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Northern elites and their counterparts in the South-South engage in rancorous arguments on existing revenue allocation formula under which oil producing states get 13 percent derivation

The controversy is raging like wild fire in a harmattan. In the past few days, political leaders from the old Northern region and their counterparts from the South-South geopolitical zone have been on the war-path over the contentious issue of revenue allocation formula.

Mu’azu  Babangida  Aliyu,  governor of Niger  State and chairman of the Northern Governors’ Forum, stirred up fresh controversy on the issue on Thursday, February 23, at the inauguration of the advisory council of  Sir  Ahmadu  Bello Memorial Foundation, Abuja. In his speech at the occasion, Aliyu described as unfair, the situation where a state like Niger got between N4.2 billion and N4.5 billion as monthly allocation while some other states in the South-South geopolitical zone received 20 times the amount based on 13 percent derivation formula for the oil producing states. He explained that this unfavourable federal allocation structure in which the 19 Northern states were at a great disadvantage poses grave danger for the North where illiteracy, poverty, ignorance and general backwardness were on the rise. The governor gave an instance with Niger State which he claimed spends half of its monthly allocation on payment of salaries and other overheads. This, according to him, leaves the state with barely enough to provide infrastructure and other needs of the people.

Aliyu, therefore, said that the governors of the Northern states were demanding for a review of the revenue allocation formula within the year to redress what he perceives as the prevailing imbalance that has put the Northern states at a disadvantage. He was firm and unequivocal in his demand on behalf of the Northern governors. “The revenue allocation formula should be looked at. We are hoping that within 2012, there would be discussions and review of the allocation formula. But there are other issues that would come. For example, there were oil wells that were more than 200 kilometres  off the shore of the country. Those ones before the passage of law by the National Assembly were supposed to be oil wells for the whole country.

But now, they have been given only to the contiguous states in addition to the 13 percent derivation. So, if you look at that, you will say that it will not serve everybody well if certain parts of the country are not doing well while some parts are doing exceptionally well. So, the pressure will continue until we are able to find a solution.”

Aliyu was not done yet with his clamour for review of the revenue allocation formula. In a lecture delivered at a forum organised by Business Hallmark newspapers in Lagos, last week, entitled: “Governance, Social Conflict and the Imperatives of Communal Harmony,” the Niger State governor threw more light on the contentious issue. “I deliberately did not expand much on specific issues like the current revenue allocation formula where some states are in paradise and some are in purgatory. We must remember that the idea of common nationality implies that the resources of the nation should be considered as a common patrimony for the common good of all the citizens. We need to examine our revenue sharing arrangement to balance derivation with need to guarantee the continued economic and political health of the nation. This is so since there is no formula for restricting the citizens of a particular part of the country from settling in another part.”

Aliyu’s position was based on the fact that currently the revenue allocation formula is 52.68 for the federal government; 26.72 percent for states; and 20.6 percent for council areas, while 13 per cent is given to the oil-producing states as derivation. The 13 percent derivation was introduced in 1999 as part of measures aimed at redressing the long time grievances of oil-producing states.

Before Aliyu came out with his demand for more revenue from the Federation Account for the northern states, Lamido Sanusi , governor of Central Bank of Nigeria, CBN, had also decried what he termed  the low allocation to Northern states from the Federation Account. In an interview with The Financial Times of London, last month, he attributed the uneven distribution of the country’s wealth to the upsurge of violence in the North, particularly that of Boko Haram, the Islamic fundamentalist sect.

 He claimed that attempts to redress historic grievances in Nigeria’s oil-rich south might have inadvertently helped to create the conditions for the sect’s insurgency. Sanusi believes it was necessary to focus funds on regenerating other regions if Nigeria wanted to secure long-term stability. “When you look at the figures and look at the size of the population in the North, you can see that there is a structural imbalance of enormous proportions. Those states simply do not have enough money to meet basic needs while some states have too much money,” he said.

Justifying Aliyu’s position, the Arewa Consultative Forum, ACF, said the North would press for a review of the present revenue sharing formula on the basis of what it claimed was the increasing financial disparity between the north and the south. The northern umbrella body asserted that the Niger Delta states have lost their leverage on oil revenue, given the fact that 78 percent of the nation’s oil revenues were now obtained offshore.

