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The Political and Economic Imperatives of restructuring the Nigerian federation

Speech by the Guest Speaker, Atiku Abubakar, GCON, former Vice President, Federal Republic of Nigeria, at the Annual Professor Ademola Popoola Public Lecture, Faculty of Law, Obafemi Awolowo University, Ile-Ife

Monday 6th March, 2017.


Let me start by dispelling some myths that have been thrown around regarding the calls for the restructuring of the Nigerian federation.

1. It is a myth to say that we do not need restructuring, that all we need is good leadership. While leadership is critical, leaders also operate within structural and institutional constraints, which may impede or enhance their performance. Thus if you have a federal structure that encourages dependency while discouraging hard work, innovation, productivity and competition, your development as a nation will be less than optimal.
2. It is a myth to suggest or imply that changes in the structure of our federation are a silver bullet or magic wand that would solve all our problems. Our challenges are multi-faceted and the structure of the federation is only one of them, albeit a critical one. Restructuring itself will not automatically guarantee good governance. As a people we still have to demand good governance and accountability from our leaders.

The organizers of this lecture wanted my speech to explore “the constitutional and political framework for reconstructing Nigeria for true federalism and national integration.” That topic brings me to the third myth about restructuring.

3. “True federalism” is a myth. Federal systems are works-in-progress, and vary from one another according to their specific historical, socio-economic and political conditions. Ultimately people agree on the kind of federal system they will have, and be prepared to make necessary changes if it does not serve them well.

Let me also say that there’s nothing wrong in people agitating for what they see as a better federal system. In fact the perennial debates and agitations by federating units for improved position within a federal structure is the hallmark of a living, breathing federal system. We need not vilify those who disagree with us or treat them as less patriotic or even as felons.

I am a businessman and politician. So my remarks will be informed by what I see as the political and economic imperatives of restructuring. I will leave the matter of constitutional framework for constitutional lawyers and for a future gathering of leaders who would work out the details of the needed restructuring. Even at that, I will show that our current constitution does indeed concentrate too much power and resources at the centre, which has, in my view, impeded national development, security, peace and stability. At some point our leaders and representatives will come together, discuss and work out a framework for restructuring our federation in order to renew it to serve our people better.

The restructuring that I have been calling for involves changes to the allocation of powers, responsibilities and resources among the states or zones and between them and the federal government. I do not see local governments as federating units and, therefore, they should not derive their powers from the constitution. Likewise ethnic nationalities are not federating units and any attempt to restructure the country along those lines will be unworkable. Some of our roughly 300 ethnic nationalities are big enough to constitute independent countries while some are too small to even constitute local government areas.

Dependency and Mistrust:
If we cut out all the sophistry, posturing and pretensions, it is clear to me that the resistance against restructuring is based on three interrelated factors, namely dependency, fear and mistrust. Dependency of all segments of the country on oil revenues, fear of loss of oil revenues by non-oil producing states or regions and mistrust of the motives of those angling for restructuring. This can be seen in the regional patterns of the advocacy for and opposition to restructuring. The bulk of the calls for restructuring comes from the south while the bulk of the opposition to it comes from the north. This tells me that it will be critical for all parties to put their cards on the table, give one another the necessary reassurances and make the necessary compromises in order to secure a restructuring deal. Denials and insults by both sides are not a substitute for these.

Although arguments against restructuring come mostly from the North, there are, however, elements from the other regions who are in government and who argue against restructuring, claiming that it is only good leadership (ostensibly theirs) that is needed to resolve our nation’s challenges. Opponents also argue that restructuring is a ploy to break up the country. They insist that national unity is non-negotiable and claim that the matter has been resolved by the civil war. How the current structure is the only guarantee of unity is never really explained, neither is it demonstrated that devolving more powers and resources to federating units would lead to a breakup of the country.

Why Restructure?
While those calling for restructuring may be driven by different motives there is certainly a strong case for restructuring our federation. My reasons are simply that the current structure, which concentrates too much power and resources in the centre, makes us economically unproductive, uncompetitive, indolent, and politically weak, disunited and unstable. It has made our component units too suspicious of one another, a suspicion that makes any rational discussion very difficult. This structure, which can be called “unitary federalism”, does not serve the country or any section well. It rests on the foundation of dependence on oil revenues, which seem to be in long-term decline and is, therefore, unsustainable. And a country remains united in the long term only because the component units believe that it is in their interest to remain part of the country, that there are important things that they get from remaining part of the country than not. Leaders from across the country acknowledged this and gave voice to it in the last political conference held in 2014, whatever the motivations for convening the conference at the time.

