution of Nigeria as amended, which requires a public officer to resign, withdraw, retire at least 30 days from the date of the presidential election.
However, the Federal High Court refused to shield Emiefele from being disqualified to contest for the presidential ticket of any political party ahead of the 2023 general elections. Ruling on the ex parte application, the judge, Ahmed Mohammed, ruled that he would rather order INEC and the AGF to appear to state their side of the case instead of granting the CBN governor’s request.
The Federal Government had last Wednesday through the Office of the Secretary to the Government of the Federation (SGF), Boss Mustapha, issued a circular directing serving Ministers in the cabinet, heads of government agencies, ambassadors and other political appointees of the administration, coveting political ambitions in 2023 to resign from the government. Soon after the directive, the CBN boss reportedly met with the President.
In our opinion, Emefiele’s action, if unchecked timeously, portends great danger to the fragile economy of the country. There is everything morally and legally wrong with his ambition to become Nigeria’s President while still occupying his current position. Looking at the handwriting on the wall, it is clear that the CBN governor has been a partisan politician to the disadvantage of the country.
Section 6 of the CBN Act says that the Governor of the Central Bank should not pursue any interest that would make him conflict with his official duties. The Act further states that the office should be autonomous and independent. Emefiele must understand that he is the number one banker in the country and chairman of the Bankers’ Committee as well as head of the financial regulations in Nigeria that determine exchange and inflation rates.
The CBN governor must realise that it is improper for him to declare a partisan interest with the sensitive position he occupies. The apex bank is like INEC which should not be under the control of any political influence or party. Indeed, sensitive security documents for the conduct of eletions are deposited in the Central Bank by INEC before any elections. Nigerians must know that Emefiele has the powers to remove the managing directors of banks and can use his position to punish or witch-hunt any bank. Why would a man who keeps in custody the nation’s foreign exchange submit himself to partisan politics?
The apex bank boss demonstrated his partisan posture during the #ENDSARS protest. Recall that Emefiele asked the leaders of the group to shelve their protest, which they refused to comply with. They then had their accounts blocked by the CBN, having gone to court to secure an ex- parte order to do that. This is because they refused to yield to his demand to halt the protest.
Already, and rather unsurprisingly, local and international media have picked up the news of Emiefele’s reported interests and his unwise responses to his linkage to partisan politics. It is needless to say that his alleged aspiration while holding office as governor of the apex bank is a very weighty turn of events. It can potentially erode the confidence in the Nigerian monetary system, which is expected to be administered by non-partisan experts with the CBN governor as the dominant head of the team.
When the CBN Governor assumed office in 2014, he set a target to achieve single-digit inflation and maintain a stable Naira. But the national currency is trading at N590 per dollar on the unofficial market and N415 at the official window. There are also profound implications for the confidence of investors, both foreign and local. Moreover, the Central Bank is an institution that needs to earn the trust of all stakeholders in the economy, irrespective of their political affiliation, creed, gender, religion, ethnicity or vocation.
The economy is yet to recover from the shocks of the COVID-19 pandemic. The disparity in rates has created a paradise for forex brokers and currency speculators. The business of forex roundtripping is also flourishing. There is a liquidity crisis in the forex market on a scale never witnessed before. We cannot afford to worsen the current economic situation with a Central Bank that is entangled in the controversy of political partisanship. In the circumstances, the most respectable course of action for the CBN governor is to resign to preserve the integrity, credibility, independence, neutrality and professionalism of the bank.

