Why Governors Will Keep Running Broke States

About a year ago, I wrote this blog post on how governors did not have to run financially broke states and advocated for states to be given control of the mining resources in their domains so that they can benefit from mining royalties and taxes largely, if not wholly. My suggestion was premised that a lot of illegal mining goes on to the loss of the states and the nation, and that damages the environment. Having states earn directly from mining was, as I see it, the first step to achieving fiscal federalism – an issue I am an ardent believer in – where states eventually earn directly from taxes such as VAT, company income tax, capital gains tax and eventually petroleum royalties and taxes.

I recently reshared the post and it led to an interesting conversation with someone on Twitter, who gave three reasons why contrary to expectations, the states are completely silent in advocating for this matter:

  • Government officials at state and local government levels benefit a lot from illegal mining through bribery and illegal payments – This is a very plausible argument considering the fact that people who are making fortunes from illegal mining are not unknown. For example, the large-scale mining in the village I mentioned in my initial post in Bauchi State has been linked to a popular politician and former governorship aspirant through his Chinese partners. So why then do state and local governments tend to turn a blind eye to this? It will not be a far reach to point to these illegal payments.
  • Illegal mining provides a lot of employment for young people, reducing the problem for the state government: This is very true. In every mining site, the workers are predominantly young people – whether it is at gold mines in Zamfara and Niger or the zinc mine I visited in Bauchi back then. In a country where there are far more employable people than employment opportunities and governments bereft of ideas on how to bridge the gap, it is easy for the governments to once again, turn a blind eye to illegal mining. After all, who does it hurt? It is not a crime on the level of kidnapping or armed robbery. Mining villages also benefit from a boost in their economies and create ancillary jobs such as food sellers, etc.
  • Northern states where most mining activity take place or are likely to take place are smart in not pushing for control of mining royalties because they know it will trigger a similar campaign for petroleum resources by oil-producing states: I found this angle most interesting. I remember that in debates online and offline after my first post was published, many people predominantly from the South were not down with the idea of a staggered weaning off states off the teat of the Federal Government. They felt that if states should be given control of resources, it should be all the resources at once, and not some now and others later. Inasmuch as I believe fiscal federalism should not be limited to some resources, I opt for a staggered approach in order to avoid states experiencing a cold-turkey situation with their finances. It is also very likely that northern politicians are not enthusiastic about controlling mining in their states because it will make their southern counterparts to demand control of oil production too. Of course, our states are addicted to the free money that flows from the FG courtesy of oil rent.

But then, if state governors are not going to push for control of mining royalties or the other things that will give them more financial independence and grow their states and Nigeria economically like reforming the tax code, the FG and the National Assembly could do it.

Sadly, this has happened despite being in the worst recession in 25 years due to low oil price and a drop in production. Our economic crisis ought to have been a great opportunity but we have not seized upon it.

I am usually the optimistic of people but I am very inclined to agree with people that say save for a complete drying up of our oil or zero sales, Nigeria is unlikely to take the necessary steps to truly diversify the country and restructure it for economic growth.

2 Comments on this post

  1. I hope you are aware of the provisions of the Land Use Act (LUA) which make all land and the mineral/other resources in them in the whole of Nigeria the property of the Federal Government. Note also that this Act was wickedly inserted into the 1999 Constitution so that agitators for more resource control by States will remain loosers. LUA states that the Stae Governors shall administer land/resources in them on behalf of the FGN. Thus Governors can only issue Certificates of Occupancy and Consent to Mortgage. This provision has far reaching ramifications – (1) Govs misuse the these powers, (2) Housing development has been stifled causing our current housing deficit of about 20 million houses; (3) States cannot exploit mineral resources within their boundaries except as joint ventures with the FGN and collect 13% derivation share; etc. The solution is to free the LUA from the Constitution. this will require a tedious process of constitutional amendment as stipuolated in S.8 of the 1999 Constitution. After freeing the LUA, we can then amend it. Same goes for the NYSC Act and that why in 40 years the NYSC scheme has not changed and has lost meaning today. Mainly Fulanis and Husas (who, incidentally wrote the LUA and the 1999 Constitution led by Professor of Law in BUK, Prof Yadudu) don’t want and freeing of the LUA and the NYSC Act because they alone benefit from it. Agitators of resource control (total or partial or graduated as you suggest) and restructuring of the federation (true federalism) should also add to the top of their demands a constitutional amendment to remove the LUA and and its review by the NASS in line with your dreams. A agree with Alh. Abubakar Atiku, former VP, that restructuring is inevitable and we better do not in peace round a table rather than in a forced manner via armed struggle.

    ASOMBEN / Reply
    • I agree with you. The LUA needs to go from the constitution and the idea that all lands are the possession of the govt must go to. And yes, restructuring is inevitable and it is better done in peace than via armed struggle.

      Mark / (in reply to ASOMBEN) Reply

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