BusinessDay

19 Experts on 2019: Olu Fasan on Reforming Nigeria’s federalism

Nigeria faces a critical choice after this year’s general election: it must restructure its polity or suffer an existential decline. Last year, the London School of Economics and Oxford University said in a joint report that a state is fragile if it exhibits the following “symptoms of fragility”: security threat from organised non-state violence; the government lacks legitimacy in the eyes of citizens; the state has weak capacity for essential functions; the environment for private investment is unattractive; the economy is exposed to shocks with little resilience; and deep divisions in the society. Certainly, these symptoms apply to Nigeria, which makes it, according to the LSE-Oxford framework, a fragile state.

But here’s the question: why is Nigeria, a well-endowed country, with huge human and natural resources, stuck in the fragility trap? Some blame leadership, and that’s somehow right. Leadership matters. However, most successful nations do not put their faith in individual leaders; they build suitable and robust institutions. This is because the right constitutional and governance structures can constrain the behaviours of individuals, including leaders, and thus condition good political and economic governance. So, nature a country’s politico-governance structures matter.

Which brings me to the nature of Nigeria’s federalism. Nigeria faces two critical problems that deprive it of economic and social progress. One is the lack of unity; the other is the absence of good governance. But these problems are largely linked to flaws to Nigeria’s federal system, its incompatibility with the political and economic principles of true federalism.

According to the Encyclopaedia Britannica, a truly federal system must have the following characteristics: non-centralisation, local autonomy and elements that promote common nationality. Nigeria’s federalism fails all these tests. First, it is over-centralised. Rather than devolve powers to the subnational units, it concentrates them at the centre.

The Tenth Amendment of the US Constitution provides that all powers not delegated to the federal government are reserved to the states. Given that the federal government’s powers are specified and limited, the states can do virtually everything else. By contrast, the Nigerian Constitution provides for an Exclusive Legislative List and a Concurrent Legislative List, which give the federal government the power to do virtually everything. The effect of the excessive centralisation is that the state and local governments lack the ability to become substantially autonomous and self-sustaining. That’s not true federalism.

But Nigeria’s federalism also fails to engender a sense of common nationality. Nothing binds together the country’s strongly divergent ethnic nationalities. The Encyclopaedia Britannica says that, in a true federal system, no part of the federation should be “so dominant that others have little opportunity to provide national leadership or even a reasonably strong alternative to the policy of the centre”. But Nigeria’s federalism doesn’t guarantee equal opportunities and fair material treatment. For instance, the Igbo have not produced a president since Nigeria returned to civil rule in 1999, yet their chances of doing so in 2023 are still subject to Nigeria’s dominant power politics. Nothing undermines a federal system more than a lack of balance among the constituent polities.

Indeed, the constant use of force, such as the so-called “operation python dance”, to maintain domestic order is a strong evidence that Nigeria’s federalism is flawed. The use of repression to maintain unity is usually associated with centralised nations, not truly federal states. Where there is a mismatch between power (at the centre) and identities (at subnational levels), compliance with authority is often not voluntary, thus frequently requiring the use of force. Only true federalism can address that problem.

So much for the politics of federalism, what about its economics? The former is concerned with unity, the latter with good governance. Central to the economics of federalism is economic efficiency, namely, which level of government is best suited to manage governmental functions efficiently.

According to the Tiebout model of decentralisation, developed by the economist Charles Tiebout, public activities should be decentralised unless where there are possibilities of significant inter-jurisdictional externalities or spill-overs. This is similar to the ideas behind fiscal federalism, a concept developed by another economist Richard Musgrave, who argued that the federal government should be responsible for economic stabilisation and income redistribution while state and local governments should have significant responsibilities and resources as they are closer to the people and best able to meet their needs. Of course, Nigeria’s federalism fails the economic efficiency test. The federal government does much of what the subnational units should be doing, including policing, and controls huge resources, taking, for instance, nearly 50% of the nation’s revenues.

What’s more, Nigeria is over-governed. The federal government has 821 agencies and the state and local government have thousands of them. True federalism would reduce the cost of governance through consolidation of administrative structures, including reduction of unnecessary duplications between federal and state governments and, indeed, between states within the same geopolitical zone. Streamlining the federal government and reducing the current 36 states to between 8 and 12 regions should be key elements of restructuring the country.

Finally, Nigeria would benefit from competitive federalism. In the 1960s, yardstick competition between the regions promoted policy and productive innovation. Today, there are no incentives for such competition and policy innovation as the states are over-dependent on the federal government. Yet, Nigeria can only be as economically vibrant and dynamic as its constituent parts.

There are strong political and economic imperatives for reforming Nigeria’s federalism. The future of this country depends on it. True federalism will yield benefits for Nigeria, but the status quo will endanger its political stability and condemn it to economic and social stagnation. Nigeria is certainly at a crossroads. The challenge for the politicians after this year’s elections is whether they would save this country by restructuring it or allow it to remain stuck in the fragility and poverty traps.

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