NIGERIAN FEDERALISM AND THE ISSUE OF RESOURCE OWNERSHIP AND MANAGEMENT



Introduction
            Federalism is the theory or advocacy of federal political orders where a final authority is divided between sub-units and a centre. Unlike a unitary state, sovereignty is constitutionally split between at least two territorial levels so that units at each level have final authority and can act independently of the others in some clearly designated areas. In the words of Nwabueze B.O.

Federalism presupposes that the national and regional government should stand to each other in a position in relation of meaningful independence arresting upon a balance division of power and resources1.


            If federalism  is predicated on “autonomy and independence” then its major problems lies in how to successfully allocate power between the central and the component units and among the component units so as to ensure  equality of power resources and independence, providing for their respective autonomy, independence and  non-interference by either of the different levels of government.
            The issue of autonomy in the sphere of resources especially as it relates to natural resources which includes independence in the management of same have remained contentions in the relationship between the component units of most federal states. This has directly impacted on their stability and unity. In Nigeria militancy, kidnapping, oil bunkering with its attendant fatalities and secession threat have all been directly associated with the contention over ownership and management of natural resources.[1]
Federal constitutions usually provided for resource ownership as well as its management and distribution. While advance federations vest ownership and management of most natural resources on the components units (states) of the federation, the opposite has been the case in some developing federations like Nigeria. These differences have been attributed to the mode of federating of these states. In the opinion of Nwabueze, the extreme dependence of the state government on federally collected revenue is as a result of the fact that Nigerian federalism evolved out of an existing unitary state which merely devolved or surrendered part of its power to a constitutionally created government units. It is his argument that had the federation been formed by the coming together of an existing independence states, the sub-units would have retained their respective resource autonomy as they would not have surrendered their respective control over their individual national resources2.
            On the other hand, other writers have traced the nature of Nigerian federation not on the mode of federating but to the unequal relationship of the group to state power with respect to the majority-minority dichotomy. To these writers, Nigerian federation have remained as it is purely due to political reasons; to maintain the marginalization and domination of the minority groups. Nwauche E.S. adopted this argument when he quoted Kimse Okoko on the unequal nature of Nigerian federal structure and why it has remained so:
…it is federalism that has grown so insensitive to the political and socio-economic right of minorities so much so that all the political calculations therein are based on the need to sustain the tripodal hegemony of the three dominant ethnic groups.3




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2 Opcit    
3 Cited in Nwauche E.S. Ownership and Control of Mineral Resources; Minorities and Human Rights in Federations.  The African  Charter on Human and Peoples’ Rights, The Nigerian Example and Comparative Lessons. (Port Harcourt Jite Books 1998) p. 19.
Whatever is the cause of the nature of Nigerian federalism, the question remains, to what extent can resources especially natural resources be allocated to accommodate the very ideals of federalism as well as carter for the rights and claims of the communities whose land these natural resources are produced.
Our objective in this paper is therefore to critically appraise the singular issue of resource ownership and management in the context of Nigerian federalism. The paper will highlight briefly the constitutional provisions of some selected African states as well as those of advanced federations as regards the issue of resource ownership and management.
For clarity and objectivity, resources hereunder discussed are restricted to natural resources. The paper will finally make recommendation for improvement toward true federalism in Nigeria.

THEORETICAL CONCEPT
            We shall hereunder briefly define some base concept s that you will find recurring in this paper. Such concepts are federalism, natural resources as well as the concept of ownership and management of resources.

i.          FEDERALISM
            The term federal is derived from a latin word ‘Foedus’, meaning covenant. It is believed to have been coined by the Bible centred federal theologians of the 17th century Britain and New England. In his essay on perpetual peace Emanuel Kant explains the origin of the word ‘federal,’ according to Kant;
Federalism from the latin words  ‘Foedus’ means contract, pact, treaty or convention; it implies an agreement, thanks to which one or more heads of the family, one or more local communities, one or more groups of communities or states commit in equality, themselves and each other to achieve one or more particular objectives4.

