ABSTRACT
The study interrogated the political economy of Nigeria’s federalism. The study formulated three objectives; (i) determine if the activities of separatist agitations addressed the issues of political restructuring in Nigeria since 1999-2020, (ii) investigate if marginalization is implicated in the increase in separatist agitations since 1999-2020 and (iii) examine if the Nigerian State has been able to address the salient issues that have triggered the rate of separatist protest and agitations for political restructuring. In its theoretical explanation, the study adopted Marxist political economy theory. The instrument used in collection of data was gotten from text books, magazines, newspapers, journals, among others. The method of data collection adopted in this study was qualitative method. Whilst the method of data analysis used in this study was qualitative method. In the course of this study, the qualitative analysis was adopted as the study employed case-study research design. The study concludes that Federalism can serve two goals in multiethnic societies: political accommodation and economic prosperity. These must be the driving forces of politics for federalism to be meaningful in the long run. Federal restructuring policy must therefore seek to balance the demands of these two purposes, as such demands may come into conflict. The study recommended among other things that; (i) issues of intergovernmental relations should be reviewed and respected so that functions to be performed by each tier of government would be explicitly stated; (ii) the appropriate strategies for raising the necessary funds should be adopted while the formular for the distribution of federally collected revenue including VAT proceeds, need to be further amended to increase share of state and local government; (iii) reform of tax administration should be addressed to enhance the growth of non-oil tax revenue in order to reduce the reliance on the oil sector for both foreign exchange earning and revenue and (iv) government should aim at achieving macro – economic stability in order to enhance savings and investment which are prerequisites for capital formation and economic growth.
TABLE OF CONTENTS
Cover page - - - - - - - - - - i
Title Page - - - - - - - - - - ii
Certification - - - - - - - - - - iii
Dedication - - - - - - - - - - iv
Acknowledgements - - - - - - - - - v
Table of Contents - - - - - - - - - vi
Abstract - - - - - - - - - - vii
CHAPTER ONE: INTRODUCTION
Background to the Study - - - - - - - 1
Statement of the Problem - - - - - - - 5
Definition of Terms - - - - - - - - 6
Objectives of the Study - - - - - - - 7
Significance of the Study - - - - - - - 7
Hypothesis - - - - - - - - - 8
CHAPTER TWO: LITERATURE REVIEW AND THEORETICAL FRAMEWORK
2.1.1. The Political Economy of Fiscal Federalism, State–Society Relations, and the Developmental State - - - - - - - - - 9
2.1.2. Political Ends and the Nigerian Economy - - - - - 15
2.1.3. The Politics of the Federal Structure - - - - - - 19
2.2 Theoretical Framework - - - - - - - - 24
CHAPTER THREE: METHOD OF STUDY
3.1 Research Design - - - - - - - - - 26
3.2 Sources of Data - - - - - - - - - 26
3.3 Types of Data - - - - - - - - - 26
3.4 Methods of Data Collection - - - - - - - 27
3.5 Methods of Data Analysis and Presentation - - - - - 27
CHAPTER FOUR: INTRODUCTION TO POLITICAL ECONOMY OF NIGERIA’S FEDERALISM
4.1. Issues of Fiscal Federalism and Revenue Allocation in Nigeria’s Fourth Republic 28
4.2. Fiscal Imbalance and Dilemma of National Development in Nigeria - - 33
CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 Summary - - - - - - - - - - 43
5.2 Conclusion - - - - - - - - - 44
5.3 Recommendations - - - - - - - - 45
Bibliography - - - - - - - - - - 47
CHAPTER ONE
INTRODUCTION
Background to the Study
It has not been easy to manage federal system including the so-called classic ones, and Nigerian federalism is not an exception. Fiscal federalism has been widely discussed by scholars because of its importance in ensuring stability of the country. What actually goes to each tier of government concerns every individual. Federalism, otherwise known as federal system, is a public sector with both centralized and decentralized levels of decision making in which choices made at each level concerning development and the provision of public services are determined largely by the demands for these services by the residents of the respective jurisdiction. Thus, Ajibola, (2018) maintained that in a federal system, different governments provide different services to overlapping jurisdiction. In Nigeria for instance, the federal system comprises federal, state and local governments while in the United States, federal system includes the federal government, states, counties, townships, cities, school districts and special districts. It is in view of the underlying imperatives of federalism that Okoli, (2017) argued that federalism is a system of shared power between units of government. It is a way of organizing a nation so that two or more levels of government have formal authority over the same area and people. From this point, it could be seen that federalism rests on divided sovereignty where state and 122 nations control some portions of political power independent of other’s authority. In federalism, power is shared among congress, the executive, the courts or judiciary and this shared power could be separated presumably in order to prevent over concentration of the power and its consequent abuse as to further prevent threats to individual liberty Omotoso cited in Okoli, (2017).
