The ongoing agitation for the review of revenue allocation formula has brought to the fore questions on the tangible benefits derived by the people at both State and Local Government levels from the huge monthly revenue allocation to their States from the Federation Account.
The existing global financial crisis which has extended to every part of the world has worsened the regional, national and global economic environments. This has a significant negative consequence on the economic activities of state governments as the economy witnesses, not only drastic fall in standard of livings, but also amplifying the poverty level since governments are financially incapacitated to discharge their mandates.
Following this, states have explored various strategies including imposing multiple taxes on the masses and private entities to augment the Internally Generated Revenue. This in turn has generated a lot of heated debates, controversies and unexpected protests from individuals, civil society groups and local industries.
In recognition of its tireless campaign in the promotion of transparency and accountability towards the nation’s building, Civil Society Legislative Advocacy Centre (CISLAC) recently received an invitation to present a view at two-days North-West Zonal Public Hearing on the Review of the Revenue Allocation Formula organized by the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) in Kaduna.
As against the State governors, who demand drastic reduction in the current 52.8% allocated to the federal government to augment the States and Local Governments’ quotas, CISLAC recommended 45%, 30% and 25% to federal, state and local government respectively, primarily to achieve a justifiable and transparent vertical review of the formula.
The submission by CISLAC was triggered by the years of rampant over-reliance of the States on allocation from the federation account with no consideration for more realistic and viable means to diversify their economy for effective Internal Generated Revenue (IGR). CISLAC bemoaned the fact that the State governments, except Lagos, Kano and Rivers could hardly depend on their IGR as they heavily rely on the monthly allocation from the federation account for survival.
Every fiscal year, governments at all level earmark high percentage of their budgets to capital expenditure. Conversely, only few have well defined concrete projects to show at the end of their tenure in office. Consider the bad shape of roads in some states regardless of the vast budget voted annually for capital expenditure. Thousands of lives are lost through road accidents. It is certain that Nigeria continues to incur economic losses running into billions of naira every year as a result of bad roads.
Over the years, in spite of the states’ enormous resources and potential, poverty is widespread throughout the nation. For instance, CISLAC noted the aggressive rise in poverty level in the country as 1980, 17.1; 1985, 34.5; 1992, 39.2; 1996, 67.1; 2004, 68.4; and 2010, 112.47. Also, basic indicators have placed Nigeria within the 20 poorest countries of the world. The issue of poverty can be easily traced to underutilization of resources in most states especially in the area of agriculture.
These problems are traceable to gross mismanagement and lack of accountability on the part of governments resulting in diversion of substantial resources from the monthly disbursement from the Federation Account.
Unfortunately, the states clamouring for the review in revenue allocation formula ought to remember that the Federal Government has assumed more responsibilities which were duly those of the states and local governments because of the ineptitude of the states like ecological problem, defence and security matters as well as transportation.
In its submission, CISLAC urged the States to focus more on Internally Generated Revenue (IGR) to avoid over reliance on federation account; there should be accountability and transparency in the utilization of public funds. The Centre called for the responsive inclusive participation on the monitoring of received and disbursed allocation at all level; as well as empowering the office of the auditor general both at national and state levels to guarantee transparency and accountability.
Furthermore, CISLAC encouraged Civil Society Organizations and all relevant stakeholders to engage more in evidence-based advocacy rather than making premature judgments on the proposed revenue allocation formula.
Abubakar Jimoh writes from Civil Society Legislative Advocacy Centre (CISLAC), Abuja.