Simplifying Our Revenue Allocation Formula Once and For All

CONTENT

1.       THE CONCERN ABOUT THE 2002 BUDGET

2.       HISTORY OF NIGERIA’S PROBLEMATIC FISCAL FEDERALISM

3.       THE MATHEMATICS OF A MONOCULTURAL REVENUE ALLOCATION

4.       THE PRESENT NIGERIAN SITUATION

5.       MY TWO SUGGESTIONS  FOR A NEW REVENUE  ALLOCATION FORMULA

6.       2002 BUDGET:  HOW IT LOOKS  AFTER 2nd  REVENUE ALLOCATION SUGGESTION

7.       EPILOGUE

BIBLIOGRAPHY

REFERENCES

Table 1:  Table of History of Revenue Allocation Formulas

Table 2:  Table of Calculated Ratios for Revenue Allocation Formulas
 

APPENDIX I:  Some Historical Notes on Table 1

APPENDIX II: Excerpt of Supreme Court Ruling on Resource Control

APPENDIX III: Nigeria's Political Divisions and Some Physical Data

1.  THE CONCERN ABOUT THE 2002 BUDGET

As expected, on April 5,  2002, the Supreme Court of Nigeria  ruled UNANIMOUSLY against the 36 States of the federation and in favor of the Federal government  over who controls offshore resources.  However, in the face of aggressive counter-claims of the states, the Federal government -  no thanks to late Attorney-General Bola Ige who filed the suit back in February 2001, and who must be smiling broadly in Heaven right now –  seems to have bitten  more than it could chew.  What it now has is a serious headache, a  serious concern over  the fiscal structure of the country as a  whole, but in particular over the 2002 Budget, in which the Federal Government  now stands to statutorily lose to the state and local governments as much as N400 billion.

I will attempt to explain.         

Let us quickly look at the figures:  Nigeria’s approved 2002 budget  pegs expected government revenue at N1.55 trillion (as against the N1.156 trillion earlier proposed by the executive arm of government), N1.312 trillion of which would be due to crude oil earnings (at 1.788  million barrels a day,  $18 /barrel at budget exchange rate of N112/$) .   For our purposes here,  I take roughly N1 trillion (almost 80%)  of that N1.312 trillion to  be onshore oil and gas,   which would be subject to the  minimum of 13% derivation.   

Now the Supreme Court has (in effect)  ruled that the following FIRST CHARGES in the 2002 budget are illegal:

Joint Venture Calls –             N0.350 trillion.

NNPC Priority Projects –       N0.002 trillion

National Judicial Council –   N0.028 trillion

External Debt Service –        N0.168 trillion

Total  -                                      N0.548 trillion

It has also ruled that the 1% FCT deduction is illegal, among a few other rulings.

So what are the implications of all of this?  This is what the budget looks like:

BEFORE THE APRIL 5 SUPREME COURT  RULING  (all in trillions):

Total Revenue                                      N1.55

Less First Charges:                             N0.548

Remainder                                            N1.002

Of Remainder (for simplicity, we will ignore the VAT pool percentages):

48.5% to the Federal Govt.             N0.485

24% to the States                             N0.240

20% to the Local Governments      N0.200

7.5% distributed as follows:

1% to FCT                                           N0.01   

1% for Derivation                              N0.01

2% Ecological Fund                           N0.02

3% Ompadec                                      N0.03

0.5% Stabilization:                            N0.005

Summary:

Total Under Federal Control                N1.11                (for its use and for distribution as it sees  fit)

Total to the States (statuory)            N0.240

Total to Local Governments (st.)      N0.200

Total                                                        N1.55

Note: 

Total State +Local Govt.                      N0.440

Some Ratios of Allocations:

(State+Local) / Federal                     0.40

Local/State                                           0.83

Derivation/(State + Local) 0.02

AFTER THE APRIL 5  SUPREME COURT RULING (all in trillion)

Total Revenue                                  N   1.55

Less Minimum 13% Derivation - N  0.130      [Goes to the States  statutorily]

Remainder                                        N  1.42

Of Remainder (for simplicity, we will ignore the VAT  pool percentages):

48.5 % to the Federal Govt.            N0.689   

24% to the States                             N0.341

20% to the Local Governments      N0.284

7.5% To who?                                     N0.106

My Suggestion # 1 (of total  remainder distribution 50% to the Federal, 27% to States, 23% to LGs):

   1.5% to Federal Govt.                  N0.022

   3% to the States                           N0.042

   3% to the Local Governments    N0.042

Summary Allocations (following Suggestion # 1):

Total under Federal Govt.                N0.711

Total to State Govt.                           N0.513   (includes derivation)

Total to Local Gov.                             N0.326

Total                                                     N1.550 

Note:

Total Min to State + Local                N0.839

Overall Percentages:

Federal Government:                         45.9%

State Government:                         33.1%

Local Government:                         21.0%

If you inspect the two Before- and After-Supreme Court ruling  budgets above, the shift of fiscal control from the federal government to the state and local governments is quite significant, and requires the federal government to fundamentally restructure its responsibilities since it could  lose up to N400 billion from under its control.  So there is panic, understandable panic by the Federal government of president Obasanjo and Na’Abba/ Anyim who now wonder how they will no fund  their travels, their salaries and allowances, that Abuja stadium, all in this  election year, etc.  For example, one report had the president saying:

“I Cannot Implement Budget As Passed, Says Obasanjo  This Day (Lagos) March 31, 2002

http://allafrica.com/stories/200203310050.html

Another   report state that  the President had set up a 5-man panel, and the National Assembly a 20-man panel to study the Supreme Court ruling.

http://allafrica.com/stories/200204110094.html

Aftermath of Supreme Court Judgment...

This Day (Lagos)   Thursday, April 11, 2002 

QUOTE

The Federal Government yesterday appointed Secretary to the Government of the Federation (SGF), Chief Ufot Ekaette, to head a five-man committee to thoroughly study the implications of Friday's judgment of the Supreme Court on on-shore/off-shore suit. 

Also, the National Assembly will today hold a joint session to discuss the Supreme Court judgment and the parlous state of the economy, among others. The Supreme Court had last Friday fundamentally restructured the Federation Account while delivering judgment in a suit instituted by the Federal Government against the 36 states of the federation for the determination of the seaward boundary of a littoral state within the country. Information and National Orientation Minister, Professor Jerry Gana who announced the membership of the committee after the Federal Executive Council (FEC) meeting named other members as the Attorney General of the Federation, Kanu Agabi, SAN, Minister of Finance, Mallam Adamu Ciroma and two other persons whose name he failed to disclose. Gana added that the committee's term of reference is to "look into the interpretation of the ruling or judgement with a view to bringing the findings to the attention of the Federal Executive Council (FEC)."