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Editorial

17 Oil Wells: Kudos To Wike

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Rivers State Governor, Chief Nyesom Wike, and  Rivers people are still luxuriating in euphoria over the Supreme Court’s verdict on the 17 disputed oil wells between Rivers and Imo States. The apex court on May 6, 2022, declared the ownership rights of the oil wells in Ndoni and Egbema communities to Rivers State, terminating the political arrangement on the sharing of revenue from the facilities.
There was a political trade-off put in place by the Governors of Rivers and Imo State in 1999 to ensure that revenues from the disputed wells were rationed equally between the two states. However, when Emeka Ihedioha became governor in 2019, he instigated a presidential memo that ordered that all incomes would have to be paid to Imo State. indeed, he also requested that Rivers State pays Imo State N15 billion royalty received from the disputed oil wells. The Rivers State Government swiftly filed a suit against the presidential directive.
Hailing the decision in Port Harcourt, Wike explained that the state was in court with neighbouring Imo State, not to claim victory, but to defend its ownership rights of oil wells in Akri and Mbede communities. The governor said: “It bears repeating that the quest to defend our ownership rights through the courts over the Akiri and Mbede oil wells was not intended to claim victory over Imo or any other state.
“To actualise the spurious claims, he (Ihedioha) stealthily wrote a letter dated August 9, 2019, to President Muhammadu Buhari and requested the refund of N15 billion from Rivers State to Imo State as backlog of proceeds from the 13 per cent derivation revenue of the oil wells. Acting on Ihedioha’s letter, the President warranted a letter to be written to the Revenue Mobilisation, Allocation and Fiscal Commission (RMAFC) through the late Chief of Staff, Mr Abba Kyari, to alter the status quo in favour of Imo State without reference to the subsisting dispute and agreement between the two states.”
The Tide is, indeed, delighted in the apex court’s verdict, hoping that both Buhari and Governor Hope Uzodimma would graciously accept the outcome. In line with Governor Wike’s offer of a concession, Imo State can explore ways to accommodate that option. “This, we may readily oblige, notwithstanding Ihedioha’s action, who, despite the extensive support and goodwill he received from the government and people of Rivers State to become governor, led the onslaught and created a wedge between two brotherly states,” said Wike.
Rivers people are upbeat about yet another victory Wike has secured for the state by legally protecting and retrieving its oil assets. We commend the governor for his magnanimity in offering to share the proceeds with Imo State in the spirit of brotherliness and for his extraordinary courage in pursuing the matter to the Supreme Court where victory was attained.
A good and courageous leader like Wike always makes history from which useful lessons can be learnt. The governor has constantly demonstrated resilience and is known for his doggedness in fighting for what belongs to the state even in the face of formidable challenges. Wike is a valid instrument God has utilised to take Rivers State to a greater height of success.
In the judgment prepared by Justice Helen Ogunwumiju but delivered by Justice Emmanuel Agim, the apex court dismissed the counter-claim of ownership put forward by the Imo State government. The oil wells located in the territories of Rivers and Imo States had been a subject of litigation at the apex court, which served as a court of first instance with seven justices in the panel.
The court agreed with Rivers State that the correct instruments, map and documents to be relied upon in determining the boundary between Rivers and Imo States were those used by Rivers State in delineating the boundary line between the two states, including Decree 14 of 1967, Decree 12 of 1976, the White Papers/Conclusion of the Federal Military Government on the Irikefe and the Nasir Boundary Commission/Boundary Adjustment Commission, the Eastern Nigeria Map, the Map of Owerri, Warri Province, Onitsha and Rivers Provinces, as well as the Ahoada District Map and Aboh Division Map.
Recall that in 2020, the Supreme Court struck out two suits the Bayelsa State Government filed to reclaim ownership of disputed Soku oil wells, which it was earlier directed to hand over to Rivers State by the Federal High Court in Abuja. Bayelsa State had approached the apex court to stop the Federal Government from further paying monthly statutory allocation from the oil wells to Rivers State.
Similarly, a Federal High Court sitting in Port Harcourt had declared that it was the Rivers State Government (RSG) and not the Federal Inland Revenue Services (FIRS) that should collect Value Added Tax (VAT) and Personal Income Tax (PIT) in the state. The court, presided over by Justice Stephen Pam, also issued an order of perpetual injunction restraining FIRS and the Attorney General of the Federation, both first and second defendants in the suit, from collecting, demanding, threatening and intimidating residents of Rivers State to pay to FIRS, PIT and VAT.
While we laud the Supreme Court justices for their display of courage and for being on the side of the truth, we denounce the obvious lackadaisical approach of the National Boundary Commission (NBC) to the boundary dispute between Rivers and Imo States. As Wike rightly observed, the fraudulent actions of the Commission created more problems than they resolved. Sadly, while the dispute lingered, NBC did nothing in demarcating the boundaries to establish the proper location and title to the disputed oil wells. This quirky conduct largely exposes all that is wrong with the establishment.
Rivers people must particularly appreciate Governor Wike’s hard work and all-consuming love for the state. We must remember that the previous administrations were indifferent about this issue. It is highly estimable that the present leadership in the state has secured at least a composite 30 oil wells domiciled in Rivers State through litigation. The governor must not let go of his advocacy of his people’s rights. His victories at the courts depict him as the veritable conscience of the nation.

