Restructuring: Derivation or Ownership

Restructuring: Derivation or Ownership

“Restructuring”; its meaning is debatable, and for many, it is about oil, resource control. Surprisingly, many see resource control as the receipt of an increased top-up percentage of “derivation” by oil-producing states from oil revenues issued by the federal government (FG) as fiscal allocations. Where is the control in receiving a token part of the revenues from resources mined under your jurisdiction? The practice of derivation, no matter the percentage, is not reducible to restructuring.

Furthermore, a synonymous concept to restructuring is “federalism.” The structural devolution of power from the central government to federating units granting them autonomy within the political structure. If achieved in Nigeria, restructuring will effectively end the unitary system of government introduced by the military government since 1966. We say very little about the “ownership” of natural resources in the mainstream Nigerian debate on restructuring. Is ownership a taboo word for oil and federalism?

Ownership will always trump derivation as a rational restructuring choice. Derivation has also been a pacifier rent offering prebends shared among the local rentier class. They do not intend such to bring development to areas where the government disburses it. It is better for states to have 1% or 30% ownership of natural resources than get 50% or 90% derivation revenues from mineral resources. This logic must be a condition of autonomy of the devolved federating units. And achieving the restructuring of their local resources.

Somehow, the federalism implied for Nigerian adoption is of two general formats. (1) Nigerian federalism before the military intervention by a military coup in January 1966. And (2) American federalism as a benchmark and guiding principle. It is where the problem of choice and application begins. The first format of federalism suggests the need for “political regression.” A return to the four regions system overseen by Tafawa Balewa. Or the twelve state’s system created by Yakubu Gowon.

Some also advocate for federalism within the format of the six geopolitical zones similarly to the four regions or twelve states system. This format seems by consensus to reject the current thirty-six states system. The second format suggests adopting the US-styled federalism tacitly. Expecting the FG to let devolved autonomous federating units (regions, states or local governments) or even private individuals to own resources within the jurisdictions of Nigeria outright.

There is nothing wrong with political retrogression as long as it is compatible with “Intelligent Retrogression” (IR). IR, “going back to our roots” was first advocated by Rev S.R.B. Attoh-Ahuma, an early 20th Century Ghanaian philosopher. More recently, its revival is down to Ghanaian economist George Ayittey. IR is a profound call to return to the way of life that is profoundly and customarily embodied by Africans, with emphasis on the pre-colonial era.

While they intend the purpose of IR for deep indigenous reflection and guidance, it could also be useful for the return to a post-colonial system of governance that once worked well in Nigeria’s past. IR rejects the unitary system of government vehemently. Peter Ekeh also affirms that members of African societies are loyal and moral towards the “primordial” [indigenous traditional] public. Still, they are amoral and subversive towards the “civic” [foreign (colonial)] public. Will restructuring consider enriching civic institutions with primordial ones to make Nigerian institutions more instrumental [effective] than ceremonial [nominal]?

There is also nothing wrong with the decentralised ownership of natural resources. But would the FG even entertain such a request or demand? Ownership is a relationship that entitles an owner to use a property or asset as he or she pleases without breaking the law. Moral ownership is a relationship that does not allow an owner to use a property or asset as he or she wants. No matter how rightful such a claim is outside the law.

Niger Deltans morally own the oil, but the FG, by federal law, holds all oil resources centrally. Here is where Nigeria’s unitary system of government fails too many of its citizens. The tyranny of unitary law is the problem, and restructuring is the only viable solution. Does the Midwest, for instance, and other regions have the collective will and wherewithal to demand the ownership of their resources? It is clear they do, and they will.

The reason we should not underestimate ownership is the fungibility of resources in a federating unit. A German economist once enlightened me to an interesting fact. Britain, as a colonial power if it so wished, could have sold Nigeria to Norway or the USA just like you sell a corporation! The FG once owned Bakassi. Now the Government of Cameroon owns it. Just like that. It is why self-ownership and autonomy are very important. Also essential is the human and financial cost of the degradation of the land that we mine for natural resources.

After decades of pollution, there is no cleanup of the Niger Delta. The FG has treated the Niger Delta as a “sacrifice zone”. All its wealth is good for revenues, but none of the responsibility for the aftermath. Transaction costs inform us that if you pollute someone else’s land, that person bears the cost, not the polluter. Someone got a Nobel Prize for that. In reality, experience and common sense inform us that there is more incentive for an individual to clean up his backyard, ceteris paribus, than a stranger or neighbour would. Political distance is as much a problem as physical distance from the central government. Restructuring is the best chance of cleaning up the Niger Delta.

The future of Nigeria is federalism with devolved autonomy and ownership. The derivation is a fiscal allocation but also a rent and ownership is about resource control necessary to add value and restructuring Nigeria.

Grimot Nane