Gana allayed the fears that the judgment of the Supreme Court, will affect the details, figures and implementation of the 2002 budget, which the president has signed into law. He explained that given the briefing Ciroma gave the president, "there is not going to be fundamental changes. In other words, the budget is not going to be fundamentally affected." Gana noted that contrary to public impression, President Olusegun Obasanjo had signed the Appropriation Bill into law "the same day it was presented to him." Although Obasanjo had said he would not be able to implement the budget as passed, the Federal Executive Council, yesterday advised all ministries to effectively implement the 2002 budget and ensure the due process of contract award and payments is followed. It was, however, gathered that the details and breakdown of the budget has not been sent to the president from the National Assembly…….

UNQUOTE

Yet a third report stated that  the president was suspending the application of the revenue allocation formula – including that  “gentleman’s agreement magic figure” of 13%  of “natural  resources”- pending action by the Revenue Mobilization Allocation and Fiscal Commission .  This is because  the Supreme Court ruling said that the presently applied stipulation was first in violation of existing law (Babangida’s Cap. 16 (as mended by Decree 106 of 1992;  “1% of mineral resources”), which is itself INCONSISTENT with the Constitution (which merely stipulates A MINIMUM of 13% of natural resources)  Although the president was empowered to do so, by law, to simply order alteration of Cap. 16 to bring it into conformity with the 1999 Constitution, he had not done so in all the time he had been president.  “A minimum of 13%” is not a  specification, rather it is discretionary, so neither the States or the Supreme Court or the States could use it as a basis to ask for or grant relief  to counter-claiming states until and unless the president and/or the RMAFC acts.

A complete  mess!

2.  HISTORY OF NIGERIA’S PROBLEMATIC FISCAL FEDERALISM

One of the many problems bedeviling the Federal Republic of Nigeria is that the description   “federal”  is  in name only – rather than in deed and in   truth.  Due to incursion of military rule in 1966, and the unitary proclivities of such a rule,  our delicately negotiated federal constitution has been bastardized and bent out of shape. 

No where is that assertion  more clear than in our current revenue allocation formula, where since 1970, the federal government has been playing “musical chairs”  with the lower levels of  state and local government over distribution of the  total collected revenue: it has often been a case of “now you see it, now you don’t.” [See Table 1.]    The irony is that various federal documents indicate that the government and  a number of its top functionaries  are  keenly aware of the various defects  and  the resulting lack of development that the republic has faced from this bad situation.  For example, in January 1993, in a paper titled “Revenue Sharing and the Political Economy of Nigerian Federalism”, General TY Danjuma, present Federal Minister of Defence, former Chief of Army Staff of  the Federal Military Government of Nigeria (1975-1979)  and writing as the  then-current chairman of the National Revenue Mobilisation, Allocation and Fiscal Commission (NRMAFC), stated viz (See Reference 1):: 

QUOTE                                                                                                                                                    

Currently, Nigeria operates a federal political economy implying a series of legal and administrative relationships established among levels of government possessing varying degrees of real authority and jurisdictional autonomy.  Within a period of 34 years of its corporate existence as a nation, the Nigerian federal system has metamorphosed from a two-tiered federal arrangement initially comprising three unequal political and administrative regions to a three tiered federal system of 30 states, one Federal Capital Territory and 589 Local Governments each of which is constitutionally recognised.  Between 1962 and 1992, for instance, the Federal system comprised 3 Regions (1960), 4 Regions (1963), 12 States (1967), 19 States (1976), 21 States (1987) and since 1991, 30 States.  The Local Governments have also increased from 299 in 1970 to 301 (1979); and then to 781 (1981) before they reverted again to 301 (1984) and increased first to 449 (1987), 500 (1991) and to 589.  As can be seen….the Constituent units in the Nigerian federation had been tinkered with eleven times either at the State or Local Government level.  With  the increasing number of units, and, with what there is to be shared not varying much, greater pressure is put on available resources;  hence the “national cake” is fragmented among many units.  With such fragmentation, no unit gets fully satisfied at the end of the day.

UNQUOTE

In 1997, a Central Bank document stated as follows:

QUOTE

CBN Annual Report Year Ended 31st December 1997,  Box 4.2 “Problems of Fiscal Federalism in Nigeria”, page 70-71.  

The Federal government in its attempt to provide some public services nationwide often assumes more responsibilities than would ordinarily be the case under the Federal Constitution.  Examples of these include provision of accommodation, mass transit, bore holes for water supply, roads, etc.  Inevitably, the functional responsibilities outweigh the available financial resources in line with statutory allocation from the Federation Accounts under the suspended constitutions.  Hence ad-hoc policy measures are adopted by the Federal Government transferring federally-collected revenue to itself and effectively neutralizing the statutory allocation formula.  These ad-hoc measures include the use of Dedication Accounts, Stabilization Funds, Petroleum (Special) Trust Fund and AFEM intervention Surplus, which substantially reduce the statuary allocations that are received by state and local governments……..The overall impact is that fiscal federalism in Nigeria has not been able to contribute optimally to social and economic development.  Despite the considerable increase in the number of administrative units, real economic growth has been low and the per capita income has declined considerably from the level attained in the 1980s.  As the nation moves into another era of democracy under a federal constitution, there is need to critically review the division of functions among the various tiers of governments as well as the revenue sharing arrangement in order to substantially improve the delivery of public goods and services as well as promote real economic growth. 

UNQUOTE

In another CBN report, the apex bank unveiled  some standard laments

QUOTE

CBN Annual Report Year Ended 31st December 1996,  Box 4.1 “Improving the Revenue Generating Capacity of the Three Tiers of Government”, page 72-73.   

