Resource Control And Federalism:

Twenty-four hours before the first part of Dr. Bolaji Aluko's article (entitled "Mid-Week Essay: Derivation, Resource Control and the NPRC - Joining the Debate) was published in Nigeria Today Online on June 24, he had circulated the entire article to selected colleagues in North America.

The key question is: who owns the natural resources in a federating unit? Furthermore, can there be a federal polity without federating units? When knowledgeable scholars and politicians begin to engage in self deception by employing mathematical analysis as a way of resolving this question, thereby attempting to distort the tenets of federalism, the governance of Nigeria as a federal system will continue to gravity towards chaos and disintegration. The position being advanced by Dr. Aluko is akin to unitarism and severely injurious to federalism.

This is surprising because, over the past decade, he had been a strong advocate of true federalism, especially following the annulment of the June 12, 1993 presidential elections in Nigeria. His shift is symptomatic of the current perception of almost all those in the South West who had espoused true federalism during the Sani Abacha military regime, and prior to the election of Olusegun Obasanjo as president. This is buttressed by the posture of the South West delegation at the National Political Reform Conference (NPRC), which has aligned itself with the North against the South-South on this crucial matter.

Discussing the Issue

In a federation, the federating units agree on the areas of jurisdiction that each will concede to the central government. Prior to independence in 1960, the government of Northern Nigeria aptly underscored the imperative this concept when, in 1953, they responded to the demand for immediate independence by the governments of Eastern and Western Nigeria. The North tabled eight conditions, which included the following:

* "Each region shall have complete legislative and executive autonomy with respect to all matters except the following: defence, external affairs, custom and West African research institutions."

* "That there shall be no central legislative body and no central executive or policy making body for the whole of Nigeria." (See, Daily Time, Lagos, Friday, May 23, 1953)

Each of the then three regions of Nigeria benefited from the practice of true federalism, which respected and recognized the exclusive regional jurisdiction over natural resources, etc., a factor which propelled the development of each region according to its capability. With regards to the principle of derivation, this exclusivity was underlined in Section 34(1) of the 1960 Federal Constitution of Nigeria, and in Section 140(1) of the 1963 Constitution of the Federal Republic of Nigeria, which was enacted after the creation of the Midwest State in August 1963.

Thus, before the intrusion of the military in Nigerian politics on January 15, 1966, derivation was based on 50%. Lt. Col. (as he then was) Yakubu Gowon's military regime decreed and placed the natural resources (read crude oil) under the exclusive jurisdiction of his government. This usurpation, which successive  military regimes (1966 - 1979; 1983 - 1999) and federal governments (Shehu Shagari, 1979-83; and Olusegun Obasanjo, since 1999) have inherited and refused to relinquish is the cause of the current political instability vis-a-vis the ownership of crude oil and gas in the Niger Delta states.

What is at play here is a gross abuse of the power of the majority in denying  the minority its rights over control of its own resources, the same rights that the majority accorded themselves in pre January 1966 Nigeria, on the basis of true federalism. It is instructive to note that, since the demise of their respective commodities (ground nuts, hides & skins, cocoa, etc) in the world market, as a result of their neglect, it became expedient for them to use their majority in suppressing the minority ethnic groups of the Niger Delta. The huge number of armed forces stationed in the Niger Delta testifies to this.  Nigeria has become a "prison of nationalities" for the minority ethnic groups.  Thus, the struggle for the ownership of their resources is inextricably linked to the question of the self-determination of nations. The refusal of the Federal Government to acknowledge the exclusive jurisdiction of the Niger Delta states over their natural resources, a position  backed by the North and the South West, is making instability inevitable in the Nigerian polity.

In his essay under review, Dr. Aluko has shifted his position from true federalism to embrace quasi federalism as enshrined in the Constitution of the Federal Republic of Nigeria, 1999. His discourse of the ownership of natural resources in a federal polity is devoid of any sustained analysis of the concept of federalism, at least as practised in pre January 15, 1966, when the military intruded in Nigerian politics. If he had done that, as I am sure he is capable of doing, he would have come to the inevitable conclusion that the current "federal" system in Nigeria is in fact a militarized polity where the central government assumes ownership of land, natural resources, air, etc., and transform the federating units into mere administrative organs of the central government. Inherent in his analysis is an attempt to craft an economic justification for the status quo, in order to ensure the survivability of the non-oil producing states who have come to rely on their allocations from the sale of crude oil to manage their respective states.