Anthony Sanni, spokesman of the ACF, insisted that the formula ought to be altered because of the need to bridge the gap between the North and South. This, he said, is not just a matter of economic wisdom but a matter of political expediency. He observed that the same view was being championed by world economic institutions with interest in Nigeria. “Seventy eight percent of the exploration is in the sea, how is the sea polluting their environment? “What does your sense of justice tell you when an oil-producing state collects as much as N24 billion per month from the Federation Account while a non-oil producing state collects about N4 billion or even less per month? Does offshore exploration also degrade the farming environment in the Niger Delta?,” he asked.

Expectedly, the demand for a review of the revenue formula and increased federal allocation accruing to 19 Northern states in Nigeria has provoked governors and stakeholders in the country’s oil-producing states. They have faulted the demand by Northern governors.  Indeed, it has literally opened a can of worms. Chibuike Amaechi, governor of Rivers State and chairman of the Nigerian Governors’ Forum, NGF, described the current Northern agitation as unfair. He said Aliyu’s outbursts lacked appreciation of the fact that the oil-producing states were, the “goose that lay the golden egg.” 

Amaechi explained that every state had resources it could develop and generates revenue and so nobody should be worried when some concessions are given to oil-bearing states. “It is unfortunate that this is coming from a governor I respect. Knowing the environmental degradation in the Niger Delta, the thought of getting equal allocation of funds is unnecessary.

Every state has its own resources. We also have states that are doing well in agriculture but the proceeds from such resources are not shared among states. The funds that are shared among the states of the federation come from the oil bearing states. The level of magnanimity from the Niger Delta should be saluted and not the call for sharing the proceeds from the oil-bearing states equally.”

Amaechi, however, explained that the issue of review of revenue allocation was a constitutional matter and advised Aliyu and other Northern governors to be very careful in commenting on it so as not to escalate tension in the country.

The Akwa Ibom State government equally faulted Aliyu’s comment. Aniekan Umanah, commissioner for information and communications, described the demand by the northern governors as improper. “When they were receiving 50 percent for groundnut, they did not share it with anybody. Now that 13 percent oil derivation is paid to the South-South and other oil producing states in the country, they want the money to be shared with them,” he said.

On Aliyu’s claim that oil wells that were more than 200 kilometres off shore were supposed to be oil wells for the whole country, Umannah faulted his submission, saying people inhabit the coastline.  He was piqued that oil producing states did not share their 50 years of environmental degradation with the North and now Northern governors want to reap where they did not sow.  “Don’t they know about environmental degradation? Don’t they think that people live along the coastlines and that they are affected by oil spills and other environmental degradation through the activities of oil companies? What have they suffered to justify their demand that they equally get 13 percent of oil revenue? It is uncalled for,” Umannah said.

Emmanuel Uduaghan, governor of Delta State, also thinks that Aliyu’s comment was unwarranted because the law is that land and water are part of a state and so, the oil and gas resources found 200 kilometres away are inside the states that they are found. “There is no way you can say that 200 Isobath does not belong to state. They (northern governors) are entitled to make request for review of revenue allocation formula, but to say that those oil wells do not belong to a state is unacceptable,” he  said.

Apart from the South-South governors, some senators and top politicians from the geopolitical zone have equally picked holes in Aliyu’s comment. Tonye Graham-Douglas, former minister of tourism and elder statesman from the South-South   geopolitical zone, described the demand by the Northern Governors’ Forum as myopic.  He recalled that when groundnut from the North, cocoa from the West and palm oil from the east served as the mainstay of the nation’s economy, the derivation formula was religiously applied with the regions taking 50 percent of its resources while paying taxes and royalties to the centre. He wondered why the North should now complain about the 13 percent derivation allocated to the oil producing states now that oil is the mainstay of the nation’s economy. “If we have been very tolerant, they should not tempt our people,” Graham-Douglas told Newswatch.

 He said Niger Delta would react more appropriately when Edwin Clark, leader of the South-South Elders’ Forum returns from his overseas trip.

 Claver Kirikpo, a senator from Bayelsa State, cautioned the Northern governors not to see the people of the South-South geopolitical zone as fools. He accused northern leaders of doing nothing to stop the bombings by Boko Haram but chose to focus attention on the oil proceeds accruing to the oil producing states. He said: “They should not see us as fools because Jonathan is the president now, they want to destabilise him and the government by whatever means. How many opposed them when they received 50 percent from groundnuts and cocoa? “As a senator representing an oil producing state, I believe that the Niger Delta states are presently receiving less than they should receive because they suffer the degradation of their environment and subsequent loss of income earnings due to these oil prospecting activities. So, rather than talk about reduction, we should talk about increasing their share through a change in the revenue allocation formula.”

