Three claims about how income is shared between Nigeria’s three ranges of presidency.
Supply: Kenya’s former prime minister Raila Odinga (August 2020)
One appropriate, two incorrect
- Since 2004 Nigeria’s income sharing system has given 52.68% to the federal authorities, 26.72% to states and 20.60% to native governments.
- Odinga was appropriate about native governments’ share, however vast of the mark for the opposite two authorities ranges.
- And consultants query his declare that Nigeria’s system “works completely effectively”.
After months of an typically fractious stalemate, in September 2020 Kenya’s senate hammered out a deal on how income could be shared between the nation’s two ranges of presidency.
In August, on the top of the impasse, former prime minister Odinga returned to a well-known speaking level to argue for establishing a 3rd tier of presidency.
Constructing on this in an interview with Citizen TV, Odinga, who can be an African Union envoy, stated Kenya may resolve the recurring battle over tips on how to share income if it regarded to Nigeria for classes.
Nigeria, he stated, had a neighborhood, state and federal system of presidency. “When it comes to income share, 20% of the income goes to the native, 35% goes to the state and 45% goes to the federal governments … and it really works completely effectively,” Odinga stated.
We checked if he was on the mark about how income is shared in Africa’s largest economic system.
We requested Dennis Onyango, Odinga’s spokesperson, for the supply of the previous chief’s claims. We are going to replace this report along with his response.
In keeping with its structure, Nigeria has a federal capital authority, 36 states and 768 native authorities authorities. There are additionally six space councils.
The Income Mobilisation, Allocation and Fiscal Fee proposes a system for a way income is to be shared between the three ranges. That is then accredited by the nationwide meeting.
The income system was first utilized in 1982 when the Nigeria Income Allocation Act got here into impact. The legislation stipulated that 56% of funds would go to the federal authorities, 24% to states and 20% to native governments.
The present system will be traced to a March 2004 round from the finance ministry. It has remained at these ranges since.
“The income allocation system remains to be 52.68%, 26.72% and 20.6%,” Prof Sherifdeen Tella, professor of economics at Olabisi Onabanjo College informed Africa Examine.
Earlier than the income is cut up an quantity “not lower than 13%” is deducted and shared among the many oil producing states based mostly on their manufacturing ranges.
In accordance with information from Nigeria’s extractive industries transparency initiative, a authorities company supervised by the president’s workplace, native governments get 20.6% of nationwide income.
We due to this fact fee Odinga as appropriate on this declare.
Latest native authorities allocations at 20%
The latest full 12 months information from the funds workplace exhibits that in 2019, native governments acquired N1.04 trillion of the N5.05 trillion accessible for sharing among the many three ranges of presidency.
And within the first quarter of 2020, native governments acquired N441.44 billion of the N2.14 trillion accessible.
Each these quantities work out to about 20% for native governments. (Word: Worth-added tax is additionally shared among the many three ranges of presidency, utilizing a distinct system. Native governments get 35% of VAT income, state governments 50% and the federal authorities 15%.)
Knowledge from Nigeria’s extractive industries transparency initiative exhibits that 26.72% is reserved for the state governments, not the 35% Odinga claimed.
We due to this fact fee this declare as incorrect.
In 2019, of the N5.05 trillion accessible for sharing, states acquired N1.35 trillion. Within the first quarter of 2020, states acquired N572.59 billion of the N2.14 trillion accessible.
Each these allocations work out to 26.72%, in line with the system.
Odinga’s declare of 45% will not be correct. Official information exhibits the federal authorities will get greater than half of the entire income.
In 2019, information from the funds workplace exhibits the federal authorities acquired N2.66 trillion of the N5.05 trillion accessible for sharing. Within the first quarter of 2020 it acquired N1.13 trillion out of N2.14 trillion.
These quantities tally with the 52.68% set out within the sharing system.
|Does Nigeria’s income sharing mannequin work ‘completely effectively’?
Raila Odinga’s assertion that the Nigerian income sharing system “works completely” is contested.
Gazie Okpara, a professor of selling at Abia State College in southeast Nigeria whose pursuits embody social coverage, stated the system was imperfect as a result of how the funds have been spent was not clear.
“Every degree of presidency ought to at all times give an account of how funds have been spent,” he stated, an audit that ought to be offered for within the structure.
Prof Sherifdeen Tella, a professor of economics at Olabisi Onabanjo College in southwestern Nigeria, informed Africa Examine that in his view, allocations to state and native governments, and particularly the previous, ought to be elevated. “What’s allotted to those two tiers of presidency will not be ample.”
Matthew Akintayo is a professor on the College of Ibadan, additionally in southwestern Nigeria. One in every of his focus areas is the economics of training. He informed Africa Examine that the sharing system ought to be restructured.
“A bulk or huge fraction of sources ought to be allotted to the state and native authorities as a result of each arms of presidency are nearer to the grassroots,” he stated. He added that state governors ought to be given extra leeway to handle their sources.
John Kinuthia, a senior programme officer on the Worldwide Finances Partnership, informed Africa Examine that Odinga also needs to have thought of the character of devolved features when drawing comparisons.
It was troublesome to match Kenyan counties with Nigerian states, partly as a result of they’d totally different features, Kinuthia stated. He gave the instance of training.
“In Nigeria there are features like training which are devolved, which is why you see an even bigger proportion of sources on the subnational degree in comparison with Kenya. In Kenya, training remains to be on the nationwide degree.”
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