According to this position, an increase in the derivation for the Niger Delta states will adversely affect the budgets of the non-oil producing states, a stance which forms the basis of Northern opposition to the Niger Delta states' demand for increased derivation. The hollowness of this argument is manifested in its gross mis conceptualization of derivation in a federal system. In fact, the advocacy of the Niger Delta states recognizes the exclusive jurisdiction of all Nigerian states over their respective natural resources - solid minerals, mines, cocoa, groundnuts, hides & skins, etc. Thus, instead of waiting for allocations from oil, all states, including the Niger Delta states, should begin to pay serious attention to agriculture as well as investing in the exploration and exploitation of their respective natural resources.

Unlike Dr. Aluko, his father, Professor Sam Aluko has lent his support to  100% resource control, arguing that "states should be made to bear the cost of exploiting such resources." While he recognized the jurisdiction of the Niger Delta states over on-shore resources, he averred that "off-shores does not belong to them," because, in his views, off-shores "is not part of their territory." In conceding 100% derivation to the Niger Delta states however, Professor Aluko proposed that these states should "pay taxes to the federal government" and "maintain the refineries, the Nigerian National Petroleum Corporation (NNPC), the pipelines."  (See Daily Champion, Thursday, June 23, 2005).

The thrust of Professor Aluko's position is an affirmation of true federalism, a view which the Niger Delta states have been postulating. In a federation, all states pay taxes to the federal government for economic activities undertaken in their respective jurisdictions. However, with regard to his proposal that the Niger Delta states maintain the oil refineries, the NNPC, and the pipelines, it should be noted that these structures and institutions fall outside the exclusive jurisdiction of the Niger Delta states. For example, while Delta State and Rivers State would maintain their refineries in Warri and Port Harcourt respectively, they cannot be expected to maintain the Kaduna refinery, which  becomes the responsibility of Kaduna State and the other states that rely on the Kaduna refinery.

Secondly, the oil pipelines, under the concept of true federalism, become the responsibility of all the states in the federation, since the pipelines transport crude oil to their territories. Thirdly, the NNPC and the federal government will terminate their exploration and exploitation roles in crude oil, as each oil producing state will have its own corporation to undertake this responsibility. Should the federal government elect to retain the NNPC, its role will be limited to helping the oil producing states to sell  their products in the international market, while each oil producing state will independently market its products within Nigeria.  Fourth, the allegation that off-shores "is not part" of the territories of the Niger Delta states is untenable in law, without a determination of the depth and boundaries of the off-shore resources.

Concluding Remarks

The debate on the ownership of natural resources is not exclusive to oil and gas in the Niger Delta.  We must recognize the position of the Niger Delta on this issue as a vital contribution to the resurrection of true federalism in Nigeria. All Nigerian states will benefit from this, as they will also exercise exclusive jurisdiction over the natural resources in their respective territories.  Professor Sam Aluko's endorsement of 100% derivation is a recognition of the exclusive jurisdiction of states over the resources in their respective territories.

The value of this position is profound for the development of Nigeria. First, it will compel Nigerian states, including the Niger Delta states, to begin to invest in agriculture and other natural resources under their jurisdiction. Second, it will serve notice on the futility of creating any more state in Nigeria. Third, it will compel all tiers of government in Nigeria to review their budgets and establish realistic salary structure for employees under their respective jurisdictions. It is inconsistent with reason or logic to operate a national salary structure in a federal polity. Each federating unit, in fact each institution within a federating unit, should establish its own salary structure dictated by its revenue. 

The demand of the Niger Delta states is to strengthen federalism. The argument by the opponents of increased derivation for the Niger Delta states is anchored on the thesis that, any increase will impoverish the non-oil producing states. This begs the following questions: Why are some politicians still agitating for state creation in Nigeria?  From where do they expect to obtain the revenues to manage their proposed states? Instead of agitating for more states, perhaps certain states should consider fusion as a realistic option. Most of the states created after 1970 fall into this category. The notion of creating states as a mechanism for attaining regional and/or ethnic balance is a dubious argument.