Federal allocation: LGs reject govs’ revenue sharing proposal, demand 35%

The 774 local government areas in the country, under the aegis
of the Association of Local Governments of Nigeria, have demanded
35 per cent of the federal allocation as the review of the revenue
sharing formula initiated by the Revenue Mobilisation Allocation
and Fiscal Commission begins soon, Punch reports.

The association, therefore, rejected the 23 per cent proposed
for the local governments by governors. The local government, as
the third tier of government, currently gets 20.60 per cent from
the federal allocation.

Saturday PUNCH had exclusively reported that the governors of
the 36 states said they would demand 42 per cent as against their
current 26.72 per cent, while proposing that the Federal
Government’s share be slashed from 52.68 per cent to 37 per cent
and the local governments’ share be increased from 20.60 per cent
to 23 per cent.

A highly placed source privy to the pre-meeting discussions
among governors had told Saturday PUNCH about the formula being
proposed by the governors.

The Chairman, RMAFC, Mr Elias Mbam, on August 15 inaugurated a
standing committee which was mandated to give the nation a new
revenue sharing formula.

He had on August 6 said the fresh review of the current formula,
which was designed during the tenure of former President Olusegun
Obasanjo, who ruled between 1999 and 2007, was predicated on the
current economic realities.

But, disclosing the proposal concluded by the local governments
which is to be presented to the sharing formula review committee,
the National President of ALGON, Mr Alabi David, in an exclusive
interview with Saturday PUNCH on Thursday, noted that their 35 per
cent demand had become imperative following the huge
responsibilities carried out by the councils.

He argued that the present system where the Federal Government
got the highest allocation was not good for the country in terms of
infrastructural development. He stressed that with the reality on
the ground, the local governments should get the highest allocation
followed by the states while the Federal Government should get the
least percentage.

This, he said, would enable the local governments to tackle
issues of insecurity and other issues pertinent to development in
their areas.

He added, “We should get not less than 35 per cent. The current
allocation sharing formula is supposed to be the other way round.
At the moment, the Federal Government is getting the highest
allocation, whereas we are getting only 20.6 per cent. It ought to
be the other way round because the aggregate of the development
that you have in local government areas make a state. If you go to
some local government areas, we do not even have roads.

“So, we have a lot of infrastructural deficit in all the local
government areas in the country. To tackle these infrastructural
challenges, the councils need a lot of money and that is why we
asking for more.”

The ALGON president argued that the overheads of the local
governments had eaten deep into their capital and that had paucity
of funds had not allow the local governments to carry out their
obligations to the public.

He said, “You will discover that we spend so much money on
teachers’ salaries as well as staff salaries. States cannot take
over primary education from us; it is our statutory responsibility
and we have the capacity and capabilities to handle it.

“But, if there is a proper review of the sharing formula and
more money comes to the local government areas, then the
development in the local councils will be meaningful. Again, when
we talk about security in Nigeria, how do we tackle insecurity? You
can tackle insecurity right from the local government level.

“The model that we are using at the moment is the top-bottom
system and that is why development is not going round the whole of
the country. So, if we adopt the bottom-top approach, we would have
a lot of development at the grass roots level and we are not asking
for too much.

“If it is a minimum of 35 per cent that comes to the councils,
then we are going to have meaningful development in Nigeria. I can
assure you that we can tackle insecurity from the local government
level in collaboration with major stakeholders. The councils are
critical stakeholders to work with in order to solve security
challenges facing Nigeria. They are not just critical stakeholders
but also a major one in Nigeria.”

“We can tackle insecurity from the local government area because
any crime that is committed today in any part of Nigeria definitely
took place at a ward in a local government. So, you will see that
if that responsibility is given to the local government, they can
tackle it.”

He further argued that profiling of persons and registration of
all domestic staff members could be done with ease at the local
government level, noting that such could help in tackling
insecurity.

“Why can’t we equip all the police stations in all the local
government areas as well as profiling of persons and criminals?” he
queried.

TUC, NUT back chairmen, seek LG autonomy

Meanwhile, the Nigeria Union of Teachers has thrown its weight
behind ALGON’s increased allocations demand for the 774 local
government councils in the country.