How We Got Here and the Way Out
I will briefly remind us of how we got to our current inhibiting structure. I will then suggest steps needed to get us towards a more robust federal system that will enhance the capacity of our federating units to optimize their ability to provide for their people’s security and welfare.

In the First Republic the constituent regions in our federation raised and retained the bulk of their revenues, mostly from agriculture and with those tried to meet their obligations. They provided security with their police forces, built roads, bridges, hospitals, schools, and provided scholarships and, of course, paid their employees, including civil servants, teachers and health service workers. Then came oil, military regimes, the civil war, and measures that progressively centralized and concentrated more powers and resources at the centre.

The regions would have staunchly resisted this power grab by the federal government were we not under a military regime, in which the governors were mere military appointees who may not even be working in the states of their origin. Also the country had seen the prospects of, and become dependent on, oil revenues. And the oil revenues came largely from the Niger Delta, a numerical and political minority.

We have become so accustomed to the current structure and addicted to oil money that even the most reasonable among us still cling to a belief that what we currently have is the most beneficial and is immutable. Nothing can be further from the truth. This is a federal system that has fostered dependence on revenues derived mainly from three states and is characterized by excessive centralization and concentration of power and resources, and intense political competition, and political instability. Today regional gatherings are usually about grievances and how to get more from the central pool of resources but hardly about how to produce and contribute to increasing those resources.

While there is no ideal federal system to which every federating country has to aspire, there are better working federal systems from which to draw lessons. We modeled our current federal system after the US, but seem to have avoided the critical elements that make the American system function better: greater autonomy for federating states and individuals, and mistrust of leaders entrusted with power. America’s is a system that fosters individual freedom, productivity, competition and innovation, and strong institutional checks on power wielders.

In particular, the founding fathers of the US knew that human beings, especially leaders, like to accumulate power as much as they can. So in order to protect and guarantee freedoms for citizens from rampaging egomaniacs, the leaders’ powers needed to be limited; the central government needed to be restrained in favour of the federating states. Thus the first ten Amendments to the US Constitution, collectively called the Bill of Rights, offer specific protections of individual liberty and justice and restricts the powers of government. The bulk of the seventeen subsequent amendments expand individual civil rights protections, while the rest deal with federal authority or modify government processes and procedures. The Tenth Amendment is of particular interest for our discussion here. It states that powers not delegated to the Federal Government and not denied the states, belong to the states or to the people.

Note that the US constitution is only 4 pages (of parchment) long, with only seven articles, excluding the subsequent amendments. Those seven articles include an outline of the national frame of government, entrenchment of the doctrine of separation of powers, concepts of federalism, describing the rights and responsibilities of state governments and of the states in relation to the federal government, as well the procedures for ratifying the document by the states. It is critical to understand that it is the states that came together to delegate some powers to the central government (on matters that they deem best served by a central government).

In contrast, our 1999 Constitution, specifically Section 7, has 83 federal legislative items as against 15 for the states (which the Federal Government can also override). I do not know of any well-functioning federal system in the world that has that kind of lopsided central dominance.

Only our First Republic Constitution came close to the US’s Constitution in terms of the process of federal constitution-making and allocation of powers between the federating units and the federal government. Subsequent efforts have been ones where military leaders amended the constitution through decrees, and, when our peoples’ representatives were involved, set the parameters and redlines that could not be crossed by “we the people.” With eyes firmly set on oil revenues rather than diverse economic activities, and a mindset that saw any push for greater autonomy for regions as a threat to national unity, the efforts resulted in excessive centralization of power and concentration of economic resources at the federal level. For as long as oil flowed and revenues remained high, few people seemed to mind. Thus, our governments walked away from preceding sources of government revenues. Rather than clamour for more productivity and improvements in human resource development, we clamoured for and got more states and local governments.

We even had the awkward situation where the federal government created local governments and continues to allocate resources directly to them through so-called joint accounts with state governments. The result has been that local governments have ceased to be local, and they are also not national or effective. Rather the state governments essentially confiscate the funds and expend them as they wish. Thus the division of responsibilities for local government administration has killed the responsibilities. Put another way, the intrusion of the federal government in local government administration has virtually destroyed local administration.