The need for adequacy of revenue at the three levels of government – Federal, state and local becomes critical, given their expenditure programs aimed at influencing the levels of income, savings, production and distribution for the ultimate goals of achieving equity and increasing prosperity…The size of revenue that government generates at any point in time is influenced by its resource endowment, level of economic activities and the efficiency of its revenue collection machinery.  The stability and growth of revenue is a function of the ability of government to stimulate and sustain a high level of economic activities and an optimal mix of revenue-generating instruments.  The foregoing analysis shows that, although revenue accruing to the governments over time has increased in absolute terms, their revenue profile has depend largely on statutory allocations while the performance of internally-generated revenue has remained unsatisfactory. Prior to the introduction of FAT, the three tiers of government relied heavily on their share of Federation Account which in turn depended on developments in the international petroleum market.  This had implications for government finances.  Thus, government revenue had been unstable, showing up in deficits and poor delivery of services with expenditures concentrated on recurrent activities in the case of State and local governments.  This explains the use of tax contractors by some State Governments and introduction of various kinds of levies by State and Local Governments to  improve their revenue standing.  It is therefore important that advantage is taken of the country’s resource endowments to enhance the revenue potential and raise the level of  total federally-collected revenue with the ultimate aim of improving revenue accruable to Federal, State and Local Governments through statutory allocations.  Apart from petroleum, there are other mineral products that have remained untapped.

UNQUOTE

The last statement is obviously one of exasperation – “Heck, we have other resources, don’t we?” – and was the greatest understatement of the1996 CBN   report.  Nigeria’s proliferation of  unproductive, money-sinking administrative units, combined with its  monocultural dependence on oil make us into nothing more than  an oil-selling company masquerading as a country, with a president (and “Commander-in-Chief of the Armed Forces”)  being  the “armed” managing director of the badly- managed company.  The state  governors then act as company division chiefs distributing  “dividends of democracy”  to citizens masquerading as indolent company workers, with local government chairmen acting as subalterns.   

Even without a penny stolen from our oil sales – and that is impossible to imagine -  to depend almost solely on 2 million barrels of oil per day sold at even $27  per barrel  (the latest price in the face of new Middle East tensions)  translates  to roughly  $0.50 per person per day in Nigeria.  When you take away production costs and company-profit taking,  that readily drops to $0.25 per day.

In short, we are an oil-rich country.  However,  based on  our needs,  we are not a rich country.

3.  THE MATHEMATICS OF A MONOCULTURAL REVENUE ALLOCATION
 

Nevertheless,  no matter the situation,  what is there to be allocated must still be allocated fairly between

the three tiers of government.  With Nigeria’s monocultural “kalokalo” economy, that should be simple enough, if only we would apply some mathematics.

So we will adopt  a simple approach without hiding monies here and there.

Suppose in a particular year,  the total federally-collected revenue is X billion Naira, out of which a percentage of  100y% is from derivation-deserving  sources – that is  P  states out of a total of T states contribute to the derivation pool an amount D (=Xy).  Next suppose that by law it has been determined to  allocate 100z%  from the derivation pool  to the worthy P states.   Next assume that by law whatever is not distributed  by derivation is then distributed to the Federal government, State Government and Local Governments  respectively in the ratio  100f%:100s%:100(1-s-f)%. .  Now let G be the total  number of  local governments in the country  and N the number of local governments in the P derivation-deserving states.                         

The following formulas are readily confirmed:

Fraction accruing to all  the T  States  =  yz    +  (1 – yz)s

Fraction accruing to all  the G LGs       =  (1-yz)(1-s-f)

Fraction  accruing to the Federal Gov.  =  (1-yz)f

--------------------------------------------------------------------------

Total fraction accruing to all levels     =  1

Then  I submit that given  G, P, T and y,    the determination of   z, s and f – that is the Revenue Allocation Formula – should be based on what our financial and fiscal planners want the following quantities FR,  RSGF, RGS and RNO to be for a united, efficient, just, united and hence  happy federation  to exist: 

(i)                   FR  - the  responsibility of the Federal Government  ie 

                                          FR = X(1-yz)f

This determines how “big” we want the federal government to be relative to our revenue base and the constitutional responsibilities. This formula can also be considered as a formula for calculating f once FR, X, y and z have been determined:

                                              f = FR/{X(1-yz)}      f , y, z < 1

(ii) RSGF  -  ratio of  total   allocations to  all  state+LGs  to that of the  federal government;

                                           RSGF = {1-(1-yz)f}/{(1-yz)f}

This reflects how “big”  or “small” the federal government is relative to the lower levels – ie a measure of its fiscal devolution from federal to lower levels of governance.

(iii) RGS – ratio of the total  allocation to all of the local governments relative to all the state governments.

                                              RGS = {(1-yz)(1-s-f)}/{yz + (1-yz)s}

This reflects how “big” or “small” the state governments are in aggregate relative to the local governments – ie a measure of fiscal devolution from states to local governments.

(iv) RNO -  ratio of total allocation to non-derivation-worthy  states+LGs  to that of the P derivation-worthy states.

                             RNO =   {1-yz)s(T-P)/T + (1-yz)(1-s-f) (G-N)/G

                                                         -----------------------------------------------

                                                          yz  + (1-yz)sP/T  + (1-yz)(1-s-f)N/G

This third ratio is an important one:  it measures the level of imbalance between the states that are resourceful to those that are not.     At the same time, it enables  the resource-rich states to have a sense of whether they  are being unjustifiably milked or not.

A critical inspection of these ratios will show that for consistent fiscal devolution, 

                                                            RSGF  ~  RGS 

That is the states should devolve to the local government to the same extent as the federal devolves to the states.

Furthermore, for a balance between equity among states and fairness to the resource-rich states, we should  require that:

                 (1-y)/y  <  RNO < (T-P)/P       if (T-P)/P > (1-y)/y

        or RNO > larger of (1-y)/y and (T-P)

A quick historical note here:  Prof. Ojetunji Aboyade, back in 1977,  during  General Obasanjo’s regime,  once gave some mathematical reasonings to his Revenue Allocation Technical Review Committees suggestion.    I do not know whether they were some of these same considerations.  Anyway, Aboyade’s mathematics  were then  dismissed by Shehu Shagari as being “too technical” , while Okigbo stated they were rather “fine…but without political context”.  Aboyade’s report was promptly rejected  when Shagari became president in 1979.     Some other critics described Aboyade’s formulae as “probably a device to deceive the citizens under the cover of being intellectually sophisticated.”  [For more details, please see historical notes of Table 1 below .]

4.  THE PRESENT NIGERIAN SITUATION
 

Let us now particularize our work to the Nigerian monocultural economy, where roughly  80% of our income comes from oil in 9 oil-producing states out of 36, which have between them 185 local governments.