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Editorial

APC’s Insensitive Form Price

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The sale of the expression of interest and nomination forms for aspirants contemplating various elective positions on the platform of the All Progressives Congress (APC) is not only outrageous, but it is also against Nigerian youths interested in contesting in the 2023 general election. The announcement sparked verbal attacks on the ruling party, with many questioning the rationale behind the fixing of the amount, which has been described as “ridiculous”.
The APC has pegged the amounts for expression of interest and nomination forms for presidential, governorship, Senate, House of Representatives and State Houses of Assembly seats for N100 million, N50 million, N20 million, N10 million and N2 million respectively. Except for a criminal and a corrupt person, an average Nigerian cannot contest for a position in the ruling party, further exposing its depraved tendencies.
Clearly, the outrageous cost of forms vitiates the principles upon which the party campaigned and was voted into power. Nigerians should be concerned that the APC, which was supposedly founded on the values and ideals of progressive philosophy, would make pre-qualification for elective offices – at state and national level – the exclusive preserve of party members with either great personal wealth or that have unlimited access to other sources of funding.
Some persons have argued that the reason for the exorbitant cost of nomination forms was simply to prune the number of contenders or to delineate the pretenders from the contenders. However, we insist that the argument is flawed. There are ample objective criteria such as integrity, experience, character, political antecedents, empathy, intelligence, and goodwill, among others, which could be employed to enable the emergence of genuinely qualified candidates.
The danger this poses to the party is that many prospective and otherwise eminently qualified office-seekers that do not possess enormous personal wealth will, in every practical sense, be precluded from seeking party nomination, regardless of the depth and breadth of their popular support. Personal wealth was not the yardstick of assessment that enabled President Muhammadu Buhari to emerge as the flag-bearer of the party in 2015 and 2019.
The APC owes it to itself and the teeming Nigerians who voted it into power for two consecutive terms, to remain a party of true progressives and a true party of progressives. The current party position on the cost of forms for expression of interest and nomination for elective offices appears to vitiate the very principles upon which the party campaigned and was elected.
For the 2019 general election, the party pegged its presidential form at N45m, while in 2015, it collected N27.5m. Recall that President Buhari had, while picking the form in the build-up to the 2015 general election, lamented its cost and also claimed to have taken a loan to buy it. Unlike the ruling party, the leading opposition Peoples Democratic Party (PDP) had pegged its presidential forms for the 2023 general elections at N40m. In 2018, the party sold it for N12m.
A Nigerian President receives a total salary package of N1.17 million monthly. This sum is inclusive of a basic monthly salary of N292,892, a hardship allowance of N146,446 monthly, and a consistency allowance of N732,230 per month. The annual salary of a Nigerian President stands at N14.05 million. In seven years, the figure would jump to N98.5 million. In four years, the maximum a President can earn is N56.2 million, slightly above half of what APC is asking presidential aspirants to pay to get the country’s top job.
Undoubtedly, the imposition of such exorbitant costs will embolden fraud and become a vehicle to completely marginalise and exclude some people from the presidential race. Moreover, the cost of the forms is not part of the several billions of Naira aspirants will incur to campaign around the country. They fly chartered aircraft and pay high accommodation costs to lodge their guests and mobilisers.
It is heartrending that President Buhari, who rode into office in 2015 on the promise to fight corruption, has kept mum about the outrageous cost of forms. In 2014, Buhari described the N27.5 million fee for the forms as exorbitant, confessing he had to take out a bank loan to purchase his party’s intent form for the presidential race. The N100 million pegged for the 2023 presidential intent form is several per cent higher than what the party collected for the 2015 election.
Denouncing the astronomical cost of nomination and expression of interest forms of the APC, National Publicity Secretary of Afenifere, Jare Ajayi, said only dishonest politicians could afford it. We agree with him, no less. The APC’s despicable decision only aims at marginalising youths, women and the average citizens who have clamoured to improve opportunities to exercise their rights to declare their interests and contest in the elections.
The cost of the forms has defeated the essence of the Not Too Young Act, signed by the President on May 31, 2018. This administration signed the Not Too Young To Run Act to give youths a chance at participating in the political process. Now, what kind of job would a youth of perhaps 30 years have done to save as much as N50 million regarding the APC? It is hard to imagine a young person who can muster the courage to buy the form at such an enormous cost.
Given the high price of the forms, the ruling party is simply saying that politics is not for the poor but the rich. It also means that anybody who gets into office after paying such a tremendous nomination fee will have to recoup their money, thereby enabling corruption in public offices. This party has devalued and destroyed the Naira and might want to erode it further.
The only reasonable alternative left is for the National Working Committee (NWC) of the party to rethink its position on the matter, which is already generating a lot of debate and controversy from within and without the party. It is never too late to reduce the cost and make refunds. Truly, the APC has inadvertently been made a party of the wealthy by the wealthy for the wealthy.

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