The National Publicity Secretary of the NUT, Audu Amba, who
spoke with one of our correspondents on Friday, said the percentage
being demanded by ALGON was justified because local governments had
a lot of responsibilities to discharge.

He said, “It is not out of place for them to call for an
increase in allocation to them because local government councils
have many responsibilities. Payment of salaries to local government
workers and even primary school teachers are part of their
duties.

“Local government councils are the closest to the people and
based on that they have responsibilities to discharge on account of
their closeness to the people. As it is, local government councils
are the ones handling almost everything that has to do with the
people at the lowest level.

“It is expected that they will perform better if their
allocations are increased. So, as far as we are concerned, we are
in line with them that allocation to the local government councils
should be increased for maximum performance.”

The President, Trade Union Congress of Nigeria, Quadri Olaleye,
said for the councils to function properly, it was important to
increase their allocations, throwing his weight behind LGs’ request
for more share of the federal allocation.

Speaking with one of our correspondents in an exclusive
interview, Olaleye called on the Federal Government to review
revenue allocation sharing formula, stressing that Nigerians at the
grassroots would only feel the impact of governance if councils
were empowered to do grassroots projects.

He said, “The Federal Government must review the revenue sharing
formula to financially empower the states and local government to
undertake projects that will impact on the lives of Nigerians.

“The present sharing formula renders the state and the local
government financially impotent and by extension, it takes the
impact of governance away from the people at the grassroots.

“Because if this imbalance, the councils cannot execute any
meaningful project for the good of the people; this must change for
the people to feel the impact of the government they voted to
power.”

‘Finance minister to consult Presidency on FG’s
proposal”

On what the Federal Government would propose to the review
committee, spokesperson for the Ministry of Finance, Hassan Dodo,
could not be reached for comment, but a top official in the
ministry told Saturday PUNCH that the position to be put forward by
the Federal Government would be determined by the Minister of
Finance after consultations with the Presidency and other key
stakeholders.

The official, who spoke on condition of anonymity as he was not
officially permitted to speak on the issue, said, “The call for a
new revenue allocation formula has been on for a while and we all
understand that the states want more revenue to finance their
programmes. But one thing you have to understand is that the
Federal Government still has the highest responsibility in terms of
managing the federation.

“The federation account is currently being managed on a legal
framework that allows funds to be shared under three major
components: Statutory allocation, Value Added Tax distribution and
allocation made under the derivation principle.

“Under statutory allocation, the Federal Government gets 52.68
per cent which is the highest percentage but when it comes to VAT,
the Federal Government only takes about 15 per cent while the
remaining 85 per cent goes to the states and local governments.

“Currently, we don’t know the percentage the Federal Government
would propose as its share of the new allocation formula. I believe
that would have to be determined after due consultations between
the finance minister and the President.”

A source close to one of the governors, however, said, the
governors had yet to sit on the matter and, therefore, they had not
taken a position on the proposal by the local governments.

The source added, “Of recent, the local governments have been
trying to find some level of independence and they think they can
only do that by attacking governors. I don’t think that is a good
strategy.”

Meanwhile, spokesperson for the RMAFC, Ibrahim Mohammed, could
not be immediately reached as of press time, but a top official in
the commission informed one of our correspondents on Friday that
the revenue sharing formula review committee would begin work
immediately after a retreat meant to prepare them for the task.

The source said, “The committees’ work is a continuous process
and not on an ad hoc basis. The public will be informed when it is
time to make presentations, town hall meetings, visitations and
other procedures. But at the moment we have not got to that
stage.

“For now, there will be a retreat where all the members of the
committees will be directed on the mandate of the committees. It is
after that the major work will start.”

A former Deputy Governor of the Central Bank of Nigeria, Dr
Obadiah Mailafia, however, said instead of focusing on the sharing
formula, the three tiers of government should focus on how to
increase their revenues.

He added, “I think it’s sad that nobody is proposing ideas on
how to bake a bigger national cake. The obsession is, rather, on
how they will share an ever diminishing cake. The real issue, in my
opinion, should be on how to grow the economy so as to boost
long-term revenues. The revenue allocation formula is a
second-order issue.”

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