Editorial
Expectations From New Revenue Formula
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.
Editorial
That Kyari’s Promise On PH Refinery
The Nigerian government has announced that the Port Harcourt Refining Company (PHRC) would soon start operations after missing several previously set deadlines. In a recent meeting with the Senate, the Group Chief Executive Officer of the Nigeria National Petroleum Company Limited (NNPCL), Mele Kyari, assured Nigerians that the refinery would begin operations in two weeks. He emphasised a commitment to meeting the set deadlines for the PHRC and other refineries.
A statement by the NNPCL spokesperson, Olufemi Soneye, quoted Kyari as saying: “We will make sure that promises that we made about the rehabilitation of these refineries are kept. We completed the mechanical completion of PHRC in December. Now, we have crude oil already stocked in it. It is currently undergoing regulatory compliance test before we restream it. I assure you that this refinery will start in the next two weeks”.
Speaking further, Kyari declares: “For Warri, we have also done mechanical work on it. It is undergoing regulatory compliance processes that we are doing with our regulators. Kaduna will be ready by December this year, but we have not reached that stage. We believe that it will also be ready on schedule.” He explained that the PHRC had received 450,000 barrels of crude for processing since the mechanical completion of the plant in December last year.
In 2021, the Federal Government gave approval to allocate $1.5 billion for the purpose of repairing the refinery. Subsequently, an Italian company, named Maire Tecnimont, was selected to undertake the repair work, which would be carried out in three separate phases. The main goal of the first phase is to restore the refinery’s operation to 90 per cent capacity within 18 months.
Although the project faces numerous delays and obstacles, it is a critical measure to increase Nigeria’s ability to refine its petroleum products and decrease its reliance on imports. The original deadline of 2022 was not met. During this year’s budget defence session, Kyari informed lawmakers that the PHRC would start operations by the end of December. However, that deadline was also missed. Another target of January 1, 2024, also failed.
There were two previous instances of deadlines set by Ibe Kachikwu, who was the Minister of State (Petroleum Resources). There was another timeline under Timipre Sylva, and now we are faced with the current one. This would be the fifth or possibly even the sixth one. In the past, several government officials had made similar statements, but no tangible outcomes were achieved.
The four state-owned refineries, which are old and in bad condition, have a total capacity of 450,000 barrels per day. One of them, the Kaduna plant located in the North, has a capacity of 110,000 barrels per day, while the other three units are situated in the oil-rich Niger Delta region. One of these is the Warri refinery, with a capacity of 125,000 barrels per day. All four refineries have been closed for several years.
In 2019, the four local refineries completely ceased operations, leading to fuel supply issues in the country. The Port Harcourt refinery has the ability to produce 60,000 barrels per day at full capacity. If fully utilised, this could result in the production of approximately 10.1 million litres of petrol, which is roughly equivalent to one-third of Nigeria’s estimated daily consumption.
The Dangote refinery was expected to begin producing products by the end of July last year, while the commissioning date for the PHRC continues to be delayed. This impediment is worrisome as it means that Nigeria’s dependence on imported fuel will persist, potentially adding N33.3 billion to consumers’ pump prices due to freight costs. The completion of these refineries is essential for reducing importation and ensuring a more stable and affordable fuel supply for the country.
In general, we should be feeling joyful about Kyari’s promise. However, that is not the situation. If anything, we are extremely angry about the news. What should have been happy news has instead provoked the frustration in us, clearly because similar promises had been made in the past without any palpable outcome. It has become predictable to hear about the functioning of the refineries, whether in Port Harcourt, Warri or Kaduna. We hope that the GMD will fulfil his promise this time.
Since 2015, when the ruling All Progressives Congress (APC) took power from the Peoples Democratic Party (PDP), which had been in government for 16 years, there have been promises to maintain and eventually operate the PHRC and others, but none of these promises have been fulfilled. So, when the NNPC released a statement declaring that the government was determined to stop importing fuel and that the PHRC would start operations in two weeks, indicating the government’s readiness to end fuel importation, we are sceptical of this claim.
