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Mar

IS FISCAL FEDERALISM AWO'S REAL LEGACY? 12102015

2015-10-12

IS FISCAL FEDERALISM AWO'S REAL LEGACY?
BY HENRY BOYO

Nigerians across divides still extol the sterling performance of the defunct Western region's economy under the governance of Chief Obafemi Awolowo and his Political Party, the Action Group.
Indeed, in a recent lecture titled "The Awo legacy and the Challenges of political leadership and governance in present day Nigeria", an erudite  scholar, Prof Akin Mabogunje noted as follows:
"The evergreen legacy of Chief Obafemi Awolowo has been based on how he harnessed the residual powers of his regional government to dramatically enhance the welfare and wellbeing of his people, in such areas, as education and healthcare and systematically transform the socioeconomic conditions under which they lived".

For example, according to Mabogunje, "when the idea of free primary education was first mooted by Chief Adekunle Ajasin at a party meeting in 1951, it sounded so impractical and impracticable".
"To the colonial administration and even to many citizens at the time, making free primary education a major plank in the Action Group Manifesto appeared to be fool hardy". 

Incidentally, there was no petroleum or gas export revenue to rely on at that time, and "government had to depend on taxation and its ability to persuade the majority of the populace of the critical importance of this programme for the development of the region and their children"; consequently to fund the project, "capitation tax was raised from six pence to ten shillings and six pence for all adult males and in some local government areas, for adult females also".

In the area of agricultural development, the Western Regional Government, reportedly, assiduously, nurtured marketing, consumer, thrift, credit and craft value chains and also diligently trained farmers to produce their cocoa to best quality standards for export. This robust synergy with government made "life more abundant" for more farmers, so much so that the movement, eventually, successfully established its own Co-operative Bank with an initial capital of £1m (Sterling) by 1953". The Co-operative progressed to develop a "one- in- town" ten storey office block with related facilities by 1957. Incidentally, "the Co-operative building remains a striking architectural landmark", to this day, in Ibadan.

Furthermore, when the Federal Government developed a cement factory at Nkalagu in Eastern Nigeria in 1957, plans were also made for another cement factory in Northern Nigeria; however, the Federal Government unexpectedly insisted that its geological survey indicated that there was no limestone deposit in the Western Region to support such industry"

Nonetheless, undeterred, the Western Regional Government hired its own consultants whose investigations revealed "a wider and thicker limestone belt extending from Dahomey (now Benin Republic) eastward into Western Nigeria". Consequently the Ewekoro Cement Factory was commissioned in 1960, surprisingly, "well before the proposed Federally sponsored Northern Nigeria Cement company".

Instructively, the Awolowo led Government also made giant strides in establishing industrial estates under the WEMABOD/ODUA umbrella and encouraged private sector driven industrial interventions, which ultimately embellished the tax revenue base which funded other remarkable programmes such as the first Television Station in Africa and the equally prestigious Liberty Stadium which made the Federally owned National Stadium in Lagos look ordinary. The Ikeja Arms (now Ikeja Airport Hotel) and other investments in several businesses including, banking, insurance and real estate developments still thrive to this day.

However, in the 24-page presentation under reference, Prof Mabogunje stressed that the Awo Legacy, both in the area of political leadership and governance could only be possible under the subsisting arrangement of relative fiscal federalism.
Regrettably, according to Mabogunje, the inappropriate imposition of a unified military command structure as from 1966, on a progressive federally articulated governance system, greatly challenged the core principle of the earlier "fiscal arrangement whereby regional governments kept 50 percent of royalties from mineral development in their areas whilst the remaining 50 percent went into a centrally controlled distributable pool that would be used to balance developments in all parts of the country".

Clearly, as oil revenue spiraled beyond 70 percent of annual federal budgets, under dictatorial regimes, the sustenance of fiscal federalism would have made some of the oil producing states vastly richer than the federal government itself, and thereby discomfortingly undermine the hierarchical discipline of military administrations. Consequently, the military readily "abolished the derivation principle and instead, created a Centralised Federation Account to receive all revenue (including mineral royalties) from which state allocations were then, arbitrarily determined and disbursed.
This arrangement, unfortunately, however, according to Mabogunje dampened the zeal and capacity of states to be pro-active in seeking new sources of revenue to implement laudable social programmes; regrettably, thereafter, state governments became inevitably increasingly dependent on the federation account for their survival.

Thus, in essence, "for the Federal Government, the more states created, the more these states would become dependent on revenue allocations". Sadly, this situation played into the hands of the military regimes which could create more states and local governments by fiat".

Furthermore, "the sustenance of purportedly federating states and local governments predicated on monthly financial allocations from a federation account has also done a lot to wean the population from their civic responsibility of paying personal income tax to provide funding for desired critical social structures and services as was the case in Awolowo's Western Region; consequently, citizens lost the authority to insist on good governance or accountability from their political leaders, such that, widespread corruption in governance, invariably, rapidly gained more ground". 
Worse still, "instead of empowering the economic exchange value to the land of citizens, especially, in the rural areas, the land use decree of 1978, which attempted to unify land administration nationwide, simply made citizens tenants in their own land, with ownership now vested with State Governors".

Ultimately, the alienation of citizens according to Mabogunje, presently constitutes one of the greatest challenges to political leadership and governance in Nigeria today.

Drawing from the preceding narrative, Mabogunje therefore concludes that 'the present political arrangement of an over centralized federal government cannot lead Nigeria to a new and progressive path of economic and social development". He therefore recommended , that, the struggle must continue as in Chief Awolowo's days to secure a more truly federal constitution which allows the states greater control over their resources and the opportunity to compete with one another for the overall growth and development of the Nation. The seasoned scholar insists that "we must end the monthly pilgrimage of States trooping to Abuja like beggars to receive handouts of what the federal government regards as their share of the federation account; "sadly, this process invariably kills the enterprising spirit of innovation, and resourceful and healthy fiscal competition among states as exemplified in the United States experience, where for example, Nevada which is virtually a desert state ingeniously built a relatively prosperous economy on the business of gambling, tourism and as a popular destination as an events centre. 

In conclusion, Mabogunje suggests that we must therefore end the fiscal distortion of the military era and move nearer to the provision of the 1963 constitution which conceded 50 percent of the proceeds of royalty in respect of minerals, and mining rents to states. Awo, he observes, could not have recorded the laudable programmes in the Western Region without the subsisting protection of fiscal federalism prior to military rule. Thus, the Action Group leader's real legacy is possibly the early recognition of the potential of this reality which undoubtedly spurred his dogged determination in several constitutional conferences between 1952-9, for the adoption and serious commitment to a federal system of government as the only path to Nigerian's freedom and development. 

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