AN ANALYSIS OF FISCAL FEDERALISM AND THE PURSUIT OF RESOURCE CONTROL

CHAPTER ONE INTRODUCTION 1.1 Background of the Study The dynamics and structure of fiscal relations in any federal system are fundamental to its stability and long-term viability. In most, if not all federal nations, one of the most persistent sources of tension involves the challenge of ensuring equitable access to financial resources. Resource control is a critical element of fiscal federalism. Given Nigeria’s distinct characteristics—its vast territorial expanse, rich diversity in culture and history, and the deeply heterogeneous nature of its population—a form of federalism was not only necessary but inevitable (Chijoke, 2012). The debate around resource control has gained prominence, largely due to the perceived marginalization of oil-producing communities that bear the brunt of environmental degradation yet remain sidelined in national development efforts. The ongoing agitation for resource control reflects a deeper pursuit for genuine and functional federalism—one often referred to as classic federalism. Unfortunately, the underlying philosophy of resource control has been misinterpreted in some circles, with detractors wrongly framing it as a parochial interest of the Niger Delta people alone. However, the centrality of the resource control movement in Nigeria’s national discourse is a legitimate demand for justice. It underscores a broader call for equitable participation and resource distribution across the federation. Proponents of resource control argue that it is not merely a sectional plea but a necessary mechanism to stimulate national development through the optimal utilization of locally available resources. As Najakkum (2016) suggests, embracing classic federalism through resource control can catalyze economic diversification, allowing Nigeria to transition from a mono-product to a multi-product economy. This aspiration becomes even more compelling in light of the high level of politicization that continues to define the Nigerian political and economic space (Sagay, 2001). The resurgence in demands for self-determination by various ethnic groups, particularly following calls from South-South state governments for control over resources within their territories, marks a significant shift in the political landscape. Historical movements like those led by Isaac Adaka Boro and the Ogoni people under Ken Saro-Wiwa epitomize long-standing grievances rooted in the exploitative treatment of the Niger Delta by successive Nigerian administrations. Ken Saro-Wiwa, as leader of the Movement for the Survival of the Ogoni People (MOSOP), became a vocal critic of the reckless exploitation of oil in the region—a stance that ultimately led to his execution (Okafor, 2017). The essence of the agitation by South-South states is to reclaim ownership and authority over the resources extracted from their lands. Advocates emphasize two key issues: first, the glaring underdevelopment of the Niger Delta despite its substantial contribution to national revenue through oil production; and second, the aspiration to institutionalize a federal structure that embodies the true spirit of fiscal federalism (Amadi, 2020). Although the southern states’ demands for resource control have faced resistance from certain national elites, the debate reached a judicial milestone with the Supreme Court case initiated by the late Attorney General and Minister of Justice, Bola Ige, concerning the interpretation of Section 162(1) of the 1999 Constitution regarding revenue allocation (Anam-Ndu, 2007). Resource control and derivation are not new concerns within Nigeria’s governance discourse. As early as 1946, during the tenure of Governor-General Sir Arthur Richards, the issue had already emerged as a significant challenge. In response, a commission headed by Sir Sydney Phillipson was established to formulate appropriate administrative and financial structures. The commission proposed a revenue-sharing formula that distinguished between "declared revenues" for the regions and "non-declared revenues" for the federal government, guided by principles such as derivation, development needs, and population. However, this model proved inadequate for some regions and failed to achieve universal acceptance (Enweremadu, 2009). When military rule ended and democratic governance was restored in May 1999, the issue of revenue allocation remained unresolved. Consequently, governments in the Niger Delta began pushing for a review of the derivation formula, the practice of resource control, and the institutionalization of true federalism. These calls were eventually endorsed by all 19 Southern state governors. Against this background, the present study seeks to examine the implications of the Niger Delta’s resource control struggle on Nigeria’s practice of fiscal federalism. It also aims to explore the challenges underpinning these demands and to identify practical solutions that can foster national unity, equitable development, and peaceful coexistence. 1.2 Statement of the Research Problem There is indisputable evidence of systemic underdevelopment in the Niger Delta region, resulting in the economic marginalization and impoverishment of its inhabitants. Over 75% of the population in this region lives at or below the poverty line, with inadequate access to basic amenities such as electricity, clean water, sanitation, and effective waste disposal systems. The environmental degradation caused by extensive oil exploration and exploitation has further compounded public health issues and community instability (Shebbs & Njoku, 2016). Additionally, oil activities have led to deforestation, the loss of arable land, and heightened unemployment, all of which have intensified the socio-economic hardship faced by the local population. The federal government’s apparent indifference to the legitimate demands for equitable resource control by the Niger Delta has made the struggle a symbol of the broader quest for authentic federalism—one that aligns with the principles of fiscal equity and democratic governance (Elem, 2021). Another significant concern is Nigeria’s overdependence on oil and gas revenues at the expense of other vital sectors such as agriculture and solid minerals. This mono-economic structure neglects the diverse resource potential across other parts of the federation and exacerbates regional inequalities. The advocacy for resource control by the Niger Delta, therefore, reflects not just a fight for justice and fairness but also a plea for economic diversification and national sustainability (Azaiki, 2019). Finally, the role of multinational corporations and local collaborators (compradors) in the extraction of oil and gas raises critical ethical and environmental questions. While host communities face the daily threat of environmental disasters—likened to the biblical flood or modern-day tsunamis—these corporations focus on fortifying their oil facilities, building protective barriers around their installations while abandoning the surrounding communities to their fate. This neglect by the corporations and their apparent disregard for the well-being of the host population constitutes yet another significant issue for investigation in this study. 