By Editorial Board
The Lagos State Government can do a lot more than it is presently doing to harness the state’s resources with a view to improving the conditions of living of people in the state. Nevertheless, it is undeniable, and indeed overdue, that if ever any state deserves a special interest from the Nigerian entity, it is Lagos, considering the immense responsibilities it is carrying as the industrial, commercial and social hub of the country. No state receives as many visitors daily as Lagos, making its government to be continually on the receiving end in coping with the educational, health, housing, infrastructure and other social demands thus arising. Ultimately, the practice of true federalism for the country will likely provide lasting solution to the growing problem of Lagos State; this is the time, however, for government at the centre to accord the state a special status in terms of revenue allocation and other support. Doing so can only be in the interest of Nigerians from all over the country flocking the state for greener pastures.
The ongoing review by the Revenue Mobilisation Allocation and Fiscal Commission, (RMAFC) of the current revenue allocation formula in the country presents a good opportunity for another look to be taken on this lingering issue for the betterment of the fiscal arrangement currently operational in the Nigerian federation. Revenue allocation whether vertical (among the tiers), or horizontal (within a tier), has been contentious in this country and various forms of fiscal federalism have been propounded by stakeholders on this very sensitive subject.
States and the local governments have over the years been crying for more resources to enhance their delivery of public goods to their various constituencies across the federation. Under the current revenue sharing formula, the Federal Government takes 52.68 per cent, the states, 26.72 per cent and the 774 local government councils, 20.60 per cent with 13 per cent derivation revenue going to the oil nine producing states. The case of Lagos is relevant.
Governor Babajide Sanwo-Olu had demanded one per cent share in the revenue allocation formula after stating that the special status of the state and its prosperity directly or indirectly has multiplying effects on the South-West region and the entire country. He also proposed that the revenue sharing formula should be 34 per cent for Federal Government including one per cent for FCT – Abuja, 42 per cent for state governments, 23 per cent for local governments and one per cent for Lagos State (special status). He added that the call for a special status for Lagos is in the best interest of the country and all Nigerians, as Lagos accounts for about 20 per cent of the National Gross Domestic Product and about 10 per cent of the nation’s population.
The issue of special status to Lagos has been muted in the past by the Murtala Mohammed regime (1975-1976) in which Lagos, Port Harcourt and Kaduna were designated as special cities. At the time, five cities, namely Enugu, Port Harcourt, Ibadan, Kaduna and Lagos were later designated as ‘‘Centres of Excellence’’ as part of a plan to make them cities of pride by the Federal Government.
Lawmaker, Setonji David who is chairman, House Committee on Information, Strategy, & Security, Lagos State House of Assembly has had occasion to make a passionate plea for what he called formalisation of Lagos special status. He asked among others: “Does any state in Nigeria hold the key to over 75 per cent of all manufacturing activities in the country? Or account for 70 per cent of Nigeria’s maritime trade? If a cog is thrown in the wheel of Lagos’ progress, could any state replace 55 per cent of all VAT revenue which accrues to the Federation Account from Lagos out of 36 states? If tax revenue is important for the system to work, Lagos alone generates over 82 per cent of Companies Income Tax available to the Nigerian state. If her economy slumps, if for any reason half of the jobs in Lagos were to disappear, is there an easy way Nigeria can absorb the army of jobless citizens that would be unleashed on the polity? Has Nigeria got the answer to any of these dilemmas that could easily be thrown up if Lagos were to become shackled by the starkly real threats to her development that are staring us all in the face?”
Davis noted that while the average annual population growth in the developing world is three per cent and Nigeria’s rate is 2.7 per cent, Lagos has an annual population growth of staggering eight per cent. “With a population realistically put at 24 million, Lagos is among the top 10 of the world’s fastest growing cities and urban areas. There is an estimated influx of 10, 000 people, foreigners and Nigerians from other states, into Lagos every single day. Lagos has been a willing host to all. Now, Lagos groans under the weight of its gargantuan responsibility towards all whom she has offered a home,” he submitted.
Lagos is generally regarded as a special state in Nigeria for various reasons. First, it was the last capital of the federation until December 12, 1991 when Abuja was legalised as Nigeria’s capital. Second, Lagos has been so critical to economic development of the country that it is generally regarded as the “economic or commercial capital” of Nigeria or even West Africa. The state plays host to so many economic and strategic agencies including critical revenue organs. The most viable international airport is located in the state as well as the two most viable seaports in the country, accounting for over 90 per cent of all maritime trade.
It is the main gateway to the country and the centre of financial services being the most viable capital of the money and capital markets in the country. The collectible tax profile of the state for federal and state is second to none in the country with the state being the largest single contributor of the now contentious value added tax in the country, relative to other states and the Federal Capital Territory.
The challenges that accompany these responsibilities are quite enormous. For example, Apapa that hosts the two critical ports has practically been abandoned. The roads are terrible; many of the state and federal highways and flyovers in Lagos State are in embarrassing state of dilapidation. There is need for adequate provision of resources from the federation account, to enable Lagos play this special role as echoed over the years.
Though the current review by the RMAFC is expected to focus only on the vertical allocation which covers allocation to the federal, states and local governments, a consideration for the special status request for Lagos will not be out of place. The expectation is that the review will lead to a new revenue sharing formula for the country which will address the request to grant this special status to Lagos in revenue allocation.