The Importance of Reversing Fiscal Repression in Nigeria

The American system of Federal Government, which we have adopted, provides a valuable lesson on how people of diverse origins, religions, customs, and cultures can coexist as a nation governed by a written constitution. This serves as a model from which Nigeria can draw inspiration.

The Federation of America brought together existing states which voluntarily ceded some of their powers to the union for the benefit of the collective. A critical aspect of the federation is that the union had no authority over the states in matters not explicitly ceded by the states to the union.

Conversely, Nigeria’s formation followed a different trajectory. The territory now known as Nigeria encompassed over 400 nationalities that were arbitrarily amalgamated by the British. The country has experienced various forms of governance, from being governed as two separate entities to a unitary government, among others.

The issue of revenue allocation and fiscal federalism has been a source of contention. Under the 1963 Constitution, the Federal Government was obligated to allocate to each region a sum equivalent to 50 per cent of the proceeds from mining rents and royalties pertaining to minerals derived from each region. This fostered healthy competition and economic development.

However, with the onset of military rule, the federal structure was dismantled in favor of a unitary system. The revenue allocation system was dismantled and all resources were controlled by the military government. This has resulted in economic disparities and impeded the nation’s growth.

The allocation of the Value Added Tax (VAT) has also been a contentious issue. The Federal Government initially altered the VAT allocation formula to its advantage, further exacerbating inequality in revenue distribution.

It is imperative for Nigeria to reverse this fiscal oppression and embrace a system of fiscal federalism that fosters healthy competition and sustainable economic growth. This will entail a review of the current revenue allocation system, empowering communities to assert ownership of their land, and involving local governments in mining and exploration activities.

There is a need for open and candid discourse on these issues in order to develop a constitution that reflects the diverse needs of the nation. Failing to address these issues could lead to further destabilisation of the country.

The success of multi-national states such as Switzerland, Italy, and Germany can be attributed to their adherence to true federalism, granting full autonomy to federating units. Conversely, those that have failed, such as Yugoslavia and the Soviet Union, did so because they failed to practice true federalism.

Nigeria must heed these examples and strive towards a system of governance that acknowledges and accommodates the diverse needs of its populace. Only through this can stability and unity be attained.

In conclusion, Nigeria must reverse the fiscal oppression that has impeded its progress and embrace a system of fiscal federalism that aligns with the needs of its diverse population. This necessitates open and honest dialogue and a readiness to consider opposing viewpoints in order to achieve social and economic justice.

The refusal to consider the restructuring of Nigeria poses the greatest threat to the country’s unity, and it is imperative for the nation’s leaders to acknowledge the need for change.