The Contradictions of the "Resource Control" Agitations at the National Political Reform Conference

By

Ibrahim Ado-Kurawa

majekarofi@yahoo.com

The most potent agenda at the National Political Reform conference was that of the oil containing states of the South South who want to have the oil revenue of the federation transferred to the coffers of their states. The Niger Delta elites consistently claim that their terrain is more rugged and more money is needed for infrastructure than in other parts of the country. Hence they argue that their demands are justified. According to Chief Mike Ozekhome one of the "resource control" advocates “the money to tar one kilometer of road in Bayelsa, you can tar a 50-kilometre road in the North.     The terrain of this people is so bad that for you to get even a borehole from inside the creeks, you will use the same amount of money to get over 50 boreholes in some parts of the country”. The resource control advocates do not believe that corruption is exclusive to their zone and they insist that others should also account for the amount given to them. This posture may not sound convincing because in “a recent report released by Mrs Nenadi Usman, the Minister of State for Finance, last January four states of the Niger Delta, to wit, Rivers, Akwa Ibom, Delta and Bayelsa States shared the sum of N33.4 billion, while the 19 states of the north split N33.8 billion. South East and South West zones got what could be accurately considered as very paltry sums in a relative sense” (Leadership April 24 2005). Therefore, whatever the Niger Delta or South South states receive it would not satisfy their needs. One other commentator and delegate to the Conference also claimed in the highly respected Weekly Trust that no Northern State can show anything to Cross River State in terms of managing resources and development despite the fact that it is listed amongst those states that some times fail to pay salaries. According to a report published in Thisday of 20^th June 2005 the National Economic Intelligence Council has noted that:

There was regular payment of salaries and allowances in Federal and State establishments in Abia, Adamawa, Bayelsa, Benue, Borno, Delta, Edo, Ekiti, Gombe, Jigawa, Kaduna, Kano, Katsina, Kebbi, Kogi, Kwara, Nasarawa, Ogun, Osun, Oyo, Plateau, Taraba, Yobe and Zamfara, the NEIC however noticed unpaid arrears of salaries and allowances of between one to three months in Akwa Ibom, Anambra, Bauchi, Cross River, Ebonyi, Enugu, Imo, Lagos, Niger, Ondo, Rivers and Sokoto States.

One of the arguments of the “resource control” advocates was that during the first republic the derivation principle was applied strictly because it favored the Northern and Western regions. At the same time some Yoruba irredentist writers such as one Biodun Sonowu of The Punch kept up the propaganda that the amalgamation of the north and south was made to subsidize the indirect rule in the north. Even some academic writers subscribe to this view without adequately exhausting their arguments. For example Professor G. N. Uzoigwe while arguing that the amalgamation was carried out to subsidize the North noted that direct taxation was introduced in the region to alleviate the financial burden (Uzoigwe 1996: 25). But he did not go further to acknowledge that the taxation helped the region that eventually even subsidized the Eastern Region. This was because the Eastern Region (which included the present South South zone) was the poorest in terms of revenue generation as observed by John Ostheimer (in his book Nigerian Politics published in 1973 by Harper and Row New York page 32):

For four decades after the creation of Nigeria in 1914, no net investments were made by Britain. All road, railway, educational and administrative developments had to be financed from local taxation. Ironically, British power was not directly applied in eastern Nigeria, which was providing the weakest public services because of its poor tax base. In northern cities, where a strong traditional emirate system had no trouble taxing the people, Nigeria’s best hospitals, roads and other public developments were built.

The Northern Region was actually subsidizing the social services of the other regionS as indicated by a 1943 tax survey and expenditure of the Central Government. Head XII of the Estimate of Revenue for that year showed the following:

GENERAL TAX

Northern Provinces        =         500,000 pounds

Eastern Provinces          =          122,000    “

Western Provinces         =          125,000   “

Colony                           =          5,000      “

LIVESTOCK TAXS

Northern Provinces        =          120,000   “

Eastern Provinces          =          2,000       “

Western Provinces         =          50            “

Colony                          =          Nil (Alkasum Abba (2000) The Politics of Principles in Nigeria The Example of NEPU p. 5 where he cited West African Pilot Tuesday, September, 28 1948 pp. 2-3)

Despite the fact that it contributed more to the Federal Revenue, the North was a deprived region because such revenue was used in developing the other regions providing infrastructure to facilitate exportation of raw materials. For example in the same year the National government’s expenditure on education was thus:

Northern Provinces        =          2,341   pounds

Eastern Provinces          =          47,000      “

Western Provinces         =         34,000      “

Colony                           =          17,000 (Abba 2000: 5) “

Revenue from the Northern Provinces  contributed to the building of Lagos and the hydroelectric power station at Kainji,  the initial source of energy for the industries of the South West. It is also true that during the post war period and first republic there was strong agitation for the derivation principle in the allocation of the federation’s revenue. This was because the Northern and Western Regions were subsidizing, at a particular time, the poorer Eastern Region (which included the present South South zone) and at that time the source of revenue was the hard labor of the peasants. Ostheimer (1973: 33) has noted:

At first, the postwar development surge promised changes on a planned basis throughout the colony. Income from taxes, excises and exports from richer areas was used to promote development wherever the needs were most obvious. Then, as Nigeria awakened politically, each Region demanded more control over the uses of its resources and income, and planning on the basis of developmental needs gave to the principle of “derivation” –that money be alloted to each Region according to its ability to produce revenues. This hindered development in the poorer East and left more resources for the richer West and North. By 1954 the principle of “derivation” was receiving far greater emphasis than were the requisites of need. One of the greatest difficulties of this policy was the growing demand by Ibos for education produced a legion of clerks, teachers, and semiskilled graduates who were unemployed within their own, poorer region. Spurred by land scarcity in Iboland, Ibo emigration toward the North, West and Lagos grew.

Revenue was derived from various sources during the colonial period and shared by the Central Government. This included revenue from direct taxation collected by the Native Authorities as well as import duties. The Northern Region being the largest obviously contributed more for example between 1928/29 and 1945/46. “In the first five years, the share of the Native Authorities in the North averaged about N4.7 million annually. Comparatively, the share of Native Authorities in the South was N710,000 during the corresponding period”. This led to demands for increase in share of the revenue to be allocated to the regions where it was collected. The North had an edge on direct taxation while the West had an edge on import duties. The revenue allocation formula was therefore reviewed at least four times (1948/49, 1952/53, 1954/55, 1959/60) during the colonial rule to take care of among issues the principles of derivation and even progress. According to Professor Adedotun Phillips “The principle of even progress derives from the need to maintain unity in the country, and it combines the elements of needs and national interest. The thrust of this principle, therefore, was balanced development with the underlying assumption that even paced progress would promote stability and unity”.  Even with the review there were misunderstandings because for example in 1949/50 “it was generally acknowledged that Eastern region received more than what it contributed to total revenue and even the amount exceeded the expenditure on regional services. Although this allocation applied only to one fiscal year, it unequivocally provoked interregional misunderstanding and hostility which grew with rapidity. It was argued by other regions that the development of the East was being fostered by the financial resources generated from both the North and West”. As a result of 1954/55 review the Western Region benefited most, as “it received a monumental sum annually from the application of the principle of derivation to the distribution of gross proceeds from import duties in motor spirit, and education grant” (Phillips 1996: 144-153 emphasis mine). These arguments clearly illustrate that revenue allocation controversy is not new in Nigerian politics and it will certainly remain.

The bulk of the Federation’s revenue during the period of the first republic and before the oil boom was from the taxation and commodities that were produced by the peasant farmers. It was this revenue that was used to maintain the Nigerian State and even during the crisis of the civil war. According to Dr. Ibrahim Tahir the Northern Nigeria Development Corporation provided the loan for the first oil exploration. Oil did not begin to contribute large share of the Federation’s revenue until 1971 after the civil war (see table 1) below:

TABLE 1: CONTRIBUTION OF OIL TO FEDERAL GOVERNMENT REVENUE, 1958-90

(Source: NNPC Annual Statistical Bulletin as contained in Osaghae 1998: 20)

The South South delegates base their argument as noted earlier partly on the fact that the North and the West insisted on derivation in the era when it was in their favor as indicated above. But they never inform the public that most of the revenue of that era was derived from taxation or the peoples sweat. Professor Attahiru Jega during one of the plenary sessions argued that it was only the revenue from mining rents and royalties that was subjected to the derivation principle in the revenue allocation to the regions and not Petroleum Profit Tax and other Federal Taxes. All the mineral resources including coal, columbite and tin ore have always belonged to the Federation. This was because Nigeria was a British territory the colonialist held it as a property of the Crown. All pre-colonial states and communities of the territories that later became Nigeria lost their sovereignty to the British who left no one in doubt that they were the owners of land and natural resources through proclamations which, were either called Acts or Ordinances. One of such Acts, "The Niger lands transfer Act No.2 of 1902" was very clear in stating colonial authority. "The Land and Native Rights Act of 1916" was more straightforward "its premise was that it was dealing with natives not people".  But it was even more humanitarian than "The minerals Act of 1916" which stated unequivocally that the rights over all mineral resources "shall be vested in the Crown" without any recognition of the natives (Bala Usman 1994: 40-45). At independence the British handed over Sovereignty to the Nigerian State and not the pre-colonial communities. The land and mineral resources were transferred to the Federal Government which has since held it in trust for the Nigerian people.