There is no doubt that many of our states are not viable, and were not viable from the start, once you take away the federal allocations from Abuja. We have to find creative ways to make them viable in a changed federal system. Collaboration among states in a region or zone will help. We can examine the possibility of using the existing geo-political zones as federating units. We can also find other ways to determine the viability of states, for example by introducing a means test such that a state that is unable to generate a certain percentage of its expenditures internally for a specified period of time will be deemed unviable and collapsed into another or a group of states. We can constitute a body of non-partisan experts to suggest other ideas. But in all, we must devolve more powers and resources from the federal government and deemphasize federal allocations as the source of sustenance of states. We need to start producing again and collecting taxes to run our governments in a more sustainable way with greater transparency and accountability.

We have a unique opportunity now, with all the agitation and clamour for restructuring, to have a conversation that would lead to changes in the structure of our federation in order to make it stronger, enhance our unity and promote peace, security and better and more accountable governance. Ours should be a federal system that delegates to the federal government only powers and responsibilities for those matters that are better handled by a central government such as defence, foreign affairs, inter-governmental affairs, setting overall national economic policy and standards. Other powers and responsibilities should reside with the states, which will include the power to create and fund local governments as they deem fit.

Why do we have federal roads all over the country that don’t get maintained? Why do we have federal hospitals and schools all over the country that are no better than their state counterparts? We even have more clamour for federal takeover of existing state institutions. That is not how to run a federation. Rather we are centralizing more and making a mockery of federalism. This is a parody of federalism, and we must get away from it.

We should proceed from the assumption that the oil economy, which underwrote our profligate, unsustainable and unstable federal structure, has reached its peak. New technologies of oil production, especially horizontal drilling and hydraulic fracturing (also known as fracking) have helped to produce a glut in the world oil market. They have also helped to move the United States towards becoming the world’s top oil producer. This partly explains why US import of Nigerian oil has declined from 50% a few years ago to almost zero today.

Also the massive investments in and rapid growth in alternative energy sources show that it is unrealistic to expect the huge rises in oil prices of the past. Let me illustrate with a few examples. In 2004 the world generated only 48 gigawatts of electricity from wind power, but by 2014 wind power accounted for 318 gigawatts. In 2004 only 2.6 gigawatts of power were generated worldwide from solar photovoltaic (PV), but by 2014, 139 gigawatts were being generated, and this excludes an additional 326 gigawatts thermal solar water heating capacity. Also total annual biofuel production rose from 30.9 billion litres in 2004 to 113.5 litres by 2014. The same phenomenal increase is noticed in annual investments in renewable energy, from a mere $39.5 billion US in 2004 to $214.4 billion by 2014. In 2004 only 48 countries had policy targets regarding renewable energy but by 2014 the number had reached 144. As we speak here today cars using non-oil based energy either in full or in part are being produced for the mass market. And in June last year the US, Canada and Mexico pledged to derive 50% of their energy from clean sources by 2025. Next month Apple, the iPhone maker, will open its new massive headquarters. The complex, which will house over 25,000 employees, will be powered entirely by energy from renewable sources. Thus the world seems to have set upon an irreversible course of reliance on non-fossil and renewable energy.

Therefore the downward pressure on oil prices will likely continue even if the world economy fully recovers from the current slow-down. Add to that the militancy and instability in the Niger Delta, which have reduced our oil production capacity and revenues. So it will be foolhardy for us to think that this ‘unitary federal’ structure, erected on oil rents, can subsist without a major modification.

Thus, the fight in this country over “resource control”, while it may still have resonance today, is really a fight for yesterday. And, as I said at a conference in Kaduna eight months ago, even a discovery of large quantities of oil and gas in the north today can only bring temporary relief but cannot reverse the fundamental shifts in the world’s energy trajectory. So, my brothers and sisters, let us move on, like the rest of the world. We should embark on the badly needed restructuring of this country now even if we are hoping to strike oil in commercial quantities in another region of the country. That way we have a chance to live better in a few years’ time and leave a worthy legacy for our children and grandchildren.

Human resources, rather than large deposits of natural resources, are a nation’s most important asset. For example, Japan has little land for agriculture and no significant mineral deposits, but it is the third largest economy in the world. And Singapore has become a First World economy in our lifetime although it has little in terms of natural resources. We can similarly transform our country. We just need to start immediately. Our country boasts of millions of young people. It is within our means to give them good education and the skills they need to become productive, innovative and competitive in the modern world.

A trained, educated and entrepreneurial workforce in a restructured Nigeria that empowers her federating units to look to their strengths, emphasize production and internally generated revenues, and compete with one another to attract investments will truly transform us into a respectable people. It will help grow our economy rapidly, ensure needed employment for our young people, improve security, stabilize our politics and promote peace.

We need the courage to move in that direction.

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