The concept of fiscal federalism in Nigeria is due for a review, particularly with regards to the sharing of mineral resources. The country's continental shelf, which is 310 miles wide and 660 feet deep, is under the control of the Federal Government, which acts on behalf of all tiers of government. The United Nations Convention on the Law of the Sea reserves this area exclusively for coastal nations. As such, proceeds from the exploration of Nigeria's continental shelf petroleum and marine mineral resources accrue to the Federation Account, from which they are divided among the federal, state, and local governments.
A former Chief of Staff to Brigadier General Benjamin Adekunle, Brigadier General Godwin Alabi Isama, has proposed an alternative model for sharing mineral resources. He suggests that each state should be handed an oil block to exploit on behalf of its citizens, rather than relying on the monthly dole from the Federation Account. This approach would give states more control over their resources and allow them to benefit directly from their exploitation. However, some individuals who have cornered the oil fields and become wealthy may not welcome this idea.
The current model has led to a concentration of wealth and power in the hands of a few individuals, while many Nigerians remain impoverished. The Federal Government's control over mineral resources has also led to a lack of transparency and accountability in the management of these resources. In contrast, the proposed model would promote greater transparency and accountability, as states would be responsible for managing their own resources.
Historically, Nigeria's regions had more control over their resources, with proceeds from agricultural activities such as cocoa, cotton, and rubber going directly to the citizens of the regions where they were harvested. The marketing boards of the regions during Nigeria's First Republic democratized decision-making over the country's resources. A similar approach could be adopted for mineral resources, with states having control over resources found within their borders.
The Land Use Act vests lands in each state governor, which explains why state governments sign Certificates of Occupancy and levy land use charges on landlords within their borders. It is therefore strange that the media and security agencies described 37 kids who died in the custody of the Nigerian Security and Civil Defence Corps as "illegal" miners, when they were simply mining gold within their state. This classification assumes that the kids had no claims or access to the mineral resources within their state.
The Federal Exclusive Legislative List of Nigeria's 1999 Constitution declares that mines and mineral resources, including oilfields and natural gas, are under the Federal Government's control. However, this declaration is considered pompous and pretentious by some, who argue that it is absurd to remit proceeds from the exploitation of mineral resources to the Federation Account in Abuja before redistributing it to the states. A more decentralized approach would allow states to manage their resources more effectively and promote economic empowerment.
The debate over Nigeria's fiscal federalism model is timely, particularly in the context of the United Nations General Assembly's critical interrogation of the rightness of fair and ethical exploitation of Africa's mineral resources. President Bola Tinubu has emphasized the need for Africa to move beyond its historical role as an exporter of raw materials and promote greater value addition and economic empowerment. A review of Nigeria's fiscal federalism model could provide an opportunity for the country to promote more equitable and sustainable economic development.
Key points
- A review of Nigeria's fiscal federalism model could promote greater transparency and accountability in the management of mineral resources.
- A decentralized approach to mineral resource management could allow states to manage their resources more effectively and promote economic empowerment.
- The current model has led to a concentration of wealth and power in the hands of a few individuals, while many Nigerians remain impoverished.