The common characteristic of a federation is therefore the existence of (formally) independent political entities which has come together as one while still retaining their individual peculiarities.
A modern federal state is one in which there is a central authority that represents, the whole and act on behalf of the whole in eternal affairs and in such internal affairs as are held to be of common interest and which there are also provincial or state authorities with powers of legislations and administration within the sphere allotted to them by the constitution5.
Thus two or more levels of government may be created within a political unit such that there will be a central government as well as component units with a constitutionally shared powers, resources and functions between them so as to ensure operational independence and autonomy in respects of matters concerning each.
While federal theorists seems to agree on this fundamental division of powers and sphere of autonomy in a federation by a constitution, they however disagree on the extent of powers to be allocated and the relationship between the different levels. This disagreement might have influenced the mind of the learned J.S.C, Niky Tobi when he stated,

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4  Stephen Woodard “The simple  guide to the federal idea; in federalism and politics, in Ventotene papers of the Allievo Spinella Institute for federal studies 1995.
5 See Appadorai, the substance of politics, (New York Oxford University Press) 1968 p. 495.
…there is no universal agreement as to what is a federalism or a federal government. Definition of words, including federalism or federal government by their nature, concept or content are never fully accurate all the time, like a mathematical solution/problem. Definitions are definitions because they reflects the idiosyncrasies, inclination, prejudices, states and emotions of the persons offering them…6

The learned J.S.C have however been criticized for reducing the word federal to a concept without a specific meaning.7
            Contrary to the conclusion of the learned J.S.C, federalism has a distinct meaning and characteristics. Federalism is an agglomeration of coordinate component authorities with each exercising the powers allotted to it in a manner and within the confines of the constitutional prescription. The constitution itself being the source from which the central government and the government of the component units draw their life none can terminate the existence of the other and none can unilaterally change or modify or amend the constitution or any of its provisions thereof. Of course any amendment must necessary be effected in accordance with such process specifically provided in the constitution itself8. Disagreement over the extent of powers and functions to be allocated or shared does not in any way undermine the basic principle and feature of federalism.
B         What are Natural Resources?
            The Nigerian supreme court adopted the definition of natural resources by the Blacks Laws Dictionary9 the supreme court defined natural resource thus:



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6  Olafesoye  V. Federal Republic of Nigeria (2004)  4 NWLR (pt 864) 580 see pp 647-649.
7  Nwabueze, B.O. How President Obasanjo Subverted Nigeria Federal System; (Gold Press Ltd. Ibadan 2007) p. 65 see also Sagay I.E’ . Nigeria. The unfinished federal project; being lecture delivered in honor of late justice Idigbe at University of Benin. Benin City on Wednesday April 30, 2008.
8 Nwabueze B.O. Nigeria under Presidential Constitution opcit
9  6th  edition

Any material in the native state which when extracted has economic value. Timberland, oil and gas, wells, ore deposits and other products of nature that have economic value. The cost of natural resources is subject to depletion, often called wasting assets. The term includes not only timber, gas oil coals, minerals, lakes and surbmerged lands but also features which supply a human need and contribute to the wealth, welfare and benefit of a community and are essential to the wellbeing thereof and proper enjoyment of property devoted to park and recreational purposes. Oil, natural gas and coal come within this definition but not … port wharves, mangoes, livestock hides and skin, horns groundnuts, beans, grains, pepper, cotton and gum, Arabic mangoes, livestock etc are no natural resources but agricultural products10.    

The Webster’s New Twentieth Century Dictionary11 defined natural resources as “those natural and potential forms of wealth supplied by nature as coal, oil, water, power, arable land etc.
            Natural resources therefore include something such as land, minerals or natural energy that exists in a country and can be used to increase its wealth. While mineral resources are within the meaning of natural resources, natural resources are wider and include other substance not within the meaning of minerals12. Note also that agricultural products are excluded from the definition of natural resources. This might be due to the depleting nature of natural resources. While agriculture products continue to exist as new ones are planted by man, natural resources cannot be replenished. Natural resources therefore include forests, water ways, mountains, hills, wild life, vegetation and even cash crops in the wild etc.


