Home / Business and Economy / Obasanjo basically right (reaction By Professor Okechukwu Edward Okeke to Chief Mike Ozekhome (SAN)’s response to ex-President Obasanjo’s Open Letter to Chief E. K. Clark)

Obasanjo basically right (reaction By Professor Okechukwu Edward Okeke to Chief Mike Ozekhome (SAN)’s response to ex-President Obasanjo’s Open Letter to Chief E. K. Clark)

Chief Olusegun Obasanjo
Chief Edwin Clark
Chief Mike Ozekhome (SAN)
Prof. Okechukwu Okeke

* Contrary to the assertion in this op-ed, federal ownership of mineral resources did not start during the military era. It started during the early colonial era, when, admittedly, the country did not have a federal system of government. But, and this is crucial, it continued when Nigeria adopted the federal system of government (1954, the so-called Lyttelton Constitution). Note that the Lyttelton Constitution was a product of an agreement by the Nigerian leaders of the three regional governments of the time. What the military government did, from 1967, was to make laws to consolidate federal ownership and facilitate federal control.

* Laws about ownership of mineral or sub-soil resources vary among federations. Ozekhome made reference to the US system.  He neglected to stress that the federal government also owns some on-shore mineral resources — those beneath lands owned by the federal government. If he had gone northwards to Canada, he would have found that, unlike in the US, individuals don’t have ownership of mineral resources (only provinces do). If he had gone to Australia to search for models, he would have found out that, in the last 20 years, the federal government has slowly but substantially undermined provincial control of mineral resources.

* States/Provinces/Regions do not pay tax to the federal government in any federation that I am aware of. Certainly, not the US, Australia, Canada, or Germany. The only attempt to do so in the modern era was in 1877-89 in the US, during the confederal era in that country’s history. The Confederation was abolished in favour of Federation because the federal government was fiscally weak. Basically, it was fiscally weak because the states did not often pay their obligations to the Confederate government. Thus, in America and later in other federations, the federal government has its own sources of revenue and uses its own MDAs to collect it. In the US, if I may add, the leading source of the federal government’s revenue is personal income tax. Interestingly, and to show that federal revenue policies are not the same in all federations, personal income tax (except for police and armed forces personnel) is collected and retained by the states in Nigeria.

* Not only in Nigeria but in all federations, the federal government redistributes the revenue it collects among federating units. The reason is simple: to minimize gaps between rich and poor states. I concede that, especially from the mid-1970s to 2000, the politically powerful regions of the country (please exclude the South-East geopolitical zone) abused this policy to the detriment of the oil-producing states.

 I concede:

* Obasanjo was not truthful when he said he did not oppose the payment of 13 percent of oil revenues to the oil-producing states. It was due to his reluctance that payment started, not in June 1999, but in February 2000, with retrospective effect to (not June 1999) January 2000. What Obasanjo wanted for the oil-producing states was the NDDC. When he was pressured to start implementing the constitutional provision on derivation, he tried to reduce contributions by the oil companies and federal government to the proposed NDDC. But, as we know, the National Assembly, allegedly bribed by the governors of two oil producing states, ensured that the original bill was passed with minor changes.

Okeke is a Professor of History at the Federal University, Otuoke, Bayelsa State

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