That is:

P = 9;   G = 185;  T = 36 and  y = 0.8       

Ie      0.25 < .RNO  < 3       

Our computations of various ratios for  various values of z, f and s are given in Table 2.   We see that only when we have a  40:20:40 or 40:30:30  split for lower values of z do we get anywhere near the compromise values of  RSGF, RGS and RNO outlined above.
  

5.  MY TWO SUGGESTIONS  FOR  NEW IMPROVED REVENUE  ALLOCATION FORMULAS
 

I believe that we should fix the derivation equation once and for all at 13%.  Then,  I make the following suggestions:

SUGGESTION  SET 1

Take the entire totally collected  revenue (X) and remove the 13%  of derivation pool D and distribute  that   to  the state and  local governments, and consider dividing the rest as follows by  one of the following stipulations:

(i)      Federal Government:   50%; State Government:25%  Local Government:25%; divide 0.13 D equally to  State and Local Government

(ii)   Federal Government:   36%  State Government: 28% Local Government:  36%; add 0.13D to State Government

(iii)     Federal Government:   36%  State Government: 36% Local Government: 28%; add 0.13D to Local Government.  This is a flip of (ii) between the state and local governments.

Recommendation (i) – (iii) amount  to the following allocation formulae being applied to the ENTIRE Federally collected revenue (not just  the Federation Account)

                                                    (i)                                                      (ii)                          

              Federal:                     0.5(X-0.13D)                        0.36(X-0.13D)                      

              State:                       0.065D + 0.25(X-0.13D)          0.28(X-0.13D) + 0.13D        

              Local Govt:                0.065D + 0.25(X-0.13D)          0.36(X-0.13D)                                   

The relative percentages would be a function of D/X and will vary in only quite a narrow band.  For  D/X = 0 (no derivation fund), and  D/X  = 1 (all available funds are by derivation),  then the overall percentages are:

            Ratios:

            D/X = 0                        50:25:25                               36:28:36

            D/X = 1                        43.5:28.25:28:25                    31.32:37.36:31.32

              Swing:                        6.5 – 3.25 – 3.25                      4.68 – 9.36 – 4.68

It is as simple as that, and would be a good political compromise, and will not lead to too much shock in the system as D/X  moves up or down, in which case Choice (i) is better than (ii) and (iii) are better.

The  claim here is that the recent full pronouncement of Nigeria’s   Supreme Court  on littoral states’ (non) resource control DEMANDS that our country  Nigeria NOW  simplify its  revenue allocation formula in order  to establish accountability and transparency, and yet satisfy the Constitution. Thus  I am recommending we do indeed  “Keep  It Simple….!”

My preferred recommendation here? After dividing 13% of the derivation fund equally among state and local governments,  let Federal Government have 40%   and the  State + Local have  60% of the remainder.  Then, in a spirit of true federalism and devolution of power, let  the Constitution merely specify that  no tier get  lower than 20% .  Each state then determines its own ratio between State and Local Government  (to add up to 60%) based on its own peculiar circumstances.

SUGGESTION 2

Based on the analysis in Section 3 as well as political realities,   I am however now prepared to make an alternative  suggestion for new revenue allocation which considers three different revenue  pots and applies different percentages to the different pots. This will be seen to be a more complex  variation on Suggestion 1, but an important one.

Here it is:

1.        We collect ALL federal government monies into three  pots:

(i)       Federation (Onshore Natural Resources + VAT Income) Account. – we distribute this among the various states according to certain formulas consistent with 13% derivation.

(ii)      Federation (Offshore Natural Resources Income) Account.  We distribute this among the various tiers of government according to certain formulas (no derivation consideration)

(iii)     Federal  (Non-Natural Resources, non-VAT funds + Independent Income )  Account -     all of this goes to  the Federal Government ONLY.

More specifically:

2.        We divide the Federation (Onshore Natural Resources + VAT Income) Account  vertically on a 40:20:40  basis as follows:

                Federal Government                -  40%     

                 State Governments                -  20%      [X%  distributed horizontally to States by Derivation]

                 Local Governments                -  40%      [Y%  distributed horizontally to LGs by Derivation]

                 Total                                  - 100%   

Yet-to-be determined X% and Y%  of the state and local government components respectively  would be distributed HORIZONTALLY to these tiers by derivation  such that overall derivation follows constitutional mandate minimum of 13%:

                   20X/100 + 40Y/100   ~ 13 

For example, we could choose one of the following:

X  = 0          Y = 33.3         à  Derivation is 13.3%; one-third of LG fund distributed by derivation

X =  25        Y = 25            è Derivation is  15%,; one-quarter each of LG & State funds by derivation

X  = 66.7     Y = 0              à  Derivation is 13.3%; two-thirds of state funds distributed by derivation

My own preference is for X = 0 and Y = 33.3%. (that is allocation to the local governments takes care of the derivation component.)

3.        We divide the Federation  (Offshore Natural Resources Income) Account on a 50:30:20 basis as follows:

                Federal Government:          50%

                State Governments:           30%

                Local Governments:           20%

                Total                              100%

4.        Whatever is distributed to the states and local government other than by derivation should be STRICTLY and ONLY on the basis of equality (considerations of population, population density, land mass, terrain can each be nominally set at 0.0025%  each (to satisfy present constitution)  and put in escrow!):

(i)     To States, based on thirty-six of them.

(ii)    To local governments, based on 768 (excludes FCT councils)  of them;

(iii)    if states additional to the 36 are created,  re-distribution of funds must be within each political zone as if there were 36 states;  

(iv)   if local governments additional  to 768  are created, re-distribution of funds within each state as if there were the present number of LGs within each states  as of May 29, 1999.

Conditions (iii) and (iv) are  to discourage proliferation of states purely for financial reasons. 

5.       2002 BUDGETS AFTER SECOND  REVENUE ALLOCATION SUGGESTION

(All in trillions)

Total Revenue                                         N   1.55

Of which:

              Onshore Resources                N1.00

              Offshore Resources                N0.32

              Non-Oil Resources                  N0.23

Total  to the Federal Govt.                 N 0.79                        (=0.40+0.16+0.23)

Total  to the States                              N 0.296                      (= 0.20 +  0.096)

Total to the Local Governments        N 0.464                     (= 0.40 + 0.064)          

Total                                                        N1.550 

Note:

13% Derivation -                                  N0.130     [Goes to Local Govts. statutorily]

Total Min to State + Local                   N0.76

Overall Percentages:

Federal Government:                         51%

State Government:                             19%

Local Government:                              30%

In effect,   this is an overall 50:20:30 split for this particular budget.

