How the 1999 Constitution ensures Devolution and Fiscal Federalism

The 1999 Constitution entrenches the concept of federalism, division of powers between the central government and component states in other words between the federal government and the state/local governments each enjoying a degree of autonomy. 

There is no doubt that the 1999 Constitution distributes powers amongst the three tiers of the government the major criticism is that 1999 Constitution gives too much powers to the central (federal) government. An all too powerful central government is not acceptable to those not in control of the federal government. Main point to note is that the vesting of more powers in the central government was deliberately done as the central needed to be stronger than the states to prevent secession and to ensure uniformity.

Section 4 of the 1999 Constitution provides for the legislative powers of the federal government and state governments. In brief, legislative powers are vested in the National Assembly (federal) and House of Assembly (state). They are required to make laws for the peace, order and good government of the federation and states respectively.  The 1999 Constitution grants National Assembly powers to make law with respect to matters included in the exclusive legislative list, Houses of Assembly cannot legislate on such matters. National Assembly can also legislate on matters set out in the concurrent legislative lists “and any other matter to which it is empowered to make laws in accordance with the provisions of the Constitution”. A State House of Assembly is also empowered to make laws on matters listed in the concurrent legislative list but any law enacted by the House of Assembly (on a matter set out on the concurrent legislative list) if inconsistent with any valid laws of the National Assembly will become inoperative and void to the extent of the inconsistency. Both parliaments cannot legislate laws which are inconsistent with provisions of the 1999 Constitution, the Judiciary will declare such laws null and void.

Again the main criticisms from of the above arrangement is that the 1999 Constitution granted too much powers to the federal National Assembly, in that a state's House of Assembly cannot legislate on matters on the exclusive legislative list and its laws may be overridden by the a National Assembly Act if it covers a field listed in the concurrent legislative list. It is on this critics have either argued for a change of structure, a new constitution or an amendment. Critics wants the document (The Constitution) itself to forbid the federal National Assembly from legislating on almost half of the matters listed in the exclusive legislative list and also bar the National Assembly from passing any Act overriding that of the a State House of Assembly Law on such matters. They want a less powerful federal government and a stronger state government. These critics have not fully considered the demerits of a weaker federal government and a stronger state government. The key ones being structural instability and undue interference by the federal government aside these there is no known federal system of government where the components are stronger than the central lailai.

On Decentralization and Devolution

A common and erroneous view is that the under 1999 Constitution in its current state, devolution of powers in not achievable. It must be sounded loud and clear that no provision or section of the 1999 Constitution precludes, prevents or forbids the National Assembly from making constitutional Acts devolving powers to the Houses of Assembly on a matter listed in the exclusive legislative list. What the 1999 Constitution did is to grant powers to National Assembly to make laws on matters listed in the exclusive legislative list. The 1999 Constitution does not expressly or impliedly bar the National Assembly from making laws that will devolve powers. The National Assembly can in accordance with Section 4(3) enact Acts that will grant states powers to establish state prisons, allow states to record finger prints, save criminal records and establish railway authorities among others things. The implication of Section 4(3) of the 1999 Constitution is that the National Assembly can enact not only substantive laws on matters in the exclusive legislative list but also regulatory and power conferring laws for states via legislation (devolution). This arrangement is a better alternative to having the Constitution directly devolving most powers to the states, a future amendment of such constitution will be rigid and almost impossible but with powers residing in the National Assembly a simple Act of Parliament can grant and withdraw powers to and from the states when necessary.

Due to the foregoing, Nigerians calling for structural change should have a re-think and use the mechanism in place (provisions of the 1999 Constitution) to achieve their aim. The potential of the 1999 Constitution have not been fully explored at all. The best means of achieving decentralization and devolution is to elect enlightened and visionary parliamentarians, future candidates must be ready to undertake that he/she will pursue devolution by sponsoring radical and extensive bills that will go a long way in changing the structure of governments and their institutions. The key to achieving devolution is hidden in the National Assembly, Nigerians must push this institution to come up with Acts that will allow the federal to surrender powers to the states.  It is important to note that the mode of  distribution of powers by the 1999 Constitution to the two top tiers of government has been via legislative competences. Thus, the “structure” of the federal and state governments can be modified by legislation and exercise of legislative powers.  Section 4(3) of the 1999 Constitution has been used by the National Assembly to confer powers on the federal government (executive and judiciary) it can also be used to confer powers on state governments as long as it in the interest of peace, order and good government of the federation and is not inconsistent with the express provisions of the 1999 Constitution.

On Fiscal Federalism and Resource Control

Fiscal Federalism relates to the division of economic and financial functions amongst the tiers of government. A major aspect of this principle is that the central government should be more willing to surrender powers to the states government in matters regarding allocation of resources while the federal should be responsible for economic stabilization and income re-distribution. Fiscal decentralization being the best means of achieving effective and efficient solutions to social and economic challenges.