In one of the most charged debates of the conference reported by The Punch of March 9, 2005 titled 'South South Insist on Resource Control', Oronto Douglas one of the outspoken delegates from Bayelsa State argued that Abuja was built with revenue while the oil containing areas were left in squalor. Dr. Ibrahim Tahir on the other hand argued that the resources in those area belonged to the Federation and not the states. “These oil-containing states sit on a territory that belongs to the Federal Republic of Nigeria. They contributed zero to the making of the oil because the oil was formed long before the universe itself crystallized into continental masses. “You belong to a territory, which by international law protects you and the whole of the Federation. It defends us and gives us a sense of identity in the comity of nations. The resources are subject to federal ownership, just like all other solid minerals,” Tahir said. The agitators for more revenue argued that in a true federalism the revenue from oil should be transferred to the territory where the oil was extracted. Tahir countered that the elites of the Niger Delta States are manipulating the agitation for resource control to deceive their people table 2 which is based on a publication of the Federal Ministry of Finance is a clear prove.

There is no doubt it was Nigeria’s collective resources that sustained the state before the oil and even guaranteed and paid part of the investment for the oil exploration and exploitation. Although Mr. Oronto Douglas in responding to Professor Yadudu claims that “the bulk investment that went into the exploration of the Niger Delta's mineral resources came from foreign capital and not from the material contributions made from other parts of the country as claimed by the professor” (Vanguard April 22, 2005) but who provided the conducive environment that kept the state and the bureaucracy buoyant to even guarantee the investment of the oil companies. The Punch of March 9, 2005 reported that Dr. Ibrahim Tahir has also argued that "the money for the oil expedition at Oloibiri in 1956 was provided by the then Federal Government. The then Northern Region, he said, lent the money out to the centre in the spirit of unity and belief in the togetherness of all parts of the country". It was also the revenue from other sources that maintained the nation during the civil war crisis as indicated in table 1.

The "resource control" advocates have forgotten how they were saved from the Biafra onslaught and the determination of Ojukwu to take over the oil resources during the Civil War crisis as observed by President Olusegun Obasanjo when he rebuffed the North and the South-South: “President Olusegun Obasanjo has given a piece of his mind on the latest political crisis in Nigeria, describing the South-South and the North as cog in the wheel of the country’s progress, a reliable source told Leadership”. According to the newspaper’s correspondent a source stated that the President who looked agitated made “the statement at a gathering of some members of the National Assembly” and his close associates last Wednesday. The President was reported to have observed that: “the two sections of the country did not contribute anything to the development of the country” (Leadership May 15 2005). This is rather unfortunate because there was a time when the taxes from the North were subsidizing education in the South during the colonial period as argued earlier based on 1943 revenue statistics published in the West African Pilot. It was also reported that the President said in anger: “What contribution did the North make apart from causing disarray and disaffection? And the South South should thank their stars that they are enjoying the fruits of freedom. If not for people like me (who fought in the civil war), the people of the South South would have still be in bondage under the Igbos” (Leadership May 15, 2005). This is a very sweeping statement because there were more soldiers from the North than from the West. And the President has himself acknowledged the role of Northern military commanders such as Murtala, Danjuma, IBM Haruna, Muhammad Shuwa and even his juniors such as Yar’ Adua, Buhari, Babangida, Wushishi, Isa Bukar and Magoro in his book My Command (pages 17 and 43 1980 edition) in which he made himself the ultimate hero. It was their contributions that gave them the moral courage to even question the military government of that time and they went ahead and overthrew it.

The oil containing states receive more of the oil revenue than other states as the table below 2 shows. Yet the states do not provide better services for their people in comparison with the others hence they need the scapegoats by deceiving their people that the Federal Government and other states have appropriated their resources. Dr. Aliyu Tilde has argued citing Professor Ben Nwabueze that it is not feasible for national resources in a federation to be handed over to a particular section to the detriment of others as this is also against the principle of balanced federation. As indicated in table 2 Delta State and its Local Government Councils with 2.9% of the population received 6.9% of the revenue allocated while Kano State and its Local Government Councils with 6.52% of population received 4.3% of the revenue allocated. This is despite the noise made that Kano State is taking advantage of more Local Government Councils. Looking at the receipts including (that of Local Government Councils) per head Kano State received N28040 by far below the national average while Bayelsa State that is complaining about Kano's Local Councils received N126369 which is about three times the national average of N42333. Most of the states that receive higher revenue per head do not have free education up to the university level while Kano State under the leadership of Mallam Ibrahim Shekarau spends over twenty percent of the state’s expenditure on education which was over N6 billion in 2004. The government gave over 22,000 students of tertiary institutions scholarships worth over N200million an unprecedented amount in the history of the state because previously only students offering certain courses were offered scholarships but now the state government has made it general. The government has also constructed over twenty six new secondary schools and 208 additional classrooms in various schools in order to achieve 75% absorption rate with enough classrooms and furniture. Previously pupils were absorbed without adequate provision leading to overcrowding of classrooms. Kano State also created more jobs than any other state in recent times in order to cushion the effect of widespread poverty and unemployment and that has begun to yield fruit in addition to the good leadership qualities exhibited by Mallam Ibrahim Shekarau peace has returned to the state. This has enabled the President and the Vice President to visit the state a number of times which was not possible during the previous PDP administration when there was widespread unrest, political banditry and discontent.