7.  EPILOGUE: 

I have outlined above what I believed are  reasoned approaches   for a new and simplified  revenue allocation formula in our country.     Clearly, political jostlings and constitutional reform must still  take place before it can be fully enacted.    The fundamental notion is that the Federal government must “right size” itself by defining its “minimum responsibility” , work within the reality of  the  weak  revenue base of the country,  and at the same time understand  that the states and local governments also have their own minimum responsibilities which they too must not shirk.  Then and only then will any revenue allocation formula make sense.

Finally, despite my best  effort here at revising  our messy   revenue allocation formula,  on the long run,  there is no alternative to moving away from our  center-controlled,  oil-dominated monoculture,  which oil contributes almost 80% of our federal government revenues, 90-95%  of our export earnings, 80-90% of our foreign exchange earnings,  and yet contributes only about 20%  to our GDP.  We must also re-write  our 1999 Constitution – via a Sovereign National Conference because the changes have to be quite fundamental, as the Supreme Court ruling suggests   - to give (among other things)  more personal income and business-profit taxing powers to the states and   local government.  De-emphazing population in revenue allocation will also mean that our census might become reliable for once,  making  planning for development more effective.

I rest my case.

BIBLIOGRAPHY
 

http://www.ngex.com/personalities/voices/sm010601baluko.htm

The Unfederal Nature of Nigeria’s Fiscal Federalism

Mobolaji Aluko

January 7, 2000

http://www.ngex.com/personalities/voices/mwc020801baluko.htm

MidWeek Essay:  On the Federal Government Suit Over Resource Control

Mobolaji Aluko

February 8, 2001

http://www.ngex.com/personalities/voices/se031701baluko.htm

SATURDAY ESSAY: The Littoral States and Onshore/Offshore Resource Control in Nigeria

Mobolaji Aluko

March 17, 2001

http://www.ngex.com/personalities/voices/mqb121001baluko.htm

Monday Quarterbacking Advising Caesar: President Obasanjo and His 2002 “Budget of Hard Times Ahead”

Mobolaji E. Aluko

December 10, 2001

http://allafrica.com/stories/200108170061.html

States Share Rise in New Revenue Formula

The Guardian (Lagos) August 17, 2001

http://allafrica.com/stories/200203270074.html

Nass Increases 2002 Budget by N284 bn    Daily Trust (Abuja) March 27, 2002

http://allafrica.com/stories/200203270044.html                                                                                        Budget 2002: National Assembly Approves N1.06 Trillion This Day (Lagos) March 27, 2002

http://allafrica.com/stories/200203270729.html

Assembly Okays Budget  Vanguard (Lagos) March 27, 2002

http://allafrica.com/stories/200203260506.html                                                                                            Reps May Okay Budget 2002 Today Vanguard (Lagos) March 26, 2002

http://www.thisdayonline.com/archive/2001/09/23/20010923pol03.html

Revenue Allocation: A Symphony of Discord

This Day  August 27, 2002

REFERENCES:

1.  “Federalism and Nation-Building in Nigeria: The Challenges of the 21st Century”,  Edited by J.I. Elaigwu, P.C. Logams and H.S. Galadima, National Council on Intergovernmental Relations (NCIR),  Abuja (1994)

2.  “Politicians and the Economy” by A.G. Adebayo and Toyin Falola, pp 13-50; a chapter in “The Politicization of Society During Nigeria’s Second Republic, 1979-1983”. Edited by Segun Gbadegesin, Edwin Mellen Press (African Studies Volume 22); 1991.

3.  “A Prophet Without Honor: The Life & Times of Ojetunji Aboyade” by Tunji Olaopa, Fountain Publications, (1997).

TABLE 1*:  SUMMARIZING VARIOUS REVENUE ALLOCATION FORMULAS SINCE 1977

---------------------------------------------------------------------------                          
                         Aboyade      Okigbo    1981   Jun 1992   Prop. by
                          1977**       1980**   Act+   To date+   RMAFC***                   
---------------------------------------------------------------------------

No. of States               19          19       19     30-36        36
No. of Loc. Govts.       299         301      781   589-774    774

Percentages:
Fed. Govt                   57.0      53.0     55.0     48.5      41.3                           

State Govt.                 30.0      30.0     30.5     24.0      31.0          

Local Govt.                 10.0      10.0     10.0     20.0      16.0

Special Funds                3.0       7.0      4.5      7.5      11.7
     Comprised of:
     i) Special Grants       3.0        -        -        -        -                       
        (no specifications)
    ii) FCT                        -        2.5       -       1.0       1.2
   iii) Stabilization              -         -        -       0.5       1.0
    iv) Revenue Equaliz.      -        1.5       -       -          -
     v) Derivation               -         -       2.0      1.0        -
    vi) Ecology                  -        1.0      1.0      2.0     1.0
   vii) Oil Prod, areas dev.   -        2.0      1.5      3.0        -
   viii)  Basic Education       -         -        -        -        7.0
   ix)   Agric/Sol Min/ST      -         -        -        -        1.5
-------------------------------------------------------------------------

*Table 1 shows the history of revenue allocation formulas since 1977, and includes the latest proposed revenue allocation formula by the Federal Revenue Mobilization and Fiscal Allocation Committee, and a summary of my own proposal.   The FRMAFCA proposal  is yet to be fully debated and signed into law,  but with the recent Supreme Court ruling, it will now have to be  sent back to  that committee back – back to the drawing board.

**  The formula is applied to all  the federally collected revenue

+    The formula is applied after first charges (like external debt, jvc, etc.)  have been removed

***  The formula is applied after ONLY derivation funds have been removed as first charge

TABLE 2:  CALCULATION OF VARIOUS REVENUE ALLOCATION RATIOS
 

For z = 0.13 (13%  allocated by derivation)

                                                              RSGF                                      RGS                        RNO

       f     s    (1-s-f) (in %)

(1)    60 –  30 – 10                  0.860                                       0.240                       1.401

(2)    60 -  20 – 20                   0.860                                       0.633                       1.413

(3)    60 – 10 – 30                                   0.860                                       1.388                       1.425

(4)     50 -  30 – 20                  1.232                                       0.481                       1.579

(5)    50 – 25 – 25                                   1.232                                       0.683                       1.585

(6)    50 – 20 – 30                                   1.232                                       0.949                       1.591

(7)   40 –   40 – 20                  1.790                                       0.388                       1.714

