States’ bailout underscores Nigeria’s ‘feeding bottle federalism’

Like the United States of America, Nigeria is running a federal system of government, but unlike America, Nigeria is running what is, arguably, ‘feeding bottle federalism’ where the centre is so powerful and comfortable while the federating units are weak and docile.

Unless states begin to make conscious efforts to tap into the abundant resources in their domain, the Federal Government would continue to be encumbered by requests for bailout, analysts have said.

Despite the uproar that greeted the request and the expression of fears in many quarters that the Muhammadu Buhari administration, if it acceded to the request, would be going contrary to its avowed pledge to stem the tide of profligacy among public office holders, government went ahead to announce N804.7billion economic bailout for the states.

Analysts say the bailout underscores the “feeding bottle federalism” concept propounded by Ike Ekweremadu, deputy Senate president, at the sixth Oputa Lecture in Canada.

It is a concept where the 36 states come to the centre to collect their share of monthly allocation.

While proponents of the current practice and non-viable states believe this would further strengthen the nation’s diversity, viable states are of the view that this would encourage laziness among non-viable states.

Observers say that Nigeria’s warped federalism has led to overdependence on oil from the Niger Delta. This has done more harm to the economy than good; one of which is states’ abandonment and utter neglect of agriculture, solid minerals, taxes and other resources from which sufficient revenue can be derived.

Economic history shows that no advanced or frontier economy in the world today has toed Nigeria’s current consumption line, characterised by governors’ monthly movement to Abuja to get their own slice of the cake.

Many recently frontier and advanced economies such as the four Asian Tigers involving Hong Kong, Singapore, South Korea and Taiwan learnt a big lesson early enough in the 1970s through economic diversification and development of natural resources to serve industries as raw materials.

These countries embraced import substitution and pursuing an export-driven model of industralisation and development. Today, they are rich and have various welfare schemes for workers, which do not include owing salaries running into months.

“What we are reaping now is the result of our warped federal structure,” Ben Osisioma, professor of accounting at Nnamdi Azikiwe University, Awka, told BD SUNDAY.

 “Many years ago, when Chukwuemeka Ezeife was governor of Anambra State, I was part of a committee called the Financial and Economic Advisory Council. We were given a mandate to move round the state and see how we would identify resources that would generate enough money and enable the state stand on its own.

“We found out that each of the local governments had two natural resources that would be the goldmine. Some local governments in Anambra had clay, which is suitable for ceramics making. So also did other local governments have peculiar natural resources that could be exploited for industrialisation.

“The point is that our states have failed to exploit agriculture and manufacturing. Everybody is now drinking oil. Our states have failed woefully, such that if they are asked to sustain workers with their own resources, they will experience serious challenges,” Osisioma said.

Akin Oyebode, professor of international law and jurisprudence, University of Lagos, said the only way to best restructure the country’s federal structure is through inward look at industrialisation.

The agitation for true federalism also became a bit apparent last Thursday when Tunji Bello, secretary to the Lagos State government, told the business community that Nigeria’s economic hub was proposing state police and internal power generation to help boost security and industries.

“We have made it clear that we need to create the state police. We cannot depend on the federal police because they are loaded with a lot of things. This is part of what we want Buhari to do,” Bello, who represented Governor Akinwunmi Ambode at the foreign policy dialogue, said.

“We are not truly running a federal state. We need to create the necessary structural reforms,” he said.

‘Bintan Famutimi, president, Nigerian-American Chamber of Commerce, said Nigeria has believed a lie for a long time.

“We have unlimited natural resources; we have the climate and everything but we have abandoned them for the Niger Delta oil. We have run this economy in an unrealistic way. The structure of Nigeria and the economy is distorted and we need to do something about it now,” Famutimi said, during the dialogue held in Lagos.

For proponents of “feeding bottle federalism,” it would be repugnant to natural justice, equity and good conscience to leave states to develop at their own pace when they are not economically viable. They reasoned that this would make some states backward since they lack the economic resources to develop at their own pace.

Findings show that from colonial times to the discovery of oil in Oloibiri in 1956 and end of civil war in 1970, the mainstay of the Nigerian economy was agriculture. The export proceeds of agricultural produce: groundnuts, cocoa, palm oil and rubber accounted for the bulk of government revenues. But the federal system inherited at independence allowed the regions to retain the autonomy to raise revenues, promote development, and conduct their affairs as they saw fit, while engaging in healthy competition with others.

However, the emergence of military rule led to the weakening of the federating units and centralisation of resources and concentration of power at the centre, thus promoting the current “feeding bottle federalism” where the federating units rely on the centre for monthly allocation.

But analysts against this practice have argued that although encouraging states to grow at their own pace will bring pains in the short run, it will, however, push non-viable states or regions to think outside the box and harness their resources in the long run. They attribute the problem to the nation’s over-dependence on oil.

George Oji, executive director, Friends in the Gap Advocacy Initiative, reasoned that the country was practising federalism up-side-down wherein rather than the regions contributing to the centre, as practised in the United States and other nations practising fiscal federalism, the reverse is the case in Nigeria.

Describing the development where each state runs to the centre cap-in-hand for monthly allocation as a “negative concept”, the head of the parliamentary watchdog harped on the need for each state to tap into the resources available in their domain to increase their Internally Generated Revenue (IGR).

He attributed the problem to extravagant nature of governors as well as the Land Use Act which gives the Federal Government exclusive rights over the ownership of land and resources in all parts of the country.

He said: “Like the oil, for instance, it is the states where this oil is found that are supposed to appropriate it and have a formula whereby they give part of what they appropriate to the centre”.

While listing Lagos, Rivers and Delta as the only viable states in the country, he said: “That is why some states haven’t bothered to exploit other sources of revenue that will make them independent. If you remember during Obasanjo’s regime, for about four years when the Lagos State Government was having some altercation with the Federal Government, Obasanjo unilaterally stopped allocation to Lagos.

The state was able to survive because it could stand on its own and generate revenue internally. That is what you expect from the rest of the states. But that is not the case because the states are lazy, coupled with the extravagant nature of the governors at the states. So, these resources that they get, they misappropriate them”.

He therefore, called for the collapse of states that are not economically viable. “Ideally, what this has demonstrated is that many states are not viable on their own. And if that is the case, they should naturally collapse into other bigger states. The states that are viable could annex the ones that are not viable.

“But in Nigeria, state creation is a political issue. It is even part of the reasons why there is more agitation for states creation because they are not going to struggle to survive; they just depend on the centre. Because if they were to go through the crucible of financial self-sustenance, the degree of agitation we are having now, would not have been there. The allocation is done on state basis; so whether you generate anything from your state or not, your survival will depend on the centre, you are not going to struggle for it.

“Ideally, it should lead to the collapsing of the existing state structures into smaller units that could survive on their own,” he maintained.