The Afenifere Renewal Group (ARG) at the weekend said the inequitable nature of Nigeria’s revenue formula was responsible for diverse security challenges, which it said, posed grave threats to peace and unity in different parts of the country.
The ARG, a pan-Yoruba economic and political think-tank, also said a justified revenue allocation formula would go a long way in quelling some of Nigeria’s multidimensional challenges, which it said, equitable revenue formula would address.
The group canvassed this in a position paper its National Chairman, Hon. Olawale Oshun presented at a public hearing organised by the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) for South-west geo-political zone.
The group explained that many agitations in the country, which were gradually building up into overwhelming security challenges, could have been better contained if revenue sharing formula and other fiscal policies had been genuinely and proactively managed to address the country’s plurality.
The group therefore urged RMAFC to see itself as having a crucial role to play in rescuing the nation from the precipice, by ensuring the ongoing review produces a formula that reflects true federalism.
The group said people’s needs could only be addressed by local administrations, and the federal government therefore should not be allowed to hold on to 52 per cent of revenue accruing into federation account.
It explained that there “are about 193,000 kilometres of roads in Nigeria, of which only 34,000km are federal roads. The larger burden of road maintenance falls on states. There are about 1000 secondary schools in Lagos State, out of which about 10 belongs to federal government. Again, we can see that the need is at state levels.
“The same can be said for health facilities. So, federal government’s allocation must be reduced and some of its responsibilities must devolve to states, whose percentage allocation must be increased to allow for purposeful governance.”
The group therefore proposed a sharing ratio of 35:65 between federal government and states respectively, arguing that there is no need to allocate anything to local government, which are entirely under state governments.
The group also recommended how best to decentralise federal government’s responsibilities, noting that it “can begin with the Federal Ministry of Agriculture and Water Resources. Land, which is a major factor of agricultural production, vested in states.
“Therefore, states are in better positions to implement agricultural policies than the federal government. ARG recommends that such ministries’ portfolios should be altered to retain only their research and policy functions,” it said.
The group also recommended that derivation be increased from 13 percent to 25 and argued that derivation principle should also be applied to the sharing of other taxes like value-added tax (VAT) among others.
It also offered useful insights on how “to bridge developmental gap among states and ensure that social development is fairly and evenly distributed,” thereby suggesting an equalisation fund into which state governments will pay an agreed percentage of their internally generated revenues (IGRs).
Posted by SirVic for wetopup(News Laboratry)