We strongly advise the National Assembly (NASS) to increase its efforts in pressuring the NNPCL management to fulfil its pledge of making the PHRC operational at the stipulated time by regularly monitoring its activities. If the NASS had performed its oversight function commendably, the state-owned refineries would not have been a heavy burden on public funds, preventing Nigerians from experiencing the benefits of being an oil-producing nation. If the refinery does not function as promised, Kyari should face severe sanctions.
Considering the Nigerian government’s history of making unfulfilled undertakings, it is understandable that we are hesitant to believe Kyari’s statement. Previous assurances have been broken, so it is hard to trust that this one will be any different. However, there is still some optimism that things will change this time and that the government will actually follow through on their promises. If the Tinubu administration must regain our trust and that of Nigerians, they have to demonstrate their sincerity and commitment to their obligations.
Editorial
Delta Killings: Need For Caution
The Niger Delta region, known for its abundant oil resources, has long been plagued by violence, rebellion and challenges to duly constituted authorities, especially among the youths. This unrest is particularly noticeable in Ughelli South Local Government Area of Delta State, casting a shadow over the region’s wealth of resources. On March 14, a tragic incident occurred where angry youths in Ughelli ambushed and killed 17 soldiers who were on a peacekeeping mission in the Okuama community.
This terrible act of extreme violence highlights the growing divide between the authorities and the frustrated younger generation. The significant loss suffered underscores the seriousness of the situation and shows the urgent need for quick and efficient solutions. The question that remains is: Who can be trusted to bring peace back to this troubled region?
With Nigerians already on edge about the increasing number of kidnappings in several areas of the country, the recent incident in the riverine communities of Ughelli and Bomadi Local Government Areas in Delta State has only added to the anxiety. The conflict between the Okuama and Okoloba communities, which began in January over a land dispute, has escalated and led to heightened tensions in the area. The citizens are understandably concerned about the situation and are hoping for a peaceful resolution of the conflict.
The Okuama people had unfortunately lost some of their own in recent events, leading to tensions between them and the rival community of Okoloba. In retaliation, the Okuama natives allegedly kidnapped a member of the Okoloba locality. This action prompted troops to embark on a peace mission to Okuama to rescue the kidnapped individual. Tragically, the mission turned deadly. The Army then insisted on taking some community leaders with them, a request members of the community declined, resulting in the crisis.
According to reports, a group of Okuama youths ambushed the military team and viciously killed the Commanding Officer, two majors, a captain, and 13 soldiers. There were allegedly intense gun battles between the youths and the troops. Reflecting the horror of the incident, media outlets described the aftermath scene as “barbaric”. The victims’ corpses were mutilated beyond recognition with severed legs and brutally torn bowels. The chilling degree of violence demonstrated was not only shocking but also unacceptable as it showcased the severe lack of regard for human life.
President Bola Tinubu’s denouncement of the attack on the military personnel and his call to fish out the attackers was expected and necessary. However, it is disappointing that he did not explicitly mention the need to avoid extrajudicial acts by the military in the process as they are wont to do. Other Nigerians have also condemned the killings as unprovoked and have called for justice to be served. All parties must ensure that the perpetrators are brought to justice through legal means and that there is no room for further violence or retaliation.
Already, reports have surfaced indicating that the military has encircled the communities, causing the indigenes to flee to neighbouring areas because of apprehension of reprisals. Viral images depicting armoured vehicles and burning structures imply that the soldiers have initiated operations. While we strongly denounce the shocking, barbaric, wicked and unforgiveable killing of the soldiers, we implore the Nigerian military to exhibit maturity and refrain from resorting to vigilantism in response. Instead, they should concentrate on apprehending the culprits, with some of them already identified.
