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Federations Magazine Article
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Nigeria’s new leader promises to curb corruption, enhance services
One year after taking power,
Nigeria’s President Umaru
Yar’Adua faces daunting
problems. High on his list
are the delivery of adequate services to
Nigerians and the responsibility to
ensure f i s ca l re spons ibi l i t y i n
While such problems are common in
any federal country, they are even more
challenging in Nigeria because of its crippl
ing cor rupt ion. Transparenc y
International surveys indicate that corruption
is rampant in Nigeria, and in a
recent poll, more than 70 per cent of
Nigerians said that corruption affects
their personal and family lives to a large
When President Yar’Adua began his
term, he pledged zero tolerance for corruption.
He arrived under a cloud but his
authority was boosted last August by the
dismissal of two electoral fraud charges
against him. The acquittals are under
appeal, however.
While corruption is rampant in
Nigeria, so is poverty, and studies show
that it is the poor who are the most victimized
by corruption, having to pay
large sums in bribes from their meagre
resource to pay for what are meant to be
governmental public services.
The previous president of Nigeria,
Olusegun Obasanjo, began as a reformer
who sought to improve government services.
In 2003, he hired Wendy Thompson,
Nigeria’s new leader promises to curb
corruption, enhance services
Demands raised for fairer sharing of oil revenues and effective use of public funds
Martins Oloja is a public affairs journalist at Nigeria’s Guardian newspaper who has covered
politics and public policy in Nigeria’s capital for almost two decades.
ni g eria
Overshadowed by a billboard of the winning candidates for president and vice-president in last year’s election, street vendors in Lagos sell food
and CDs.
AP Photo/Sunday Alamba
FEBRU ARY | MARCH 2008 Federations
then British prime minister Tony Blair’s
special adviser on public service reform,
to assist with a framework for public service
reform in Nigeria.
Raised red flags
After a few months in Nigeria, Thompson
reported in April 2004 that Nigeria’s services
“are not serving people well.”
“Mainly they are inaccessible, (of )
poor quality and indifferent to customer
needs,” Thompson said. “Despite their
policy ambitions, ministers lack the
levers to ensure delivery happens ‘on
the ground.’ Central departments have
little information with which to monitor
performance or intervene to tackle
failure. Unpredictable and uncertain
funding often leaves services without
any non-staffing revenue to maintain
premises and systems, or to provide
services. Support services are not
designed to support front-line services,
and are a major impediment to acquiring
the staff, goods and information
that are needed.”
Her scathing report said reforms
would be “executed on challenging terrain,
the result of years of misrule,
systematic corruption, and a failure to
meet people’s basic needs for public
services. Public confidence is poor,
inequalities high and institutional
arrangements confusing and wasteful.
What is required is a far-reaching transformation
of Nigerian society that
involves government and other
Notwithstanding murmurings
about reforming Nigeria’s public serv
i ce, the respons e was larg el y
The Heritage Foundation/Wall Street
Journal Index on Economic Freedom
was just as scathing in its assessment.
“Despite stronger efforts to hold government
officials accountable for illicit
activities, corruption remains common
at all levels of government and in the
judiciary. Much of economic activity is
carried on in the informal sector.”
Besides 36 states and the federal capital
territory, there are 776 local councils
that depend mainly on money from the
federation account. This account is mandated
by the constitution to receive
almost all the Nigerian government’s revenue,
to be shared among the three
orders of government. The constitution
makes the President responsible for
reporting to the National Assembly periodically
on the revenue allocation from
this account. The federation account is
funded mainly by the country’s oil and
gas revenue. Nigeria is ranked as the
globe’s tenth largest producer of oil. In
2003, it was reported that over the last 25
years, Nigeria had received US$300 billion
in oil revenue after deducting
payments to foreign companies.
But despite revenues of that magnitude,
services are not being delivered to
the people, poverty is not being curbed
and the economy is sickly.
For instance, the proportion of
Nigerians living below the United
Nations’ US$1 per day absolute poverty
line rose from 27 per cent in 1980 to 70 per
cent in 2000. It has since declined to
slightly more than 50 per cent. In 2006,
Nigeria ranked 165th out of 179 countries
in the International Monetary Fund’s
ranking of countries’ GDP comparing the
purchasing power of the same basket of
With the funds available to all three
orders of government, there should be
adequate supplies of drinking water,
electricity, health services, educational
facilities and roads. But this is not the
case. A dysfunctional federal system and
the lack of a culture of public service have
made demo c r a t i c ins t i tut i ons
Alert never sounded
Nigerian federalism was not designed for
effective service delivery, but rather to
increase national unity among the
diverse ethnic groups. With revenue allocation
heavily in favour of the federal
government, sub-national governments
are reliant on the central government for
the funding to meet their service obligations,
which include public order,
intra-state trade and commerce, education,
state health policy, state highways
and public transit.