(8)   40  -  30 – 30                   1.790                                       0.721                       1.725

(9)   40 -   20 - 40                    1.790                                       1.266                       1.736

For z = 0.25 (25%  allocated by derivation)

                                                              RSGF                                      RGS                        RNO

       f     s    (1-s-f) (in %)

(1)    60 –  30 – 10                  1.083                                       0.182                       0.863

(2)    60 -  20 – 20                  1.083                                       0.444                       0.869

(3)    60 – 10 – 30                   1.083                                       0.857                       0.875

(4)    50 -  30 – 20                  1.500                                       0.364                       1.012

(5)    50 – 25 – 25                   1.500                                       0.500                       1.015

(6)    50 – 20 – 30                   1.500                                       0.667                       1.018

(7)    40 – 40 – 20                   2.125                                       0.308                       1.137

(8)    40 - 30 – 30                   2.125                                       0.545                       1.143

(9)    40 - 20 - 40                   2.125                                       0.889                       1.149

For z = 0.50 (50%  allocated by derivation)

                                                              RSGF                                      RGS                        RNO

        f     s    (1-s-f) (in %)

(1)    60 –  30 – 10                 1.778                                       0.103                       0.393

(2)    60 -  20 – 20                 1.778                                       0.231                       0.395

(3)    60 – 10 – 30                  1.778                                       0.391                       0.397

(4)    50 - 30 – 20                  2.333                                       0.207                       0.478

(5)    50 – 25 – 25                  2.333                                       0.273                       0.479

(6)    50 – 20 – 30                  2.333                                       0.346                       0.480

(7)    40 – 40 – 20                  3.167                                       0.188                       0.555

(8)    40  -30 – 30                  3.167                                       0.310                       0.557

(9)    40 - 20 - 40                  3.167                                       0.462                       0.559

APPENDIX I:

Historical notes on Table 1:

HISTORY OF REVENUE ALLOCATION  FORMULAS  IN NIGERIA – PAST, PRESENT AND PROPOSED

Since the 1946 Richardson Constitution which granted internal autonomy to the then-existing three Regions, there have been several attempts to provide equitable revenue allocation formulas consistent with the sharing of  responsibilities between the Federal and regional/state governments.  These include

(a)     before Independence: four  ad-hoc Revenue Allocation Commissions - (i) Phillipson Commission (1946)  (ii) Hicks –Phillipson Commission (1951), (iii) Chick’s Commission (1953); (iv) Raisman Commission (1958);

(b)     two post-Independence ad-hoc Revenue Allocation Commissions:  (I)  Binns Commission (1964) during the Prime Minister Balewa government;  and (ii) Dina Committee (1969) during the Gowon regime;

(c)       four Military-government-issued decrees, all during the Gowon regime – in (i) 1967;  (ii) Decree 13 of 1970;  (iii) Decree 9 of 1971 and (iv) 1975.

(d)      two comprehensive revenue allocation commissions (I)  Aboyade Committee (inaugurated 15 June, 1977), established by the Obasanjo military regime ; (ii) the Okigbo Commission (appointed 21 November, 1979,  report submitted 30 June, 1980), established by the Shagari regime.

(e)     two revenue allocation legislative acts:  (I) Allocation of Revenue Act (Federation Account)  (1981)  during the Shagari civilian regime; (ii) Allocation of Revenue Amendment Decree (1984) during the Buhari/Idiagbon military regime; and finally establishment of a  permanent National Revenue Mobilization, Allocation and Fiscal Commission (NRMAC) through Decree 49 of 1989, a commission which continues with us today even in our 1999 Constitution.

1.  Members of the Dina Committee (1968):  Chief Isaac Dina (Chairman); Dr.  Ojetunji Aboyade, Prof T.M. Yesufu, Dr. Ibrahim Tahir, Alhaji Mamman Daura, etc.

2.  Members of the Aboyade Technical Committee on Revenue Allocation (1977):  Prof Ojetunji Aboyade (Chairman), Prof Ayo Teriba, Dr. Green Nwankwo, Alhaji Mamman Daura, Chief Olumese (Secretary) , etc.

QUOTE

Page 161 ff of Ref. 3

Aboyade was still Vice-Chancellor in Ife when, in 1977, the Obasanjo government appointed him Chairman, Technical Committee on Revenue Allocation……

When the [ABOYADE] committee finished its job, the Obasanjo government received its report.  Among other technical details, the Committee set up parameters and models for administrative and fiscal controls which no effort in the past ever worked out.  It recommended that all federally-collected revenue (except personal income tax of the Armed Forces, External Affairs Officers and the Federal Capital Territory) should be consolidated into the State Joint Account.  This would then be shared [VERTICALLY] by the Federal, States and Local Government using 57:30:10 percentages respectively.  In addition, it created special grants accounts [3 PERCENT ALLOCATION  WITHOUT SPECIFIC CATEGORIES] to cater for problems like general national ecological degradation, national emergencies, disasters, oil pollution and the like.

Each state was also to contribute 10 percent of its total revenue receipts to the share of its constituent local government from its total revenue.  The Committee recommended the establishment of a joint fiscal and planning commission to periodically review federal fiscal system, while it added a set of new criteria for [HORIZONTAL] allocation [ie OF THE 30%  SHARE TO THE STATES]:  equality of  access to development [25%]; national minimum standards for national integration [22%]; absorptive capacity of the national and state economy [20%]; independent revenue and minimum tax effort [18%] and fiscal efficiency [15%].  The government then sent the report to the Joint Planning Board (JPB) where state governments worked on it.  The draft was finally fine-tuned by the Federal Government which adopted and implemented it.

A number of Federal constituencies that were dissatisfied with the policy unleashed a spate of criticisms.  Some people felt that “need” was not adequately taken care of.  These people were mostly from eastern Nigeria.  The Northern elite felt that “population” was not given its deserved place.  Some areas that were not populous but which had a large geographical space and land area felt the report did not give enough attention to “physical area.”  Some, mainly minorities in the oil producing areas, argued that the treatment given to “derivation principle” was faulty.  They felt that oil was dominant and important and that if the members of the committee had been from oil producing areas, they would have given derivation a greater percentage.  Others felt that if the Committee’s principles of allocation as established in its report and the White paper were good and defensible, the numbers could be questioned.