Professor Itse Sagay is the doyen of “resource control” advocacy and also one of its leading intellectuals. He has attempted to argue for “resource control” based on his interpretation of international law which has been adequately challenged and even defeated. Hence the press conference held by the delegates of the South South in which they canvassed for derivation to be raised from the present 13% to 60% (The Guardian April 29, 2005). It should be noted that all mineral resources in Nigeria are owned by the Nigerian State, which is the successor of the British Crown by law. It is the universal practice of law for municipal law to have preference over international law in national issues of a state. Therefore there is no way a personal interpretation of international law would be accepted over Nigeria’s law that vests ownership with the Nigerian State and not component states or communities. Professor Sagay tried to show that coastal states of Nigeria are the same with States under international law. The Nigerian coastal states were created by the Nigerian State. They did not exist as entities before Nigeria and therefore they cannot be compared with states in other federations that aggregated to form a federation. His attempt to cite the practice in other countries and federations in terms of "resource control" would also not withstand interrogation. Professor Yadudu in several published interventions has also adequately tackled this, with specific examples from the laws of other oil and mineral producing states. The oil containing states and the agitators for the appropriation of the Federation’s oil revenue perceived that their agenda at the conference will not succeed and they begun strategizing through threats by their ethnic unions and continuous propaganda in the media.

According to a report in the Daily Independent (Friday May 13 2005) “resource control” advocates were advised “to change gear and call for an increase in derivation percentage if they want to succeed”. The report added that Professor Yadudu advised these advocates “to use the loophole in the 1999 which gives room for derivation principle….instead of asking for resource control…which is unconstitutional”. The law Professor maintained his position “that laws and provisions of the constitution in this country as obtained today, do not approve of any constituent unit of the federation calling for resource control”. The agitators of “resource control” are aware of the illegality of their agitation but they are doing it to get more concessions. They also deliberately misrepresent history by reducing the complex history of Nigeria’s fiscal federalism to suit their emotions. It should be recalled that revenue sharing between the constituent units of the federation was reviewed several times even during the colonial period. Different principles of derivation and need were emphasized at different times. For example “the Western region (the richest), received the largest revenue from total statutory allocations to the regions between 1952/53 and 1959/60 as a result of the principle of derivation”. Analysts who are not northerners for example Professor Philips observed that:

It can be summarized from the reliance of this principle as the sole determinant of interregional revenue allocation that it completely ignored the fiscal needs of the regions and even the needs of the entire country. Accelerating uneven development and disunity were some of the direct consequences of the intensive and extensive use of the derivation principle. Even the argument has been posited that the sole application of derivation placed undue emphasis on regional self-reliance, a principle that may be more relevant under a loose federation. On these counts, derivation was essentially a destabilizing principle (Philips 1996: 153 emphasis mine).

These arguments are more relevant today when some of the oil containing states received quantum amounts which they have not utilized judiciously for their citizens and their elites have been using youths to threaten the Nigerian state and even their delegates at the National Political Reform Conference. Chief Obafemi Awolowo was amongst the first to call for a more objective revenue allocation not based on sentiments this is similar to the recommendation of committee of the conference as argued by Major General Ibrahim Haruna on Tuesday June 7, 2005.

TABLE 2: ANALYSIS OF NET ALLOCATIONS TO STATES, LOCAL GOVT. & AREA COUNCILS (JUNE 1999 – JULY 2004)

(Source: Federal Ministry of Finance: Detailed Breakdown of Allocations to Federal State and Local Governments June 1999 to July 2004)

.Majority of the delegates at the National Political Reform Conference from the South West, South East and the North did not support "resource control" agitation. In fact one of the most powerful arguments was made by Prince Bola Ajibola who observed that it is not healthy for the Federation to have states and super states by allowing the oil containing states to take more of the revenue. Professor Joe Irukwu who is the leader of the Ndigbo led the elders committee that arrived at the consensus rejected by the South South delegates even though they were adequately represented at the committee.  The agitators could not justify the colossal amounts their states received from the Federation account and it was one of their elders who recommended an increase of the derivation principle from 13% to 17% in the revenue allocation. And in order to save their faces they walked out of the Conference. It is sincerely hoped that the South South delegates will put the interest of the nation first and return to the Conference. Their arguments were defeated not because of prejudice or emotions but because they were unscientific as argued throughout this paper.