Okoli, (2017) notes that the constitutional supremacy clause makes a valid national law superior to an otherwise valid state law when the two laws conflict. Each government is independent of the other in exercising its constitutional powers. She added that the states may, for example enact and enforce compulsory school laws in their respective states without the federal government’s approval. Similarly, the federal government may enact and enforce military conscription in each state without the states’ consent. Thus, each government enforces its own laws directly on the people and each may act independently of the other. This is closely different when it comes to fiscal federalism. In fiscal federalism, the states and local governments depend heavily on the national government for fund for development and to run their various affairs. In his words, Jega, (cited in Aniche, 2009) contented that “States quarrel with the federal government and local governments quarrel endlessly with state… state bicker and contest their allocations relative to others”. Watts, (1970) similarly observed that, federal finance is a controversial subject because, it affect its allocation of administrative responsibilities, the political balance within a nation because the level of government with major financial resources has political control and the assignment of fiscal and expenditure powers will determine which governments are able to use these instruments control the economy. The issues of revenue allocations have been the dominant topics in Nigeria since 1940s. The sharing of funds from the federation account is one of the contentious and sensitive issues in the Nigeria polity this has remained a central element of inter fiscal relations. In Nigeria revenue allocation is taken as the distribution of national revenue among the various tiers of government in federation in such a way as to reflect the structure of fiscal federalism. This issue is so important that in some other countries it has become a national question (Mbanefoh, 2016; Emenuga, 2019).
Thus, in Nigeria, the nature of fiscal federalism and revenue allocation formula places the federal government at a vantage position and hence controls the economy. In a pluralistic society such as Nigeria, the revenue allocation formula tends to naturally assume political religious and social dimensions. Section 192 (3) of the 1999 constitution establishes the need for distribution of revenues in the Federation Account among the tiers of government, the said document further puts it this way: “Any amount standing to the credit of the Federal Account shall be distributed among the Federal and State Governments and the Local Government Councils in each state on such terms and in such manner as may be prescribed by the National Assembly.
In the Fourth Republic, the return of democratic government is expected to lead to the practice of a more balanced system of fiscal federalism, more transparency, fiscal accountability and more devolution of powers to lower units of government and hence more fiscal decentralization. While a greater degree of decentralization would, no doubt, contribute to greater grassroots participation, generate more local development, increase efficiency and equity, create employment opportunities and promote poverty alleviation. Adebayor, (2020) posits that it must not be done in such a way as to conflict with the national objective or unduly complicate it, i.e. the change in the internal geographic structure of the nation as a result of strong and continuous agitation for state creation has led to distortion in the revenue allocation formula and this has weakened the fabrics of federalism. For example, 12 states were created out of four regions in 1967. In 1987, the number of state rose to 19 while local government rose to 300. By 1991, the number of state government had risen to 30 with 589 local governments and 1996, the number of state rose to 36 with 774 local governments. Till date we still have 36 states and 774 local governments. Given the associated rising cost of running federal system such as the provision of secretariats, staff salaries and allowances, rental and buildings, provision of utilities and increasing outlays on maintenance and new projects, statutory allocations to state and local government together with internal revenues have become grossly inadequate. It is in the light of the above issues that there is the need to study the revenues allocation and its impact on the economic growth process in Nigeria (Reason, 2012). The issues of revenue allocation in Nigeria are fundamental one that borders on promotion of national unity and rapid economic growth. It is however sad that despite continuous increase in revenue generation in Nigeria over the years, the expected impact on economic growth and development in Nigeria has not been realized.
The now contentious 13 per cent derivation principle was enshrined in the 1999 Constitution. The affected states started getting the 13 per cent from April 2000. It was not yet Uhuru for Niger Delta as the region had to contend with the contentious issue of revenue allocation and derivation formula is on the front burner of national discourse again. Specifically, the apex northern socio-political and cultural organization, the Arewa Consultative Forum (ACF) and the Northern Governors Forum (NGF) are demanding a review of the revenue allocation formula. Therefore, the question of an acceptable formula for revenue sharing among the component tiers of the Nigerian federation is one of the most protracted and controversial debates in the political and macroeconomic management of the economy. This debate has its foundations in the history and evolution of the Nigerian federation. “Revenue allocation or the statutory distribution of revenue from the Federation Account among the different levels of government has been one of the most contentious and controversial issues in the nation’s political life. So contentious has the matter been that none of the formulae evolved at various times by a commission or by decree under different regimes since 1964 has gained general acceptability among the component units of the country. Indeed, the issue, like a recurring decimal, has painfully remained the first problem that nearly every incoming regime has had to grapple with since independence.