Angry troops from the Nigerian Army recently attacked an Ijaw community called Igbomotoru, located in Bayelsa State in the Southern Ijaw Local Government Area. This community is known to be the birthplace of the purported ringleader, whom the troops were searching for. However, their efforts proved abortive, as the suspect had received a tip-off and fled before their arrival. Unfortunately, the invasion resulted in significant loss of life and destruction of property. Regardless of the soldiers’ anger, it is morally and legally wrong to take innocent lives. Such actions are uncivilised and give the impression that our military operates outside of the law.
It is a common practice in Nigeria for the military to respond to violence against its personnel by taking severe actions against the involved people or communities. Nonetheless, this approach may not necessarily lead to long-term peace and understanding. In fact, it could backfire and provoke more hostilities. That is why we think that the military must tread with caution. The risk is that such retaliatory measures could fuel resentment and defiance among the affected population, causing a cycle of ongoing animosity that could eventually lead to even more rebellion and hostility towards the authorities.
To look into the circumstances surrounding the regrettable incident, the Federal and Delta State governments should work together to form impartial probe panels that include representatives from both parties. The decision to deploy soldiers to settle a land dispute was inappropriate in the first place, as this is a matter that falls under the jurisdiction of the police. The military needs to concur with the police force and possibly the Directorate of State Services (DSS) in similar situations to prevent any further escalation of civil conflicts.
Nigeria’s police system needs to be reviewed in light of the killings of the military officers. Following understaffing, the military has been forced to take on internal policing duties, including tackling organised crime, oil theft, communal crises, kidnappings, and banditry. The police force must be adequately funded and equipped to effectively carry out their constitutional responsibilities. This tragic event emphasises the necessity for seeking justice without first resorting to revenge.
In November 1999, in Odi community, Bayelsa State, a gang killed 12 police officers and soldiers over oil resources and environmental degradation issues. The military’s response was severe, leading to the deaths of hundreds of civilians and the destruction of Odi. In October 2021, the military intervened in Zaki-Biam, Benue State, after 19 soldiers were abducted and killed by locals. The troops were sent to stabilise the area due to clashes between the Tiv and Jukun communities in Benue and Taraba States. Reports by Human Rights Watch indicated that the soldiers killed about 100-200 men and destroyed properties in Zaki-Biam and neighbouring areas.
The Okuama killings have shed light on the harsh reality that there are far too many weapons in the wrong hands in our country. To combat this issue and reduce criminality, President Tinubu must prioritise disarming and preventing non-state actors from obtaining weapons during his administration. The military and police should conduct thorough investigations into the homicides and ensure that only the perpetrators are brought to justice, to prevent further bloodshed and violence.
Editorial
For An Effective Supreme Court
The recent inauguration of 11 additional Justices to the Supreme Court, Nigeria’s highest judicial institution, presents a robust event in the judiciary. This action comes in the wake of a period the court was grappling with high workload pressure because of statutory retirements and unfortunate demise, resulting in the highest court running below its required capacity. However, the induction of the new Justices has brought transformation. The replenishment of the Bench restores the court’s strength to its estimated complement of 21 Justices, in line with the stipulations of the country’s constitution.
During the administration of the Oath of Office to the Justices, the Chief Justice of Nigeria (CJN), Justice Olukayode Ariwoola, reiterated the essence of their role and the responsibility they carry. He emphasised the expectation for them to exhibit utmost integrity and fairness, akin to Caesar’s wife, in delivering justice impartially regardless of whose interests were at stake. According to him, they should see themselves as God’s representatives. Unfortunately, the 11 Justices were assuming their positions on the Supreme Court Bench during a period when the Nigerian judiciary, including the apex court, faces severe criticisms, resulting in widespread skepticism towards judges among the people.