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10 Per Ogundare JSC in Attorney General of the Federation V. Attorney General Abia and 35 supra 609
11 Unabridged, 2nd  edition, delue colour
12 For the legal meaning of Minerals Act, cap 226 LFN
            Natural resources are not man made, they are rather provided by God (nature) in its original state. What man does is to convert it to a useful; state for man’s benefit and consumption. Natural resources are not like agricultural product or other resources that came into existence by man’s effort, it is not planted nor manufactured by man and that explains the tussle over who owns, manages or controls it. Should it be those who by circumstances of nature found themselves living with these resources?  Is it those who through state apparatus have appropriated it to themselves? The former claimed that it is provided to them by God (nature) while the later relied on the over-reaching power of the state. What does ownership and control of these natural resources constitutes.

The theory and concept of ownership and management of natural resources
            Traditionally ownership is defined as the right of enjoying or disposing of a thing in the most absolute manner. In practice however, this right is often limited in some way or another. Ownership is composed of the following rights;         
1.         The power of enjoyment, to determine the use to which the thing is to be put, to deal with, produce or to destroy it as the owner pleases,
2.         The power of possessing which include the right to exclude others.
3.         The power to alienate and
4.         The power to charge as security
An owner may grant to another person any or all his right for a stipulated time period and still remain an owner.
The concept of ownership of natural resources lies in the identification of the body or group of whom natural resources are vested. On the other hand resources management refers to the body vested with the responsibility of ensuring that natural resources are wisely utilized and conserved.
  The use of natural resources often raises conflict among individuals and groups with special interest in the resources. Conflicts may arise among industrial users of forests, minerals, and fish, the recreation industry which depend on lakes, streams and forests, and naturalists who advocate wilderness and wildlife preservation and conservation. There is also the very important need of using the resources in such a way to ensuring sustainable development, the need for resource preservation as well as the need to harmonize the claims of native dwellers and settlers who make claim over those natural resources therein. All these conflicts and others require careful management strategies such that governments seem to be the most suitable body adapted to these functions.
            On the other hand, those who advocate community control over natural resources are of the opinion that nature can never be managed so well unless the people closest to it are involved in its management. These set of advocates argues that common natural resources were earlier regulated through diverse and decentralized community control systems, and therefore demands in return to the status quo.
            Under the Nigerian legal system, both ownership and management of natural resources are vested on the federal government13. The implication of this on the Nigerian polity we shall consider hereunder.      
                                          

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13 Item 39(1) of the Exclusive Legislative List, sec 44(3) of the 1999 CFRN.

Federal Government Ownership and Management of Natural Resources are National Stability       
            The ownership and management of natural resources especially mineral resources by the federal government have never been accepted by all Nigerian without opposition. Indeed the period of oil boom in Nigeria in the seventies and its attendant damage and neglect of the oil mineral producing communities led to a high degree of resentment by the people. Different forms of resentment had been manifested against the federal government in different forms as the communities demands that ownership and management of these resources be vested on them to enable them carter for the resultant consequences of degradation and pollution of their environment. In 1958 the British government set up a Minority Commission, to investigate the fear minority, unfortunately the commission found the allegation of discrimination, victimization and oppression  made by the minority tribe as unfounded and exaggerated. The commission nevertheless recognize the genuineness of their fear and therefore recommended the certain safeguards which included the centralization of the police force, a constitutionally guarantee of rights, establishment of a development board to advanced on the physical development of Niger Delta among others.   Other commissions set up subsequently were disfavourable to the mineral producing communities as they upturned the previous 100% derivation to 50% arguing that allowing the then eastern region to retain 100% derivation would upset the balance of national development and would give the eastern region “a source of income too sizeable to ignore”14
           
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14
Subsequent military regimes created a momentum to this agitation as they tinkered more with the derivation principle against the oil producing states. The 1990’s witnessed a rise in militancy as spear headed by the Movement for the Survival of Ogoni People (MOSOP), Movement for the Emancipation of Niger Delta (MEND) and others. The inhuman executing of Ken Saro Wiwa and other activist rather than quell the resentment gave same a momentum as Niger Delta became a “war zone” with oil bunkering, kidnapping  and adoption of expatriates.
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15 The Allocation of Revenue (Abolition of Dichotomy in the Application of the Principle of Derivation) Act 2004
16 See Daily Independent, Thursday June 23, 2005 p. 138  
 