Those who were more technically minded, Dr. Pius Okigbo being the strongest, felt that the method of translating principles to money was too complicated, hence the succeeding government of Shagari’s conclusion that Aboyade’s report  “was too technical” as reported in the national newspapers.  In a sense, this may have some foundation.  In the report one finds mathematical expansions like the ratio of this and the inverse of that other ratio, and calculus like this weight when pushed to this side gives the coefficient of that.  It was truly a technical report and, therefore, required to be simplified so that it could be easily intelligible to the average civil servant and commentator.  The critics of the report felt that it was possible to have a formula which would involve less mathematical calisthenics.  Some of them argued that Aboyade’s formulae were probably a device to deceive the citizens under the cover of being intellectually sophisticated……

The first major criticism against the Committee’s report, however, was the stricture rendered on the floor of the Constituent Assembly in 1978 by Dr. Pius Okigbo.  Okigbo criticised the method and the logic of the report.  Alhaji Shehu Shagari labelled the report as “too technical.”  Thus, when Shagari became President of the country in 1979, it was only to be expected that the report would be subjected to further review.

UNQUOTE

3.  Members of the Okigbo Commission on Revenue Allocation  (1979):  Dr. Pius Okigbo (Chairman); Alhaji Ahmed Talib, Alhaji Balarabe Ismaila, Dr. Dotun Phillips, Alhaji Muhammed Bello, Dr. W. Uxoaga and Dr. G. B. Leton.

QUOTE

From REFERENCE 2

The Presidential Commission on Revenue Allocation, popularly known as the Okigbo Commission, was inaugurated on 23 November, 1979…..The Commission embarked on a tour of the states in the months of January to March 1980…..                The Committee submitted its report on 30 June 1980 and the Federal Government’s White Paper on the report was released on 1 September 1980.  Given the lack of interest of the State governments in revenue collection, it should not come as a surprise that the Commission’s treatment of the problem of revenue generation did not give rise to any disagreement.  For instance, the Commission argued that the produce sales tax [which used to be levied  and collected by the regional governments before it was abolished by the military in the wake of the oil boom] should be vested in the National Assembly.    This argument was meekly accepted by the states, even when they all  knew that produce tax constituted a veritable source of independent revenue.  Also, the commission’s recommendation that companies income tax should be collected by the Federal Government was accepted by the states.  On this count, the states had acquiesced in the commission’s rejection of the suggestion earlier made by some state governments that their internal revenue departments be allowed to assess and collect companies income tax from companies based in their states, and that companies in which the state government had controlling equity shares should be given tax concessions .  In short, the states did not gain additional sources of revenue from the Okigbo commission; and they did not seem to mind the fact that, by not being able to generate substantial revenue locally, they thus depended totally on Federally collected revenue.  Therefore, rather than raise all the dust on the allocation to tax jurisdiction, the politicians and other interested parties felt concerned and agitated over the sharing of what was Federally collected.

The Commission’s recommendation on the sharing of the Federation Account was as follows:  53% to the Federal Government;  30% to the State Governments; 10% to the Local Governments; and 7%  as Special Fund which is also to be distributed as follows:  2.5%  for the initial development of the Federal Capital Territory; 2%  for special problems of the mineral producing areas; 1% for other ecological problems such as soil erosion, desert encroachment, flood control, etc., 1.5% for the revenue equalization fund.

[Footnotes:  1. Page 40   “There were three reports:  a majority report, and two minority reports;  one by Dr. Leton, who wrote on behalf of the oil-producing states, and the other by Dr. Phillips who was criticised as having “repeated the stand of the UPN [UNITY PARTY OF NIGERIA OF AWOLOWO]”.  2.    Page 41: “As could be expected, bearing in mind the emphasis of the Shagari administration on Abuja, the Federal Government rejected the minority submissions of Dr. Phillips that the FCT should not be treated separately in the sharing of the Federation Account.”  ]

It was clear that these were provocative and unacceptable recommendations.  Opposition to them began with the Federal Government’s White Paper which proposed an amendment to the National Assembly seeking to increase the Federal Government’s share from 53% to 55%.  The proposal still leaves the states with 30%, but lowered the Local Government’s share to 8%.  The Special Fund, which was left at 7%, receive a new disbursement formula from the Federal Government’s White Paper:  3.5% to the mineral-producing states, to be shared on the basis of derivation, 2.5% to the Federal Capital Territory, and 1% for continuing ecological problems.  Of the 3.5% meant for the mineral producing states 2% should be allocated directly while the remaining 1.5% should be managed by a special agency for the development of mineral-producing areas……

An intense political crisis followed the report….By the last months of 1980, it was clear that the {SHAGARI] executive arm of the Federal Government had bungled the revenue allocation issue.  It had set aside the recommendation of the commission it appointment, and had made even more absurd suggestions….

Petty political bickerings, alliances, accords, divisions, lobbying characterized the debates, and by February 1981 a stalemate had been reached.  The House of Representatives and the Senate could not agree on the points and extent of amending the Bill.  On 9 December 1980, the House of Representatives had passed the Bill with the following amendments:  50% of the Federation Account to the Federal Government;  40% to the States, and 10% to the Local Governments.  On 14 January 1981, the Senate passed the Bill with the following amendments:  58.5% to the Federal Government, 31.5% to the States and 10% to the Local Government.  The following day, the SJA (State Joints Account) suffered another set-back in the Senate as it was decided that the 5% allocated to the oil-producing states should come from the states share.  This meant that the states were really to share 26.5%.  The Senate also decided that the funds in the SJA be disbursed as follows:  50% according to the principle of equality;  40% according to population, and 10% by “land use area.”…….

With these points of disagreement between the House of Representatives and the Senate, it was decided that the Bill be referred to the Joint Finance Committee [JFC] for reconciliation.  The JFC endorsed [ON JANUARY 29, 1981]  the amendments made by the Senate, and on February 3, 1981, the President signed the Bill into law…….by March 1981, either jointly or severally,  no less than twelve states had taken the revenue allocation bill to court, demanding its nullification.  Some filed their cases at the Supreme Court, others went to the lower courts.  By April 1981, seven such cases had been filed by state governments in the Supreme Court, seeking similar ends.  Thus, on 21 April 1981, the court decided that all suits would be heard at the same time, and that Bendel State suit would be taken as a test case…..