Heineken Lokpobiri, another senator from Bayelsa State, said what the North was asking for was unthinkable. “Every state has its own resources, everyone should be thinking of developing sectors in their states with a view to raising revenue. The people of the Niger Delta suffer the environmental hazards and no one is talking about that; what is good for the goose is good for the gander, it should be increased to 50 percent.”

Ita Enang, a senator from Akwa Ibom State, described the call as insensitive, warning that the north should not wake the people of the South-South to revisit issues that had been considered settled in the Nigerian federation. “Let them consider the dual carriage ways in the north and tell us how much of these are in the Niger Delta and other parts of the country. How much has been spent on FCT alone and where is the money from. Let them consider how much is invested in Kaduna State alone and how much has been invested in oil producing states, how much of oil money in river basins that are in the North can you find in the South?”

Ifeanyi Okowa, a senator from Delta State, on his part described the demand as an insult. “I think it is not right to talk in that manner. The constitution in the first instance says nothing less than 13 percent should be given to regions where resources are being sourced from and the federal government is currently implementing that. Any attempt to take it below 13 percent rather than move it to 25 percent will be very insulting to the Niger Delta people,” Okowa said.

Annkio Briggs, a Niger Delta female activist, also kicked against North’s demand. “I want to tell the governor of Niger State that what he said is unfair because his state is not bringing anything to the table. The people from the Niger Delta region are bringing the oil that God has given to them. The oil is in our land and it belongs to us. I want him to know that it is unfair that there are 36 states in Nigeria and only nine states are actually contributing something; and people who are not contributing anything at all are now talking about injustice,” Briggs said.

Kimse Okoko, a professor of political science and former president of the Ijaw National Congress, described the position of Aliyu as ‘insensitive.’ He explained that Aliyu’s position had further reinforced the call for a Sovereign National Conference and the urgent need to amend the 1999 Constitution in favour of true federalism in the country. “They don’t experience the kind of severe pollution that the people of our states experience in this country. It is not fair that we should bear the environmental destruction caused by oil spills in the litoral states and at the same time share with those people who have absolutely not been affected by any oil pollution,” he said.

Robinson Esitei, national secretary of the Ijaw National Congress, described that the demand by the northern governors as selfish and advised them to be creative and look for alternative sources of revenue to run their respective states. “What the northern governors are saying is totally wrong. Our people are saying that they should be in control of the resources found in their communities so that they could pay tax to the centre. If you look at the IGR of the states of the North, you will find out that it is lower than that of their counterparts in the South because they are relying on allocation from oil proceeds from the federal government.”

Sam Oyovbaire, a professor of political science and former minister of information, said it was a pity that in 2012, the northern governors were proffering this kind of argument. “The northern governors have simply reopened the issue of restructuring of the country. I think, however, that their call is a strategy of provocation because we have been arguing that 13 percent derivation is too small, yet they are saying that it is too high. I feel sad that we are going to all these again.”

Mujahid Dokubo-Asari, ex-militant leader, warned the Northern governors to stop thinking that they would continue to intimidate the people of the Niger Delta. “They don’t have the right to our oil resource; they should look for their own. We are demanding 100 per cent of our resources because when it was groundnut and other things in the past, they did not use the money to develop the South-South, it was only the north that they developed.”

Joseph Ambakederimo, co-ordinator of the South-South Elements Progressive Union, SSEPU, said the demand by the Northern Governors is not only parochial but smacks of insensitivity. “When we are still agitating for resource control which we are prepared to fight to achieve with the last drop of our blood, they are talking of sharing of money. Whose money do they want to continue to share,? “ he said.

The traditional rulers of the South-South also added their voice to the fresh controversy over the revenue formula. Charles Ayemi-Botu, former chairman of the Traditional Rulers of Oil Producing Communities Organisation of Nigeria, TROMPCON, believes that it is a misnomer for northern governors to think that oil revenue would be shared equally. He explained that what the South-South was asking for was the implementation of true fiscal federalism. According to him, TROMPCON had been crying for a long time that the Revenue Mobilisation, Allocation and Fiscal Commission, should begin the implementation of true fiscal federalism, and  so the call for the review of the formula by northern governors should form the basis of action. “We are not against the review of the revenue formula; it is foolhardy for them to think that revenue that is supposed to come to the oil states where the resources come from will be shared equally with them.”