            The return to civil rule in 1999 gave political impetus to the resentment as state governors joined their kins in these agitations. This demands ranges from total secession, confederation, 100% derivation subject to payment of royalties to the federal government among others.            The state governors particularly want to be allowed to control the resources within their states. In reaction to this increased agitation and restiveness, the federal government took a pre-emptive legal action in 2001 over the subject of resources ownership and offshore oil claims. This singular action by the federal government escalated the issue into a major constitutional and political confrontation between the whole body politics. The aftermath was not good to the polity. The federal government attempt to placate the oil producing state by enacting the Offshore Dichotomy Act15 was challenged by the Northern states as they instituted action against the federal government seeking to abrogate the said Act. This was an aggravated injury to the Southern oil producing states. The 2005 Constitutional Conference came to a halt over the debate on the derivative principle as the south-south delegates to the conference staged a walkout16.
            There is no doubt that for those from the area where natural resources are derive, the desire to get access to the resources and the frustrations over lack of local control and benefit from the resources bring them into conflict with themselves, the exploiters, and the state. This conflict has been observed17 to follow a predicable pattern as follows:
1.         Land over which this people have ancestral ties and most times under effective cultivation are allocated to companies without consultation with the communities;
2.         The people protest to and make demand on the company and the company makes promises of compensation and other enticement.
3.         The promises are unfulfilled and nothing is done to meet their demand and local people take action sometimes confiscating equipment, occupying company site, preventing company staff  from working.
4.         The company hires local thugs or the military or the police or call in the government who sends troops;
A vicious cycle of violence ensues as violence on the part of authority and security personnel beget more violence and lawlessness.
            The Predictable response of government by unleashing superior violence is often justified publicly on the basis of threats to national security. This conceptualization of national security is not only faulty but fictitious.
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17 Diepreye Alameyeseigha, “Oil Exploration and Youth Restiveness, the example of Balyelsa State” reported in Tell Magazine No. 16 April 18, 2005 p. 13.
 
            In summary, the foregoing emphasizing the point that most violence and restiveness in the Niger Delta are occasion by their demand to own, manages, or substantially benefit from the resources produced in their area. This restiveness are sources of political instability; where lies the solution. Before we delve into recommendation, we shall however consider what is obtainable in order jurisdiction.
Resources Ownership and Management in some other Jurisdiction
            The right over natural resources including the right of exploration and exploitation of same for the benefit of the public are found either at common law or under the constitutions or other statutory regulations of most countries. Three approaches have been commonly adopted by different states. One is to vest resources in the state, the second is to vest same with individual land owners with a right to the government to appropriate and expropriate them on payment of fair and adequate compensation. The third is the adoption of both public and private ownership where resources in certain areas are exclusively reserved for the state whereas others outside the state owned area may be privately own.
            States that belong to the first category include Angola, Algeria, Ghana, Equatorial Guinea, Nigeria etc. Canada would have been a good example from an advanced federation except that in the case of Canada such ownership is vested on the component state of the Canadian federation18.
            On the second category Botswana, Burkina Faso, Gabon are examples of African countries. Under this category government can only compulsorily take possession of such natural resources where such taking of possession or acquisition is necessary or expedient in order to secure the development or utilization of such resources and provision must have been made for prompt compensation19.  
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18 Sec. 109 Canadian Constitution (BNA) Act 1867
19 See for example sec. 8 (1) (a&b) of the Constitution of Botswana Article 22 of the Constitution of the Republic of  Benin.
 
The United States of America and Australia falls within the third category. Under the  United State the determining factor is the location of the natural resources; where they fell on private lands, mining companies enter into private contractual arrangement with the land owners, but where they are located on states own land or public domain land control by the national government, such resources are reserved to the respective government authority.20 in Australia private own minerals exist size by size with public own mineral resources as a result of the application of the common law rule of he who owns the land own all that lies above or below the surface. State can however acquire right over privately own mineral resources in the public interest and on payment of adequate compensation21.