Statement of the Problem
Federalism is a system meant to integrate people in a society who are diverse ethnically, culturally, geographically and even religiously. It therefore becomes imperative that once a government is in place, it must endeavour to adequately and equitably distribute powers, functions and resources among these diverse groups. But in Nigeria, there are instances where governments have openly violated this principles of federalism. Suffice it to say that in theory, Nigeria can be said to be operating the federal system of government, whereas in actual practice, the country is tending towards a unitary system. Therefore, the problem with federalism in Nigeria is the mix-application or non-application of this clause especially as it has to do with power distribution (Awa, 2019). Federalism is the bedrock of democratic edifice for a country of Nigeria’s size and bewildering diversities. Like India, also a federal state which has been rightly described as a land of “million mutinies” (Roy, 2012), also by the intensely conflictual nature of third world politics (Suberu, 1990).
Federalism is either reordered in Nigeria or the generic system encounters national disintegration. The problem of this study centers on this supposition. Watts (1998) opines that although federalism is no panacea to all problems of plural states, federal arrangements and the idea of federalism have shown that they can provide a means for reconciliation (in the interpretation of federalist thoughts). The challenge for scholars (Watts believes) is to contribute, by critical, objective, and comparative analyses, to a better understanding of how new federal systems may be established or the existing ones made more effective. This research is fundamentally about how the existing federal system in Nigeria may be made more effective. This study has the problems and prospects of the Nigerian federalism, focusing on weakening the center as plausible goal on one hand, and the imminence of national disintegration as dreadful consequence on the other. Levy (2016) further argues that federalism, when it has not been ignored altogether in normative political theory, has typically been analyzed in terms that fail to match the institution as it exists in the world. This contribution uses a normative methodology to analyze federalism in Nigeria, precisely as it exists.
The uniqueness of this work is such that it will focus this study to examine the political economy of federalism in Nigeria and the inherent challenges that stands as a major or inhibits national development in Nigeria.
Research Questions
Has Nigeria’s federalism facilitated national development since the return to democracy in 1999?
Has the inequities in Nigeria’s federalism accounts for the lack of national integration?
Is the agitation for practice true Fiscal federalism in Nigeria as sensitive as the debate on national unity?
Definition of Terms
For the purpose of this study or research, we came up with some basic concepts that are inevitable in the course of this study. Some of the concepts are clarified for better or clear understanding which include;
Federalism:
The system of government that explains or outlines the power sharing and revenue sharing structure between the central government and its constituent units (decentralization).
Fiscal federalism:
Fiscal federalism as used in this work is the statutory sharing of proceeds or allocation from the center to the subordinate units either through vertical or horizontal way.
Political Economy
For the purpose of this work, it will be conceived as the interrelation between politics and the economy in Nigeria. Its intrigues and how they play out in the practice of federalism.
Objectives of the Study
This study has broad and specific objectives.
The broad objective is to examine, evaluate and assess the political economy of Nigeria’s federalism.
Whilst the specific objectives of this study include the following:
To examine if Nigeria’s federalism facilitated national development since the return to democracy in 1999.
To investigate how the inequities in Nigeria’s federalism accounts for the lack of national integration.
To determine if the agitation for practice true Fiscal federalism in Nigeria as sensitive as the debate on national unity.
Significance of the Study
This study has both theoretical and practical significance. The theoretical relevance of the study is that it examines the political economy of Nigeria’s federalism. By so doing, the study enriches the existing literature or expands the frontiers of knowledge through its findings, and therefore serves as a source of materials or data for scholars whose interest would eventually be arisen by this study to undertake further studies in the area.
Empirically or practically, this study will be of immense benefits to Nigerian government, Nigerian government’s fiscal relations and other tiers of government in Nigeria, oil producing states and communities, policy makers, industry watchers, stakeholders, politicians, political leaders, political officeholders, and Nigerian oil industry.
1.6. Hypothesis
Nigeria’s federalism hasn’t facilitated national development since the return to democracy in 1999.
The inequities in Nigeria’s federalism accounts for the lack of national integration?
The agitation for practice true Fiscal federalism in Nigeria is sensitive as the debate on national unity.
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