Restructuring Nigeria’s Laggard federation   (1)

Two weeks ago, my intervention on this page was titled in form of a question; “Is the Nigerian federation crumbling?” After examining the laggard and unsustainable nature of our federal system I had concluded thus: “…it was only a matter of time before the acute financial situation leads to government collapse in most states.”

Precisely a week afterwards, Nigeria’s 36 state governors under the aegis of the Nigerian Governor’s Forum came out openly to admit that they are broke and unable to continue to pay the N18, 000 meagre minimum wage agreed since 2010. A communiqué at the end of their meeting read: “…we should understand our situation where some of us (states) today are taking N100million take home  (monthly allocation) and then have salaries in particular of over N2billion to pay.” It continued: “The situation is no longer the same when we were asked to pay N18, 000 minimum wage, when oil price was $126 (per barrel) and continued paying N18, 000 minimum wage when the oil is $41 and the source of government expenditure is from oil, and we have not seen prospects in the oil industry in the near future.”Expectedly, the Nigerian Labour Congress (NLC) came out guns blazing asking the governors to prepare for war with Nigerian workers.

It is clear that the states are desperate for survival. And to confirm investors and analysts’ speculation that the ‘irrational fine of $5.2 billion slammed on MTN (the largest such fine in the world and more than MTN Nigeria’s entire capitalisation and credit worth) was a desperate attempt to shore up depleting oil revenues, the Governor’s Forum came out guns blazing insisting that MTN must be made to pay the fine not minding that such draconian measures was highlighting Nigeria’s risk potentials and scarring away current and potential investors from Nigeria.

But I digress! It was only in June that 27 out of Nigeria’s 36 states were given major bailouts to enable them pay backlog of staff salaries and they also had their short-term loans reschedule to long term loans to give them some breathing space. That was however a temporary and clearly unsustainable solution. Nothing has been done to solve the problem of funding for the states. The thinking was that the oil prices will begin to pick up again before things fall apart. But things are not working out according to expectations. With oil prices below $50 per barrel and long term prognosis aren’t looking bright – with some informed oil experts predicting a further decline of oil prices to about $20 in the coming months, things may begin to fall apart for the states sooner than we’d all expected.  As the communiqué of the NGF above indicated, states just do not have the capacity to pay their workers or even currently justify their existence as respectable orders of government. How can a state with a wage bill of N2billion alone be earning N100 million as federal allocation?  Where are they going to get the money to pay their workers not to talk of providing the now famous ‘dividends of democracy’ on whose strength the governors of the various states were elected into office? Already most of the states that benefited from the bailout are already crying for more bailouts as they struggle to cope with the deteriorating situation.

My feeling is that this is the most convenient time for Nigerians to debate the restructuring of our federation. That debate cannot be realistically held during periods of oil boom. Nobody listens. But now, they clearly have no option. Interesting questions could arise: What is the wisdom in maintaining 36 small, fractured and unviable states with executive governors (who operate like presidents), state legislators, judiciary, commissioners, public and civil services, agencies and organs almost complete as those operated by the federal government? From which source(s) will the states generate the funds to maintain such an expensive form of government? By what arrangement did Nigeria come to have such an unwieldy and expensive form of federation that depends only on a single source of revenue for its survival? In the first instance, how was our federal system structured to ensure resources flow from the centre to the states when classical federalism dictates otherwise?

This naturally leads us to examine the very origin of the Nigerian federation. The structure of Nigeria’s federal system was laid by the Oliver Lyttleton colonial constitution of Nigeria of 1954 which provided for greater regional autonomy for Nigeria’s three regions of North, West and East and the removal of the power of intervention by the central government. That federal constitutional framework was retained at independence in 1960 and guided Nigeria through the first republic which was abruptly ended by the military putsch of January 1966. Due to the exigencies of the moment and the need to prevent the secession of the Eastern region from Nigeria, as well as to provide the federal government with enough resources to prosecute the ensuing Civil War (1967 – 1970), the military regime at the time created twelve states in place of the existing three (or four) regions, usurped revenue-collection powers from the regions and arrogated to itself the right to determine the formulae for sharing centrally collected revenue amongst all the states of the federation. Although, the various military governments have been quick to maintain Nigeria’s federal status, the nature of the military itself – known more for its  unitary command and organizational discipline – made it difficult to practice federalism as its framers intended it.

Nigeria’s version of ‘military federalism’ therefore involved the unilateral creation of economically unviable states in the guise of responding to local demands for self-governance, appointment of junior military officers as state administrators/governors, the pre-eminence of the central government as the source of power and revenue, and the status of states as mere conduits for the dissemination of federal resources to the diverse ethnic and cultural formations in the country. The current thirty-six state structure were all created by the various military regimes between 1966 and 1996.

To be continued next week

 

 Christopher Akor