Ownership and Management of Natural Resources in Nigeria – the way forward                           
            Having concluded our voyage into what federalism is as well as the ownership and management of natural resources in other jurisdiction, we can confidently submit that federalism is not in any way adverse to the ownership and management of natural resources by a sub-unit of a federal state. It is also not against community control of natural resources. In fact federalism is the only form of government that allows a sub-unit of the state to own and manages its resources without interference from the federal government. Federalism entails not only a constitutionally shared obligation; it includes constitutionally shared powers of control and management of resources. In the words of the renowned federalist, KC Wheare, there should be no financial subordination ‘in fact financial subordination makes an end of federalism”22.
The Nigerian Supreme Court seemed to have accepted this argument when the court stated
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20 See Nwauche E.S.  opcit p. 49
21 See for example the Victorian Mines Act of 1948
22 Cited in P. Ransome (ed), Studies in Federal Planning, (London, Macmillan Publishers 1943) pp 28-31
 
….by the doctrine of federalism, which Nigeria have adopted the autonomy of each government which presupposes it separate existence and its independent from the control of other government, including the federal government is essential to the federal arrangement. Therefore each government exist not as an appendage of another government but as autonomous entity in the sense of being able to exercise its affairs free from direction by another government23.

The independence required is not just independence with regard to power to regulate and execute such matters. It requires in addition independence with respect to resources or means necessary for the performance of its legislative and executive functions. According to Nwabueze B.O. a government invested with independent governmental power over certain matters with no independent resources for carrying such functions has no real independence24.                                                                                        
            It is however important to state that the mere fact that Nigerian constitution adopted federalism is not conclusive fact that all theoretical doctrines of federalism will apply in Nigeria. The same Supreme Court has described the principle of autonomy and non interference as mere “ideals to follow or guidance for an ideal situation”25. What this therefore means is that federal principle can only apply in Nigeria to the extent allowed by the constitution.
            The 1999 constitution have therefore provided for certain federal features26 the principle of financial autonomy was not adequately provided, therefore at the ending of every month each state government in Nigeria has to wait for its own share of the federal allocation from the federation account. In recent times, the accountant general of the federation has had cause to withhold the allocation accruable to some states of the federation on the instruction of the federal government. The provisions of the 1999 constitution are therefore an impediment to the demand for ownership and management of natural resources by the mineral producing states and communities.
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23 A.G Ondo State v. A.G Federation (2002) 9 NWLR (pt. 772) 222.
24 Nwabueze B.O. How President Obasanjo subverted Nigeria’s federal system, op cit p. 425
25 Supra 308
26 See chapter 1 part II constitution of the federal Reublic of Nigeria 1999.
 
            Note however, that there exist constitutional provisions that if scrupulously implemented would have in a large way assuaged or alleviated the problems in the mineral producing area of the country. For example, section 17 sub 1(d) and 20 of the constitution of federal republic of Nigeria 1999 provide
Exploration of human or natural resources in any form whatsoever for reasons other than the good of the community shall be prevented;

The state shall protect and improve the environment and safeguard the water, air and land, forest and wildlife of Nigeria.

            A sustainable solution to the restiveness and resentment associated with the ownership and management of natural resources by the federal government is tripartite. While it is important that the constitution be amended so as to incorporate ownership and management of natural resources by the component state, a sustainable development does not singularly lie in that. This is because any constitutional amendment in favour of state or even community control of natural resources without tackling the endemic corruption and mismanagement that has bedeviled our national polity will only worsen the Nigeria situation. While advocating for constitutional amendment, political will is essential in ensuring the development of the oil communities and in elevating their suffering. A massive education aimed that involving the masses in issues of governance will be necessary in fostering good governance and sustainable development.
            In conclusion there remains a pressing need for a genuine and fundamental restructure and transformation of our federal society base on the universal norm of democracy and rule of law fiscal federalism and good governance. This the only true part to national unity national greatness enduring peace and stability growth and sustainable development. A federation every Nigerian shall have a sense of belonging.     


[1]  Nwabueze B.O. Nigeria under the Presidential Constitution, (London, Sweet and Maxwell, 1983) p. 181


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