The Federation Accounts Allocation Commission (FAAC) is saddled with the responsibility of sharing Nigeria’s revenue amongst the tiers of government, using a sharing formula that has been agreed on by stakeholders.
Even with the agreement reached in the past, there are still, stakeholders who feel the arrangement is lopsided. For this group, population should be looked at when the nation’s resources are allocated.
But there is another school of thought who embraced the old saying that there is no free lunch after all. According to them, the sharing formula should be based on state’s contribution to the ‘national cake’.
A neutral group is however, asking, what happens to the socio-economic needs? of the densely populated that gets little because what they bring to the table is not significant?
The current position with the amount shared between 2008 and 2010 indicates that the South-South region of the country got the highest amount. The region got a total of N2.14 trillion during the period, about 35.67 per cent of total amount shared by the country. The region has a population of 21.03 million.
The South Western part of the country got N875.32 billion, 14.58 per cent of total FAAC allocation during the three- year period. Population of the region, according to the statistics is put at 27.72 million or 19.53 per cent of total population.
The South Eastern part with only five states got N553.11 billion, 9.22 per cent of total amount shared. The region also has the least population at 16.44 million or 11.58 per cent of the country’s population.
Generally, southern part of the country with a population of 65.19 million, about 46 per cent of the country population got N3.68 trillion about 61.33 per cent of total funds shared by FAAC.
On the other hand, the Northern part of the country with a population of 76.78 million, about 54 per cent of the entire population got N2.32 trillion, about 38.67 per cent of total amount shared.
Within the Northern region, the North Eastern part got the lion share of N795.92 billion during the three-year period, about 13.25 per cent of total amount shared. The region has a population of 21.93 million or 15.45 per cent of total population.
The North Western part has the highest population in all six regions with a population of 35.91 million, about 25.29 per cent of the nation’s population. It got N774.93 billion or 12.92 per cent of total shared amount.
The North Central region got N747.99 billion or 12.47 per cent of total amount distributed. The region has a population of 18.94 million, 13.345 per cent of total population.
Wale Abe, Chief Executive of Financial Market Dealers Association of Nigeria (FMDA) said there is a direct correlation between the amount of money allocated to a particular region and the level of poverty.
He explains that the amount of allocation the region gets, translates to its per capita, which is very vital to the level of well being in such area. He likened the situation to a family whose head gets little as salary. Abe said such a family's well being will be different from another family where the head get handsome salary.
He, however, said, how wealthy the family or region will be, depends largely on the application of the revenue shared to it. He notes that a high level of corruption could easily undermine any form of economic growth, and so will fuel poverty.
But another analyst, Joe Okonkwo who is based in Lagos said poverty has little to do with how much is allocated. According to him, if the wealth or money worldwide is taken away from everybody, and the money re-divided equally among all the people, he said more than 90 per cent of the people who were poor will become poorer in less than five years, while nearly the same people that were wealthy will become richer.
He said the fact that some are poor and others rich is a matter of attitude more than what they have at their disposal.
According to him, it may not be true that all the states in the South-South with huge allocation have eliminated poverty. In the same vein, he said, it is possible for some of the states in any of the region in Northern Nigeria to apply what it gets and become richer than some of the oil-producing states.
Kunle Adegun, an analyst based in Lagos said there is no way monies will be shared equally or according to population. He said those states that produce the oil and suffer the degradation that goes with it must have the lion share. According to him, before the discovery of oil, 50 per cent of monies from resources went to the place that produced same.
Adegun believes that, every region has something that could buoy its economy. He chided the Federal Government who has refused to invest in mining activities that could have brought additional income to parts of the North.
“Instead, the government left commoners to do the mining themselves unto death and other hazards”, he said.
Bismarck Rewane, Chief Executive of Financial Derivatives Company (FDC) Limited, is more concerned about what the outcome of poverty, particularly the one he refers to as mass poverty would do to the nation, irrespective of whether it is caused by allocation of revenue or not.
The National Bureau for Statistics (NBS) data shows that the percentage of Nigerians living in abject poverty has increased from 54 per cent in 2004 to 61 per cent in 2010.
Analysts say, the fact that there is economic growth as recorded in Gross Domestic Product (GDP), show the wealth of the country must be going to the same old rich people, thus widening the inequality gap.
Rewane’s concerns are the possible consequences of this inequality.
He acknowledged that the poverty level is infinitely more intense in the North of Nigeria with Sokoto State having the highest poverty rate of 86.4 per cent and Borno 77.7 per cent.
“There is therefore the likely correlation between the poverty, the anger and the resentment of Government in that region.
“The CBN governor has been courageous enough to start this very important conversation and debate about the link between poverty and group anger. This has not gone down well with some people. But what is wrong with a healthy debate, we don‘t have to agree on everything”, he said.
Rewane concluded that, “one only needs to understand this slippery slope of poverty and political instability to understand why Nigeria must take the poverty threat seriously”.
The subject of revenue allocation took another dimension outside mere argument when the Northern part of the country collectively rose up against what they described as marginalisation.
As a matter of fact the Northern caucus has submitted a 252-page ‘Regional Analysis of Capital Allocation in the 2012 draft Budget’ to speaker and other leaders of thought in the region. Also, copies of the said document is said to have been sent to the Presidency and relevant ministries.?
A source from the caucus wondered why none of the three regions in the North gets as much as 50 per cent of what is allocated to the South-South.
A report quoted from the 252-page document said, “the budget with the theme: Fiscal Consolidation, inclusive growth and job creation” is provided at N4.75 trillion. Of this amount, N1.3 trillion is proposed as capital expenditure. The focus of this analysis is on the capital allocation component of the budget.
The report is aimed at bringing to limelight some salient gaps that need to be closed in the final budget in order to mitigate the devastating effect that such observed imbalances might have on the socio-economic development of the affected region(s)
“… From the foregoing analysis, it could be pictured that a large chunk of the allocation is handled centrally at the headquarters of various ministries.
“The provisions traceable to the zones as percentage of the gross allocation indicate that South-South takes the highest with 8.83 per cent, while the South-East, comprising five states only takes the lowest? with 3.73 per cent.
“Upon the exclusion of the centrally allocated amounts, the South-South takes 29.65 per cent, while the South-East takes 12.52 per cent. Others are Noth-Central (16.27 per cent); North-East (10.40 per cent); North-West (14.50 per cent) and South-West (16.67 per cent)”.
But other prominent South-South leaders say the North is simply fishing for trouble. According to the leaders, the minimum acceptable standard by the South-South in any review was a return to fiscal federalism.
They say, fiscal federalism in a federal state which the country pretends to be practicing is one that allows federating units to control their resources and pay tax to the federal government.
“This was the practise in the country when cocoa, ground-nut, palm oil were the mainstay of the economy. The East, North and West collected 50 per cent as derivation for these agricultural products respectively and the South-South was almost starved to death because oil had not been found then”, the leaders said.