How did our states become lazy?

The decline of Nigeria’s agriculture can be traced to a progression of self-defeating legislation that removed incentive from our sub-national units to be productive.

As at 1953, revenues from selling mining rights went to the federating units in their totality. However, when it came to exporting the products of mining, the FG and the host regions shared the proceeds from the associated export duties equally. This revenue sharing formula was approved by the 1953 Chick’s Commission.

By the time the Raisman Commission sat in 1958, the new sharing formula prescribed 50% of mining rights proceeds to go to the host regions.

The 1964 Binns Commission allocated revenue from mining rights as: 67.4% for the oil producing regions, 12.6% for non-oil producing regions, and 20% for the federal government.

Decree №51 of 1969 basically gave the federal government control of what would become our most significant economic resource — oil. The problem is that after the war, Decree 51, 1969 was not rescinded; it still operates till this day.

Following the oil boom of the early 1970s, the Aboyade Committee sat in 1977 and enshrined federal control over all natural resources in Nigeria. The Land Use Act, 1978, made all of this a fait accompli.

What did the Aboyade Committee do?

It created the Federation Account Allocation Committee, abolished derivation as a principle of determining resource control and management, and removed all rights to oil resources from the oil producing states. From that moment, the Federal Government of Nigeria got 100% of the revenue from oil production, and began sharing the revenue to what was then nineteen states.

In thirteen years, between 1964 and 1977, Nigeria had moved from having its states or sub-national governments get 67% of proceeds from the minerals derived from their communities, to 0%.

This affected everything, including the country’s first love, agriculture. As a result, the incentives for states to encourage agriculture, or any other export oriented economic activity for that matter, was removed. Why should they encourage something that they would make no profit, or derive any significant benefit, from?

Read the rest of this, which includes more of the history, an analysis of the current situation, and a possible solution, at Financial Nigeria.

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A collection of mainly Nigerian opinions on the past, present and future. Bringing the “Nigeria spice” to important issues.

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Cheta Nwanze

Cheta Nwanze

Using big data to understand West Africa one country (or is it region?) at a time.

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