1.3 Objectives of Study The objectives of study are as follows: 1.To understand factors responsible for the agitation by some states to control their resources. 2.To find out the impacts of the agitation by some states to control their resources. 3.To find out whether resources control can halt to or rather minimize the recurring problem associated with Nigeria fiscal federalism. 4.To find out whether resource control would either promotes centripetal or centrifugal forces in the Nigeria policy. 5.To find out whether resources control would bring development to the federating units. 1.4 RESEARCH HYPOTHESES The following hypotheses were formulated to guide the study; H0: resources control cannot halt or minimize the recurring problem associated with Nigeria fiscal federalism H1: resources control can halt or minimize the recurring problem associated with Nigeria fiscal federalism H0: resources control will not bring development to the federating units H2: resources control will bring development to the federating units 1.5 Significance of the Study The principal and dominance significance of this research study is that of the exposure of the members of the public to the controversial issues associated with the problem of Fiscal federalism and resource control. This is expected to raise consciousness and awareness of the members of the public. More importantly, the project work will not only look at the conflictual relationship that existed between federal and state governments (Niger Delta states) but also to find or rather proffer solutions that will in turn enhance cordial relationship for an enduring federalism. The study is desirable because of the overriding need to understand the inherent difficulties in the operation of federalism in Nigeria as it relates to resource control and its impacts on the contemporary times. It is also hope that the study will in no doubt educate the public and various government authorities in their rights economically and legally on the issues of fiscal federalism and resource control. Since the ends of any social science research is to proffer solution to a given social, economic and political problems, the study therefore is very significantly pertinent in proffering solutions to the problems associated or inherent in fiscal federalism and the struggle for resource control by the Niger Delta region. 1.6 Limitation of the Study The limitations are built around its limitations, they are those factors inherent in the research situation that might affect the results which the investigators must recognize and acknowledge for the study. It shall also include the examination of horizontal developments and antecedents of the Nigeria constitutions, acts, and decrees associated with fiscal federalism and resource control legal backdrop. The major problem is that the information required is not easily come by as a result of the official bureaucracy involved in collecting relevant government materials. 1.7 Definition of Terms Before going into more rigorous and systematic aspect of this work, it is necessary and imperative to begin by given operational definitions of certain terms or concepts whose clarifications are basic to the understanding of the whole work. The terms that are commonly used in this study are operationally defined as follows: a) Federalism: This is the method of dividing powers so that the central and regional governments are each within its sphere coordinated are independents. It can also be seen as a constitutional arrangement for the distribution of government authority by area in other to maximize freedom of expression of cultural socio economic and political attributes. b) Resource Control: This involves three major component of power, the right of a community or state to raise fund, by way of tax or person’s services and material within its territory. The exclusive rights to the ownership and control of resources both natural are created within its territory. The rights of custom duties or destined for its territory excise duties on goods manufactured in its territory. It can also be conceptualized as a strict adherence to the principle of deprivation. c) Fiscal Federalism: Fiscal federalism can be described as financial governmental relations among the different tiers of government in a federation. It is a consequences of federalism that is concerned with the relationship among the various levels of government with respect to the allocation of national review (National cake) and the assignment of functions and tax powers to the constituent unit in a federation. d) Derivation: Derivation can be defined as revenues allocation principle by which certain amount of finance is allocated to the component units of the federation based on the revenue generated from the mineral resources of the area. It is seen as having the inherent ability, due to its relationship to taxes and compensatory features of overcoming the felling of alienation by members of any unit. e) Niger Delta Region: Niger Delta Region comprises of Nine (9) states that are not actually united based on geo-political zone but bounded by their economic emancipation to control their God-given national resources of their region. There are differences between the south-south zone and the Niger-Delta region. While the south-south zone is the geopolitical zone comprising of six (6) states which have vested interest bordering more on the political. The Niger-Delta comprises of nine (9) states. These nine (9) states which have come together are united in the struggle or rather are united in the fight for the economic emancipation of the region. The nine (9) states of the Niger Delta Region are: Abia, Akwa-Ibom, Bayelsa, Cross-Rivers, Delta, Edo, Imo, Ondo and Rivers states  1.8 ORGANIZATION OF THE STUDY This research work is organized in five chapters, for easy understanding, as follows Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study. Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature. Chapter three deals on the research design and methodology adopted in the study. Chapter four concentrate on the data collection and analysis and presentation of finding. Chapter five gives summary, conclusion, and recommendations made of the study