The states were not disappointed.  Bendel State won the case.  In its ruling [ON OCTOBER 2, 1981], the Supreme Court declared the Revenue Allocation Act of 1981 unconstitutional, illegal, null and void, and directed all Federal and State government officials to refrain from allocating Federal revenue according to the provisions of that Act…………

By December 1981, all the parties concerned seemed to have learnt their lessons……It was perhaps this lesson of caution that informed President Shagari’s new Bill sent to the National Assembly in December 1981, as well as the debates on the Bill in the Assembly.  The House of Representatives proposed no amendments, and those proposed by the Senate were thrown out by the JFC which met under the chairmanship of Senator Ameh Ebute on 17 December 1981.    The state bourgeoisie remained silent on the bill and the Act, eventually signed by the President, was used in allocating revenues in 1982 and the remainder of the life of the Second Republic.

Here is a summary of the adopted formula:  55% to the Federal Government; 35% to the State Governments and 10% to the Local Governments.  The SJA was to be sub-divided as follows:  30.5%  to all the states, 1% to be paid into a special fund to be administered by the Federal Government for the amelioration of ecological problems in any part of Nigeria, and 3.5% to be shared on the basis states directly and by derivation, and 1.5% should be paid into a special fund to be administered by the Federal Government for the development of the mineral producing areas.  The funds in the SJA [30.5%] was to be shared according  to the following principles:  equality of states [40%], population [40%], social development factor [15%;  MADE UP OF:  DIRECT PRIMARY SCHOOL ENROLLMENT – 11.25%; INVERSE ENROLLMENT – 3.75%], internal revenue effort [5%].

UNQUOTE

APPENDIX II

SUPREME COURT RULING ON RESOURCE CONTROL

Revenue Allocation: The Supreme Court Judgment

In The Supreme Court of Nigeria, holding in Abuja on Friday 5th Day of April, 2002 before the Lordship Muhammadu Lawal Uwais, Chief Justice of Nigeria; Abubakar Bashur Wali, Justice Supreme Court; Idris Degbo Kutigi , Justice Supreme Court; Michael Ekundayo Ogundare, Justice Supreme Court; Emmanuel Obioka Ogwuegbu, Justice Supreme Court; Sylvester Umaru Onu, Justice Supreme Court; Anthony Ikechukwu Iguh, Justice Supreme Court

SC28/2001

Between
Plaintiff - Attorney-General of the Federation

And
Defendants - [36 State Attorneys-General]

THE SUMMARY

In summary, I adjudge as follows:

1. Plaintiff's case succeeds and I hereby determine and declare that the seaward boundary of a littoral State within the Federal Republic of Nigeria for the purpose of calculating the amount of revenue accruing to the Federation Account directly from any natural resources derived from that State pursuant to Section 162(2) of the Constitution of the Federal Republic of Nigeria 1999, is the low-water mark of the land surface thereof or (if the case so requires as in the Cross River State with an archipelago of islands) the seaward limits of inland waters within the State.
…

3. The 6th Defendant succeeds in his claim (a) and, accordingly, I determine and declare
that the Constitution of the Federal Republic of Nigeria 1999 having come into force on 29/5/999, the principle of derivation under the proviso to Section 162(2) of the Constitution came into operation on the same day -- that is to say, 29/5/99 and Plaintiff is obliged to comply therewith from that date.

His claims (b) and (e) are, however, struck-out while his claims (c) and (d) are dismissed.
…….

6. Claims (a), (b), (c) and (d) of the 10th Defendant's counterclaim are hereby dismissed; claims (e) and (g) are, however, struck out. The 10th Defendant succeeds on his claims (f) and (h). It is hereby declared that the underlisted policies and/or practices of the plaintiff are unconstitutional, being in conflict with the 1999 Constitution, that is to say:

(i) Exclusion of natural gas as constituent of derivation for the purposes of the proviso to section 162(2) of the 1999 Constitution.

(ii) Non payment of the shares of the 10th Defendant in respect of proceeds from capital gains taxation and stamp duties.

(iii) Funding of the judiciary was a first line charge on the Federation Account.

(iv) Servicing of external debts via first line charge on the Federation Account.

(v) Funding of Joint Venture Contracts and the Nigeria National petroleum Corporation (NNPC) Priority Projects as first line charge on the Federation Account.

(vi) Unilaterally allocating 1 per cent of the revenue accruing to the Federation Account to the Federal Capital Territory.

I also grant an injunction restraining the Plaintiff from further violating the Constitution inn the manner declared in claim (f) above.
……

(CERTIFIED TRUE COPY and SIGNED)

M. D. Ogundare,
Justice, Supreme Court

APPENDIX III

(1) Nigeria's Political Divisions and Some Physical Data

Nigeria:
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1 country, 2 major Regions, 6 Political Zones, 36 States, 1 Federal Capital Territory (with 6 Area Councils) and 768 Local Governments [ 925,717sq. km, 1991 Census: 88,514,581]

South (17 States, 355 Local Governments)
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SW - Ekiti (16), Lagos(20), Ogun(20), Ondo (18), Osun (30), Oyo (33)
[6 states, 137 LGs] [78,941sq. km 1991 Census: 17,600,641]
Lagos, Ogun and Ondo are littoral; Ondo is also oil-producing.

SE – Abia(17), Anambra (21), Ebonyi (13), Enugu (17), Imo+ (27) [5 states,
95 LGs] [29,908 sq. km; 1991 Census: 10,712,675]
Abia and Imo are oil-producing; none of the states is littoral.

SS - Akwa-Ibom (31), Bayelsa (8), Cross-River (18), Delta (25), Edo (18),
Rivers (23) [6 states, 123 LGs] [85,097sq. km; 1991 Census: 12,939,226]
All of the states are littoral except Edo;  all are oil-producing.

North (19 States + Federal Capital Territory; 419 Local Governments)
---------------------------------------------------------------------

NW - Kaduna (23), Kano (44), Katsina (34), Kebbi (21), Niger (25), Sokoto
(23), Zamfara (14) [7 states, 174 LGs] [207,745 sq. km; 1991 Census: 22,494,182 ]
None is littoral or oil-producing

NE - Adamawa (21), Bauchi (20), Borno (27), Gombe (11), Jigawa (27) , Yobe
(17) [6 states, 123 LGs] [271,998 sq. km; 1991 Census: 11,907,122]
None is littoral or oil-producing

NC - Benue (23), Kogi (21), Kwara (16), Nassarawa (13), Plateau (17),
Taraba (16) [6 states, 106 LGs] [252,012 sq. km; 1991 Census: 12,212,064]
None is littoral or oil-producing

FCT - Abuja (6) [1 Capital Territory, 6 ACs] [1991 Census: 378,671]
Not littoral or oil-producing