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.

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.

TUC President, Quadri Olaleye

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.”