It should be noted that the principle of fiscal federalism can apply to federal and non-federal Countries as it deals with the central government's willingness to surrender policy responsibilities (e.g revenue collection) to the component states. The are two majors way of achieving fiscal federalism in a federation a Constitution could actually state the boundaries or the Constitution allows the central government to devolve at will. To elaborate, it is either a Constitution expressly states the competences of the tiers of government and then precludes the central from interfering except under some special circumstances or the Constitution grants central government enormous powers of which it can now decided what to and what not to surrender to the state, here the central will have an absolute discretion (in theory) in deciding when to withdraw such powers. The 1999 Constitution adopts the latter approach.

It should also be made clear that the 1999 Constitution does not contradict the principle of fiscal federalism and resource control. The Constitution rather than expressly granting more powers to the states preferably granted powers to the National Assembly, Revenue Mobilisation, Allocation and Fiscal Commission (RMAFC) and the President. One of RMAFC's duties is to “review from time to time the revenue allocation formula and principles in operation to ensure conformity with changing realities”. The RMAFC tables proposal to the President who then forwards it to the National Assembly.

A brief history of the revenue allocation proposals highlights the possibility of achieving a situation where states can be granted more allocation. The 1963 Constitution provided for a 50% derivation to the region where mineral rents were derived and the rest to be distributed based on various basis and indices. Okigbo commission recommended 45% to the federal,  35% to states and 10% to the local government. In 1992 recommendation was 48.5, 24% to state and 20%  to local, with 7% for special funds. RMAFC made a its first proposal under the 1999 Constitution as 41.3%, 31% and 16% to the federal, states and local governments respectively and a special fund of 11.7% which was later held to be unconstitutional under the 1999 Constitution. In May 2002 President Obasanjo invoked an executive order and held the formula as 56%, 24% and 20% this was later adjusted in July after serious discontent to 54.68%, 24.72% and 20.60. In March 2004, Dr. Okonjo Iweala adjusted the second executive order to 52.68%, 26.72 and 20.60 this being the current formula.

It is important to note that over the years the RMAFC has submitted series of proposal (46.63%, 33% and 20.37 in 2003, 47.19%, 31.10% and 15.21% in 2004/2005) which for one reason or the other have not being adopted. The questions here should be why has these proposals not been successful? and why are we are not clamouring for a review of and change in the existing sharing formula?  A matter like this is what I believe should be trending as it borders on the core structure of system. At a time like this where states are unable to pay workers' salaries, raising matters of sharing formula review will be fair and reasonable.

Nigerians must insist on process following, it should be clear by now that the inability of Nigeria to revise its revenue sharing formula in the past 12 years cannot be due to a fault in the 1999 Constitution, it can only be attributed to the failures our leaders and representatives to make use of the process laid down by the 1999 Constitution.

On resource control, section 162(2) provides for the principle of derivation and states that not less than 13% of the revenue accruing to the federation directly from any natural resources in a state must be remitted to such state. Important point to note is that the 13% derivation is not a cap but the minimum that must be remitted to an entitled state, in essence it could be increased to 15%, 20%, 30%or more. Increment can be achieved by an Act of Parliament, so for those clamouring for resource control best way is to lobby, negotiate with and demand for the National Assembly to act as the 1999 Constitution empowers it.

It has been generally argued that the monthly revenue allocation to states have made states lazy, idle and lacking in vision this may be true but the revenue allocation between the federal government and the state governments is a major feature of a federal system of government. There is nothing wrong with it. Major federations or federal systems all have their different version of revenue allocation which is also their life line and with its own disadvantages. In India there is the Financial Commission (Act), Germany has the Fiscal Equalisation Laws, USA has the aid in grants principle amongst other arrangements, Australia has the Commonwealth Grants Commission and Canada has Federal-Provincal Fiscal Arrangement Act. The common feature is that the central government has the responsibility of sharing revenues mainly tax, between it and the components and also amongst the components with most advanced federations have in their sharing system complex equalization principles. The main point here is that revenue sharing should not be seen as a problem rather it is a feature of the system of government we practice, it is the states that should seeks ways of increasing their internally generated revenue.

In all, it is the National Assembly that must live up to its responsibility, there is a reason while the parliament is bi-carmeral. A progressive and liberal executive is also needed to complement a radical National Assembly. When next we are to choose a President can we please ensure the such person supports devolution and fiscal decentralization ? A rigid and conservative President may frustrate a liberalist/radical National Assembly and vice versa. Two new strives must now be added to the fight against corruption and good governance. It is fiscal decentralization and devolution of powers which can be easily achieved within the framework of the 1999 Constitution. 

'H.A Sotayo-Aro