- March 19, 2014
- Posted by: Diekola Onaolapo
- Category: Eczellon Talks
Recently, His Highness Sheikh Mohammed Bin Rasheed Al Makhtoum, Ruler of Dubai and Vice President of United Arab Emirates, tweeted:
“Today we concluded the Government Summit, a unique global gathering that charged us with innovative ideas and great energy to achieve our targets. We want the UAE to be a global capital for government creativity. Next GS (Government Summit) will test the limits of our imagination to develop government services”
In the same week, the Governor of a state in Nigeria was quoted in ThisDay Newspaper saying:
“The financial situation of the 36 states of Nigeria is precarious, following a drop in Federal revenue allocations by 40 per cent in the last six months……if the situation is not checked, many of the states will not be able to pay workers’ salaries and allowances soon.”
One could easily draw a parallel between the statements attributed to both leaders and see the gap between the performance levels of Dubai and Nigeria as a whole; as the statement of the Governor mirrors the attitude across all levels of government in Nigeria.
The Nigerian public sector, which actively drives the economy, is at present, largely a congress of allocation, with its attendant issues and conflicts which have not been resolved for close to five decades. Arguments and discussions have been focused on efficient revenue distribution from the center (i.e. Federal Government) to other tiers of the Fiscal Federalism (which Nigeria is) i.e. States and Local Governments.
The question is: should the public sector thrive ONLY on allocation?
While it is somewhat impossible and illogical to argue that the common wealth of the Federation of Nigeria should not be shared across its three tiers, the over-dependence on Federal Allocations (revenue distribution from the center to the units) has rendered majority of states unviable. This is apparent from the statement of the Governor earlier quoted.
There is therefore a need for creativity in management of government. CEOs of the various states need to begin to look inwards at other avenues of generating revenue. This is all the more important given the grim outlook for the Nigerian oil – the number one driver of revenue to the Federation.
Lagos State is in a league of its own among the 36 states of the Federation of Nigeria. In 2012, Lagos State’s Internally Generated Revenue was N219billion – the highest – which was over four times that of Rivers State – about N50billion – in second place.
The Lagos model, however, may not work for all the states.
Lagos is the commercial capital of the country. The taxation model as the main revenue source has worked largely due to this economic characteristic of the state. Will the same strategy work with Ebonyi or Ekiti State?
This is where creativity is important.
All the states have unique features, endowments, human and other economic, as well as mineral resources which each can leverage to develop its unique economic model. By working with professional project development experts, each state can articulate a clear blueprint for economic self-sufficiency.
For instance, a review of one of the middle-belt states in Nigeria revealed a robust IGR-boost strategy. The trigger for the three-phase strategy was tourism. The impact however, would be greater on hospitality and general services over a 5 – 10 year window, and is projected to generate IGR of N54billion, when fully implemented.
There really is need for that paradigm shift from “revenue distribution” to revenue creation and generation at the state level.
Not only will this bring about real and truly sustainable economic prosperity, it will also foster stability and socio-economic integration. Without self-sufficiency at the state level, the states are perpetually locked in dangerous rivalry for increased share of the national wallet.
This has been the lot of Nigeria since independence. It is time for a new thinking and approach. Time for real creativity in government.