Nigeria: States Seek Shift In Federal State Mineral Revenue Allocation

• Proceeds from Nigeria's continental shelf mineral resources are allocated to the Federation Account for all tiers of government, as the Federal Government controls these areas under UNCLOS.
• A strong argument exists that land-based mineral resources, including oil and solid minerals, should belong to the states where they are found, citing the Land Use Act which vests land in state governors.
• During Nigeria's First Republic, agricultural proceeds directly benefited the regions of origin, managed by regional marketing boards, offering a historical precedent for decentralized resource control.
• Brigadier General Godwin Alabi Isama proposed that each state should exploit its own oil block, rather than receiving monthly allocations from the Federation Account, to empower states directly.
• The inaccurate classification of 37 children who died in custody as 'illegal' miners highlights the contentious nature of land-based mineral rights, as they were arguably mining within their state's justified jurisdiction.

The legal foundation for greater state control over land-based resources is often anchored in the Land Use Act.

Nigeria's fiscal federalism debate frequently centers on the allocation of mineral resources, particularly concerning the distinction between offshore and land-based deposits. While there is broad consensus that proceeds from petroleum and marine mineral exploration on Nigeria's continental shelf should flow into the Federation Account for distribution among federal, state, and local governments, the situation for resources found within state boundaries is far more contentious.

The continental shelf, defined as submerged coastal land potentially extending 310 miles wide and 660 feet deep, is exclusively reserved for coastal nations under the United Nations Convention on the Law of the Sea. Given that this area falls outside the geographical limits of any individual state or the jurisdiction of a state governor, the Federal Government assumes control over these mineral resources, acting on behalf of all governmental tiers.

However, a strong argument persists that land-based mineral resources, including petroleum, gold, lithium, cobalt, barite, and bauxite, should rightfully belong to the states where they are discovered. This perspective advocates for a significant shift in Nigeria federal state mineral revenue allocation, moving away from the current centralized model toward greater resource control states.

The legal foundation for greater state control over land-based resources is often anchored in the Land Use Act. This pivotal legislation vests land ownership in each state governor, empowering state governments, rather than the Federal Government, to issue Certificates of Occupancy and impose land use charges on properties within their borders. This statutory authority is seen by proponents of decentralization as a clear indicator that mineral rights associated with these lands should similarly fall under state purview.

Historically, Nigeria's First Republic offered a decentralized model for resource management. During that era, revenues generated from agricultural commodities such as cocoa, cotton, rubber, groundnut, hides and skins, and palm oil directly benefited the citizens of the regions where they were harvested. Regional marketing boards played a crucial role in democratizing decision-making processes regarding these economic resources, a stark contrast to the current system.

Critics argue that placing proceeds from land-based mineral exploration on the Federal Exclusive Legislative List and channeling them through the Federal Accounts Allocation Committee (FAAC) undermines state autonomy. They contend that this centralized approach forces state governments to appear as supplicants, collecting a monthly 'dole' rather than exercising inherent rights over their natural endowments. Furthermore, the current structure, particularly the operations of the over-centralized Nigerian National Petroleum Company Limited, is perceived by some as stifling the growth and potential of the nation's petroleum sector.

In light of these concerns, alternative models for Nigeria federal state mineral revenue allocation have been proposed. Brigadier General Godwin Alabi Isama, former Chief of Staff to Brigadier General Benjamin “Black Scorpion” Adekunle, suggested a radical departure from the current system. He proposed that, rather than state commissioners traveling to the Federal Capital Territory to receive monthly allocations from the Federation Account, each state should be granted an oil block to exploit directly on behalf of its citizens. This idea, shared with Sam Omatseye, Chairman of the Editorial Board of The Nation Newspaper, aims to empower states with direct control over their resource wealth.

However, the implementation of such proposals faces significant resistance. Powerful individuals who have historically cornered oil fields and amassed considerable wealth are unlikely to welcome changes that threaten their established hegemony over the nation's resources. These groups, sometimes described as a 'bourgeois' class believing in a 'divine right' to Nigeria's riches, are also implicated in activities like oil bunkering in the Niger Delta and clandestine mining of solid minerals in other regions, further complicating efforts to reform the existing resource control states framework.

The practical implications of the current centralized system and the ongoing Nigeria fiscal federalism debate are not merely economic or political; they also carry significant human costs. A poignant example involves the tragic deaths of 37 children in the custody of the Nigerian Security and Civil Defence Corps. These children were inaccurately labeled as 'illegal' miners by both the media and security agencies.

This classification, however, fails to acknowledge the underlying arguments for state control over land-based mineral resources. From the perspective of those advocating for state ownership, these children were arguably mining gold justifiably within the confines of their state, given the Land Use Act Nigeria mineral rights framework. This incident underscores the urgent need to clarify and potentially redefine the legal and policy landscape governing resource ownership and revenue distribution in Nigeria.

This article outlines arguments for greater state control over land-based mineral resources in Nigeria, citing the Land Use Act. Lawyers advising state governments, resource-rich communities, or mining companies should monitor potential legal and policy shifts that could redefine resource ownership and revenue distribution models.

Source: Original reporting via Punch