Another look at fiscal federalism

There shouldn’t be any argument that proceeds from the exploration of Nigeria’s continental shelf petroleum and marine mineral resources accruing to the Federation Account, from which they would be divided among the federal, state and local governments of the Nigerian federation. That is the way it should be.

A continental shelf, which could be 310 miles wide and 660 feet deep, is coastal land submerged under the sea and is exclusively reserved by the United Nations Convention on the Law of the Sea for a coastal nation.

Because the continental shelf is not within the borders of any state or the authority of any state governor, the Federal Government controls the mineral resources therein, acting on behalf of all tiers of government.

But that has not always been the case, because some Nigerians, who arrogate Nigeria’s commonwealth to themselves and their regions, do not want anything to threaten their hegemony over the country’s resources.

Brigadier General Godwin Alabi Isama, former Chief of Staff to Brigadier General Benjamin “Black Scorpion” Adekunle, General Officer Commanding of the Nigerian Army’s Third Marine Commando, has an idea of how to share the proceeds from exploitation of mineral resources from the continental shelf.

He told Sam Omatseye, Chairman of the Editorial Board of The Nation Newspaper, that, instead of asking state commissioners to come to the Federal Capital Territory to take the monthly dole from the Federation Account, each state should simply be handed an oil block to exploit on behalf of its citizens.

But, as he has deftly hinted, the individuals who have cornered the oil fields and have become so rich that they admit that they do not even know what to do with the riches may not be too welcoming of this idea. And he is right.

Some reactionary Nigerians believe that wealth is better left in the hands of a few bourgeois who think that they have a divine right to the riches and resources of Nigeria. In addition to engaging in oil bunkering in the Niger Delta region, they also engage in clandestine mining of solid minerals in other regions of Nigeria.

While the proceeds from the exploitation of mineral resources from the continental shelf should be shared between the Federal Government and the states, those from petroleum and other mineral resources on land, like gold, lithium, cobalt, barite, bauxite and others, should belong to the states within whose boundaries they are found.

This would be as it was during Nigeria’s First Republic, when proceeds from the sale of cocoa, cotton, rubber, groundnut, hides and skins and palm oil, derived from agricultural activities, went to the citizens of the regions from which they were harvested.

Instead of the over-centralised latter-day Nigeria National Petroleum Company Limited, which is constricting the growth of the Nigerian petroleum sector, the marketing boards of the regions of Nigeria’s First Republic democratised the decision-making over the resources of the Nigerian economy.

The proceeds from the exploration of these mineral resources should not have been under the Federal Exclusive Legislative List, or the Federal Accounts Allocation Committee from which state governments, like panhandlers, go and collect the dole every month.

This argument becomes tenable for two related reasons: The Land Use Act vests lands in each state governor. That explains why state governments, not the Federal Government, sign Certificates of Occupancy and levy land use charges on landlords within their borders.

That is why it is strange that those 37 kids, who died in the custody of the careless (or callous) Nigerian Security and Civil Defence Corps, should not be described by the media and the security agencies as “illegal” miners. The inaccurate classification of the kids as “illegal” miners fails to recognise that the kids were justifiably mining gold within the confines of their state.

But worse is that this untenable position of the media and the security agencies assumes that the kids should not have claims or access to the mineral resources within their state. That assumption by any of these institutions is unfortunate.

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The declaration of paragraph 39 of the Federal Exclusive Legislative List of Nigeria’s 1999 Constitution that “Mines and mineral (resources), including oilfields, oil mining, geological surveys and natural gas” under the Federal Government, for distribution to the federal, state and local governments, is absolutely pompous and pretentious, to say the least.

It is absurd and preposterous to first remit proceeds from the exploitation of mineral resources within the borders of states to the Federation Account in faraway Abuja, in the Federal Capital Territory, before redistribursing it to the states.

Imagine the extremely ridiculous act of a Federal Government agency that bought brooms from Cross River State, hauled the cargo all the way to the stores at the Federal Capital Territory before redistributing it to the states, including Cross River State, from where it was bought in the first place.

If those who keep kicking against the democratisation of Nigeria’s resources and economic power realise what is good for them, they will gladly embrace this option for the economic empowerment of the regions and the citizens of Nigeria. Like politics, all economics should be local.

When states are empowered by the constitution to exploit mineral resources within their borders, it increases the chances of creating a larger number of rich citizens, unlike the situation whereby economic and investment decisions are over-centralised in the hands of a distant central government that cannot feel the urgent existential needs of every citizen or geography of the Nigerian realm.

This discussion is apt at a moment when no less an international collective than the 81st plenary of the United Nations General Assembly is critically interrogating the rightness of fair and ethical exploitation of Africa’s mineral resources in the interest of Africa and its peoples.

President Bola Tinubu recently told delegates to UNGA 81 that “Africa must move beyond its historical role as an exporter of raw materials for greater value addition, manufacturing, technological innovation and knowledge-driven growth.”

His conclusion that “Our abundant natural resources must become engines of shared prosperity, rather than sources of perpetual dependency” is not only for the action of the rest of the world, but also for the governments of resource-rich African nations.

France that was accused by the Alliance of Sahel States, comprising Burkina Faso, Mali and Niger Republic, of unfair exploitation of African mineral resources, has repented and is now preaching for equity in the exploitation of Africa’s mineral resources.

After telling the denizens of the metropolitan economies to back off Nigeria’s mineral resources, President Tinubu and other members of Nigeria’s political elite must take deliberate steps to spread Nigeria’s wealth as widely as possible.

Former President Muhammadu Buhari, who pledged to lift 100 million Nigerians out of poverty over 10 years, famously made Nigeria the poverty capital of the world in 2018, though India later retrieved the inglorious trophy.

But in 2023, when he left office, many Nigerians had descended into multidimensional poverty, including malnutrition, child mortality, and inadequate access to healthcare, education, clean drinking water, electricity, proper sanitation, clean cooking fuel and adequate housing.

This allocation of resources, instead of revenue allocation, should reduce the politics of the current revenue allocation formula.