While it is apparent to all that the
funds earmarked for social services and
capital improvements are leaking and
not reaching their intended destination,
alarm bells ought to be going off.
But the constitutional provision for
audit alerts has remained largely unenforced.
Under the 1999 constitution, the
Auditor-General of the Federation and
the Auditors-General of the 36 states are
empowered to issue audit queries if
FEBRU ARY | MARCH 2008 Federations
Singing and dancing their protest, Ijaw women demand jobs outside a Chevron Texaco fuel
station near Abiteye village in Nigeria, in July 2007.
AP Photo/Saurab h Das
FEBRU ARY | MARCH 2008 Federations
appropriated funds are not satisfactorily
accounted for.
While the president and the governors
nominate auditors from a group of
existing finance officers, once they are
confirmed by national and state assemblies,
they cease to be part of the
executive arm. Instead, the auditors
report to each legislature’s public
accounts committee. However, the auditors’
reports are almost never ready on
time and neither civil agencies nor
the media are vigilant enough to
use the audit system to track
Nigeria’s public funds and prevent
them from being looted.
Centre gets lion’s share
Despite protests about mismatched
fiscal responsibilities and funding
by states and municipalities, allocation
of revenue between federal,
state and local governments is still
lopsided. Under the 1999 constitution,
the federation account, into
which oil revenues and other
incomes are deposited, belongs to
the three orders of government. But
the 36 states’ governors have
alleged that with the co-operation
of the accountant-general of the
federation, the federation account
“is often unilaterally, arbitrarily and
illegally operated, appropriated
and manipulated by the central
A study by G.D. Olowononi of
Ahmadu Bello University in 2004
concluded the federal government
spent more than 70 per cent of total
public revenue between 1993 and
In 1981, the central government’s
share of the federation account was 55
per cent, states received 30 per cent and
local governments obtained 10 per cent.
But in 1992, when local governments
received the additional responsibility of
managing and funding primary education,
the federal government reduced the
states’ share of the federation account
from 30 per cent to 25 per cent.
Even lobbying for the reduction of the
federal share to 33 per cent or less of the
federation account did not succeed as it
only led to the allocating of 1.5 per cent in
1992 to special funds. Control over the
special reserves such as the stabilization
fund, the petroleum trust fund and the
autonomous foreign exchange market
intervention surplus gave central authorities
a way to reduce revenue available to
sub-national governments. The federal
government has 48.5 per cent of the federation
account, while the states and
local councils share the balance.
Yar’Adua is haunted by the prospect of
continued conflict in the Niger Delta
Region, where the country’s oil supplies
are located, and to avert trouble, he has
taken a step toward asymmetry that
could backfire. In his proposed 2008
budget of 2.4 trillion naira (about US$20
billion), he set aside a whopping 444.6
billion naira – about US$3.7 billion – to
security issues and the Niger Delta alone.
The Delta includes nine of Nigeria’s 36
states, which already receive an additional
13 per cent of revenue from oil and
gas from the federation account.
As a result, funds required for critical
services for the entire country in the
areas of education, health, water
resources, poverty reduction and energy
were eclipsed by Niger Delta expenditures
in the Yar’Adua national budget.
Politics is a balancing act, though,
and cheers broke out after the president
announced he had signed the four-yearold
Fiscal Responsibility Bill into law. The
law would inculcate budgetary discipline
in public servants and enhance transparency
in fiscal activities. The president
said he assented to the Bill after consultation
with state governors who agreed to
enact similar legislation.
Wanted: funding for infrastructure
But despite promises of greater transparency,
it still remains to be seen
where the funds to improve infrastructure
will come from. There
have been no budgetary provisions
for the mega-city project for
Lagos, initiated by the Obasanjo
administration. Lagos, with its 14
million people, is the country’s
most populous city.
And more headaches could be
on the way as the Lagos state government,
now controlled by an
opposition party, is expected to
challenge the unprecedented budgetary
allocation to the volatile
Niger Delta area.
As anti-graft agencies await
political support to prosecute former
“execu-thieves,” there is
concern that the Yar’Adua administration
is not fully committed to
completing the comprehensive
public service reform, begun
under former president Obasanjo.
For example, the administration
has sworn in nine federal
permanent secretar ies and
recalled two others since Aug. 29,
2008. But senior bureaucrats, who
are chief accounting officers in the
ministries, agencies and departments,
have yet to be assigned their responsibilities.
In a system of checks and balances,
financial integrity can only be attained
with competent and honest accounting
officials overseeing spending; otherwise
funds go astray and unaccounted for.
Clearly, fiscal responsibility and service
delivery will remain challenges for
President Yar’Adua’s administration.
To get there, the administration has
relied thus far upon the mantra of its
“commitment to the rule of law.” It is
unclear when the regime will shift from
rhetoric to action.
Denying corruption charges, Saminu Turaki, former
governor of Nigeria’s Jigawa state, arrives at the federal
high court in Abuja in July 2007.
REUTERS/af olab I sotunde