Take a fresh look at your lifestyle.

FAAC Serial Deadlocks: When Will Quarrel Over Free Money Sharing Stop?

By Ifeanyi Izeze


It has become a routine ritual that every month, the Federation Account Allocation Committee (FAAC) must end with fighting over shortfalls in remittance of accrued revenue into the central coffer. This year alone, we have recorded seven deadlocks in FAAC meetings.

It ended inconclusive in February for January allocation, March for February allocation, April for March allocation, also on 3th June for May allocation and two times in July for June allocation

The author, Ifeanyi Izeze

By the way, what is FAAC in the first instance? Is it not the forum where money is shared as allocations among the Federal, States and Local Governments?  This meeting is chaired by the Minister of Finance and Commissioners of finance from the 36 states of the federation and FCT every month, as well as representatives of revenue generating agencies.

How long can we continue like this? For some months now, it has been the federating states as usual accusing the Federal Government and the Nigerian National Petroleum Corporation (NNPC) of failing to remit tens of billions of Naira of the monthly accrued revenue into the Federation Account.

Curiously, our usual reactions have always been to rush to berate the NNPC and other revenue generating agencies of the federal government but we failed to see or rather honestly acknowledge that there is something seriously wrong with the way our federal system is structured. We should ask ourselves: is this how federal system of government works in other climes where it is practiced such as the United States of America whose model we claimed to have copied?

It has become an indisputable fact that today’s Nigerian states essentially have been reduced to parastatals of the Federal Government and have become dangerously addicted to the monthly “handouts” (allocation) they receive from Abuja? This is a result of decades of dodging hard decisions on the negatively skewed relationship between the federal on one hand and the state and local governments on the other.

How do you reconcile that the combined Internally Generated Revenue (IGR) from all the 36 states came up to less than one percent of Nigeria’s nominal Gross Domestic Product (GDP)? Internally generated revenue is far less than what the states require to run their administrations and many state and local governments survive by consuming more resources than they can generate internally – thanks to the generous handouts from the federation accounts and the “spirit of fighting” that goes with it.

With these every-month quarrels over sharing of free money by the three-tiers of government, it should have dawned on us that we have promoted, or rather tolerated a defective political economic structure.

We politicized the creation of states and local governments over the years and ended up having states and local governments that are too weak to meet their constitutional responsibilities to their people. Consequently the Federal Government emasculated them and took away those responsibilities that should actually be handled by the states and local governments.

As a consequence, the Federal Government appropriates, along with these responsibilities, huge resources to itself and leaving little or nothing to the local and state governments. For example, in the allocation of revenue from the Federation Account, the Federal Government is unduly favoured at the expense of the States and Local Governments. Out of every Naira in the Federation Account, 56 kobo will go to the Federal Government! This is neither efficient nor equitable.

If we accept the wisdom behind calls for a restructuring of the polity, we must be ready to build a foundation for its success: we must, in other words also restructure and strengthen the economies of the sub-national units (the states) by making more money available to them for grassroot development.

Former Vice President and presidential hopeful on the platform of the Peoples Democratic Party (PDP), Atiku Abubakar, in his recent speech at the London’s Royal Institute of International Affairs (Chatham House), frontally challenged this present arrangement and suggested some cogent policy roadmaps that if taken, may redress some of the problems of our negatively skewed federal system.

Though political opponents including the ruling party, APC, may take it as subtle campaign for the PDP presidential ticket, there are some takeaways from the Atiku’s speech at the Chatham House London that deserve to be seriously considered if we actually want to help the states strengthen their economies and free them from the present cap-in-hand situation.

Atiku on “The Importance of Strengthening the Economic Management System of the Federating States in Nigeria,” said “There is nothing as addictive as states that are dependent on their monthly share of revenue from crude oil sales and the only way to get them to manage their economies in an economically viable way is to cure them off that addiction.”

The need to reverse the current sharing formula and allocate more money to the local, states and federal governments in that order, cannot be overemphasized. This will make the centre less attractive and drive development to the grassroot through the activities of local governments in addition to whatever the state governments will also add to improve the quality of the lives of the ordinary Nigerians. We must commit to a new development agenda with focus on wealth creation by the states, rather than wealth distribution from Abuja to state and local government headquarters. God bless Nigeria!

(Ifeanyi Izeze: iizeze@yahoo.com; 234-8033043009)

Comments are closed.