Indeed, the agitation by Aliyu for a review of the revenue formula has reopened a debate on the fiscal terms of the nation’s federalism. Victor Ndoma-Egba, SAN, majority leader of the Senate and leader of the South-South caucus in the upper chamber of the National Assembly, believes that the renewed debate on the revenue formula is an opportunity to redress the inadequacy of funds allocated to the oil rich region. “It is something that could go either way because if you recall, historically there has been this agitation by the South-South that 13 percent is inadequate. So, for me, the time has come to take a totally new look at the fiscal terms of our federalism,” Ndoma-Egba said.

Anya O. Anya, a professor of history and former chairman of the Nigeria Economic Summit Group, NESG, said the clamour of the Northern governors was reflective of a desperate effort of a failed leadership which superintended the affairs of the country for 38 years out of its 51 years existence as an independent nation.

According to him, the problems the Northern governors want to be addressed were created during the 38 years the north held the leadership of the country. “They brought the problem to being. They should start interrogating their leaders on what they did to alleviate poverty when they ruled the country,” he said.

Ayo Adebanjo, stalwart of the National Democratic Coalition, NADECO, believes that it would amount to injustice to cut the derivation proceeds to the oil producing areas. “If anything, it should be raised to 50 percent instead of 13 percent. I am not from the South-South but I believe in strong derivation for the South-South. If you look at the terrain of the South-South, how much can you give them to develop the place? In those days of the regions, the regions enjoyed 50 per cent derivation. Now, there is oil in South-South why stop derivation? You can’t get justice like that,” he said.

Reuben Fasoranti, Afenifere leader, cautioned the Northern governors and ACF not to use the back door to alter the current formula.  “They should not go through the back door to change the current status-quo of revenue sharing because that would be inequitable and could be counter-productive.”

Newswatch learnt that the lawmakers from the North   were threatening to frustrate the budget’s passage, if the “imbalance” was not addressed. Some members of the caucus were reportedly insisting on inviting Ngozi Okonjo-Iweala, minister of finance, to explain why the South - South has 29.65 percent of capital votes for the six zones.

It was further gathered that the caucus has submitted a 252-page “Regional Analysis of Capital Allocation in 2012 Draft Budget” to Aminu Tambuwal, speaker and leaders of the North in and outside the government.  Copies of the document have equally been sent to the Presidency and the minister of finance.

Sources told Newswatch that members of the Northern Caucus were not happy over what they described as the huge gap between the capital allocation of the South - South and other zones in the country, particularly the core Northern states.  According to the source, while N116.5 billion capital vote is given to the South-South, other regions have between N40.8 billion and N65.5 billion. Yet the capital vote is outside derivation principle, the N69 billion virement for some special projects in the South-South, the NDDC budget and other contingencies.

From all indications, the North and the South-South geopolitical zone are on the war-path over the revenue allocation formula. But this is not the first time the contentious issue is causing schism between the elites from the two sections of the country.

During the National Political Reform Conference, NPRC, convened by former President Olusegun Obasanjo, delegates from the South- South canvassed strongly for resource control, fiscal federalism and genuine restructuring of the country. The South-South delegates to the NPRC insisted that the areas bearing oil and other mineral resources should be allowed to tap the resources and pay agreed tax to the centre. The South-South delegates insisted that their zone was entitled to 100 per cent control of its resources but in view of the fact that they ought to be their brother’s keeper, they would make do with 50 percent. They later accepted 25 percent which could be increased gradually in the years to come. The North opposed the move and argued that the 13 percent set aside for the despoiled by oil exploration was too much.

 But delegates from the residue of the South backed their Niger Delta counterparts. Those from the South-East who had, in the past, canvassed the need for devolution of power to the federating units supported the position of the South-South on the issue.

When the issue was almost leading to a conflagration at the conference, it was agreed that the prevailing 13 percent should be increased to 17 percent. But the Northern delegates led by Umaru Dikko, former minister of transport, rejected it. Even ACF, the umbrella body of the North, stated that there was no need for the 17 percent that was already approved by the NPRC, which it described as “an excessive generosity” or the 50 percent over the next five years demanded by the South-South. It asserted in a statement, signed by, Aliyu Hayatu, its spokesman, at that time, that the South-South demand was unwarranted and an act of blackmail.

The discord between the delegates from the North and South eventually led to the abrupt end of the conference on Tuesday, June 14, 2005. This was because the South-South delegates stormed out of the conference following the controversial adoption of the report of the Joe Irukwu-led Leaders’ committee, which recommended increase in the prevailing 13 percent derivation to 17 percent and claimed that it was a consensus agreement. 

Aliyu’s recent comment on the issue appears to have brought the controversy on the issue back to the front burner.