Today, there is a lack of consensus regarding CJN Ariwoola’s assertion that Nigerian judges, across different levels, serve as representatives of God on earth and understand his expectations. While the CJN could have provided his guidance without invoking religious beliefs, he accurately pointed out the heightened scrutiny that the apex court will face, particularly from Nigerian politicians seeking to manipulate judicial outcomes. The legal community will also closely observe the newly appointed Justices, assessing how their promotion and the completion of the judicial panel at the apex court will impact the administration of justice and advance legal principles.
The main concern regarding the depletion of the apex court was the high number of cases on the docket, leading to over-congestion in the court and causing the Justices, who were already few in number, to be overworked. Justice Musa Dattijo Muhammad highlighted in his emotional farewell speech in October 2023 that the Justices were also underpaid and lacked resources. With the recent addition of 11 judges to the apex court, more cases can now be heard, leading to improved performance and efficiency. However, for this to be successful, the administrative processes at the Supreme Court must also be revamped and modernised.
We congratulate the new Justices on their appointment to a position that carries a sense of authority in their decisions while presiding over cases brought before them for adjudication. However, they must remember that their new role comes with great challenges, responsibilities, and heightened expectations, as the judiciary is often seen as the last resort for the common man.
This has become pertinent in light of the demand for justice by Nigerians, both ordinary citizens and those in positions of power, who feel let down by the decisions coming from the courts on various issues, especially those related to politics. Whether rightly or wrongly, there is a widespread belief that the respected institution of justice has been influenced by corruption; that greed and dishonesty have tarnished what was once a highly esteemed establishment that was respected by all.
Many well-meaning Nigerians have been vocal in their calls for the purification of the corrupt judiciary, especially the Supreme Court. It is widely believed that by ensuring a full complement of judges, a new era of swift justice can be ushered in, ultimately leading to the much-needed purification of the system. The hope is that with a reformed and efficient judiciary, the rule of law will be upheld, and justice will be served timely.
The judiciary in Nigeria is a reflection of the larger society, encompassing both the good and the bad. It must be recognised that Justices are human, with all the inherent flaws that come with being human. However, it is believed that through their training, sense of duty, and the discipline required for their roles, they should be able to rise above any shortcomings and fulfil their responsibilities to the public. It is expected that they will meet the presumptions of the people they serve.
From that perspective, and in view of the burden of duty they must discharge, we feel obligated to further contend that for the Justices to be able to, like the blind-folded lady, dispense justice without fear, favour or ill-will, there is the compelling urgency to make the judiciary a member of the tripod, truly independent, especially from the standpoint of funding. It deserves to get its allocation directly from the federation account devoid of the manipulative influence of any other arm of government. This is required if the nation must do away with the negative perceptions of who pays the piper dictates the tune.
Furthermore, the selection of the Chief Justice of the Federation or Chief Judge of a state should not be at the discretion of a single elected official, whether it be a governor or the President of the country. This tendency for one individual to have complete control over who holds these critical positions, often through manipulation and questionable deals, undermines the idea of a judiciary that is truly independent and able to withstand political pressure. Appointments to these offices should be made based on merit, integrity, and public scrutiny rather than political favouritism.
If judicial officers are diligent in carrying out their duties, they deserve to have comfortable working conditions. This means that they should not have to settle for the meager salaries they currently receive. The nation must ensure that we did not repeat the past where Supreme Court Justices had to protest against the poor working conditions they were subjected to. Corruption can be tempting, but with the right incentives and working environment, we can prevent it from taking hold. Justices need to be provided with better working conditions that do not compromise their rectitude.
Given that the Supreme Court has now been completely constituted, there should be no room for cases to drag on in their dockets. It is anticipated that a fully constituted Supreme Court will have all its courtrooms operational and the newly appointed Justices will enhance our legal system and assist the apex court in realising its maximum potential. Despite these recent appointments, more Justices of the apex court are approaching retirement and any resulting vacancies should be promptly filled without delays. With the court now at full capacity, we are optimistic about the future productivity and efficiency of the Supreme Court.
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