The World Bank says the increase in food prices could push additional six million Nigerians into poverty — calling on the government’s attention for short-term policies to support welfare.

The Washington-based institution stated this in its latest report titled ‘Covid-19 in Nigeria: Frontline Data and Pathways for Policy’.

In June, the World Bank said an estimated 7 million Nigerians were pushed into poverty in 2020 due to rising prices alone — without considering the direct impacts of Covid-19.

Using the Nigeria Covid-19 National Longitudinal Phone Survey (NLPS), the report examines the impact of the Covid-19 crisis on human capital, livelihoods, and welfare of Nigerian households.

The NLPS represents a successful collaboration between Nigeria’s National Bureau of Statistics (NBS) and the data production and methods team at the World Bank.

The World Bank lamented that the effects of the Covid-19 pandemic have brought Nigerian households’ food security under threat.

“The rise in prices witnessed between June 2020 and June 2021 alone could push another six million Nigerians into poverty, with urban areas being disproportionately affected. This underscores the need for short-term policies to support welfare,” the report reads.

“The simple simulations suggest that the share of Nigerians living below the national poverty line could have increased from 40.1 percent to 42.8 percent due to the food price inflation witnessed between June 2020 and June 2021.

“This means about 5.6 million additional Nigerians would be living in poverty. While food price inflation would decrease purchasing power and raise poverty across Nigeria, it appears that urban areas could be disproportionately affected.

“In 2018/19, about 16 percent of poor Nigerians were urban dwellers. Yet among those who would be newly impoverished by the increase in food prices between June 2020 and June 2021, around 27 percent would be from urban areas.

“Nevertheless, poverty in Nigeria is set to remain a primarily rural phenomenon, with or without rising food prices.”

The report said that coverage of social protection programs remained low throughout the Covid-19 crisis.

It stated that between March 2020 and March 2021, just four percent of households received support — in the form of cash — from the federal, state, or local government.

This figure, the World Bank said, was significantly below what would be needed to counteract the widening and deepening of poverty brought about by the crisis.

The report further noted that while many schools have reopened across Nigeria, learning that was lost during the Covid-19 crisis still needs to be recouped — and some children have not returned to school.

Commenting on the report, Shubham Chaudhuri, World Bank country director for Nigeria, said: “The Covid-19 crisis has provided a wake-up call to address the long-standing structural challenges that could constrain the government’s ambition to lift 100 million Nigerians out of poverty.”

“There is no time like the present for the country to prepare for future climate and conflict shocks and seize the promise of its young population to lay strong foundations for inclusive growth.

The report suggested three immediate priorities that could provide the bedrock for recovery.

“First, rolling out vaccines quickly and equitably should reduce the direct health threat posed by the virus,” the report reads.

“Second, it will be essential to help children remediate the learning losses incurred during the pandemic – by getting them back to school or by finding low-tech remote solutions that work for the poor where this is not possible.

“Third, expanding social protection could provide short-term relief for the welfare losses Nigerian households are currently facing.”

The Cable

 

 

Federation accounts allocation committee (FAAC) shared N671.910 billion among the three tiers of government for October.

This figure is down by N68 billion from the allocation distributed in September 2021.

Oshundun Olajide, acting director, (information), ministry of Finance, disclosed in a statement that the allocation was distributed at the FAAC meeting in Lagos on Wednesday.

According to the communique issued by FAAC at the end of the meeting, it indicated that the gross revenue available from the VAT for the month under review was N166.284 billion as against N170.850 billion distributed in September, resulting in a decrease of N4.566 billion.

Of the amount, inclusive of VAT, augmentations, exchange gain and non-oil mineral revenue, the federal government received N284.292 billion, states N209.838 billion and the 774 LGAs received  N156.282 billion.

It added that oil-producing states received N21.498 billion as a 13 percent derivation of mineral revenue.

“The distribution is as follows; federal government got N23.227 billion, states received N77.422 billion, LGs got N54.195 billion, transfers and refunds received N4.789 billion and cost of collection got N6.651 billion,” the statement reads

“The distributed statutory revenue of N407.864 billion received for the month was lower than the N692.283 billion received for the previous month by N284.419 billion.

“Of this, the federal government received N180.551 billion, states got N91.578 billion, local government council got N70.603 billion, derivation (13 per cent mineral revenue) got N21.118 billion, cost of collection received N17.940 billion while transfers and refunds got N26.075 billion.”

The communiqué also disclosed the augmentations of N100 billion — as the federal government received N52.680 billion, states got N26.720 billion, while the LGAs received  N20.6 billion.

Also, N50 billion from non-oil revenue was shared as follows: Federal Government received N26.340 billion, states got N13.360 billion and LGCs N10.3 billion.

The Cable

Train services across the country have been shut down as the three-day warning strike embarked by railway workers nationwide begins.

The warning strike by workers of the Nigerian Railway Corporation (NRC) is to hold from November 18th to November 20th.

The workers’ unions had declared the strike to demand increased wages and condition of service.

Minister of Transportation, Rotimi Amaechi, had invited the labour unions into a meeting on Saturday which ended in a deadlock.

Another follow-up meeting by the Board and Management of the NRC could not change the decision of the unions on the strike.

The NRC management had earlier on Tuesday notified all district managers and coordinators to shut down train services with effect from Wednesday night.

Managing Director of NRC, Fidet Okhiria, in an internal memo issued on Tuesday alerted all district managers and relevant officers of the need to protect railway assets in the event the strike goes ahead.

The memo titled, “Protection of Railway Assets in View of the Impending Warning Strike by the two in-house unions slated for Thursday 18th to Saturday 20th November 2021”, read, “With regards to the impending warning strike action, the management and board have met with the two in-house unions to deliberate and resolve issues that are still in discussion to avert the proposed warning strike action.

“However in the event of a strike action, you are please requested to do the following to ensure that railway assets are protected adequately.

“The RDMs, managers and coordinators are to prepare and shut down train services appropriately by midnight of Wednesday, 17th November 2021.

The memo also directed the officials to move all locomotive and coaches for Abuja-Kaduna, Warri-Itakpe and Lagos-Ibadan train services to safe places.

General Secretary of the Nigerian Union of Railway Workers (NUR), Segun Esan, said the strike has commenced with full force and it would take shape on Thursday.

Daily Trust

 

Washington on Wednesday removed Nigeria from its list of countries with religious freedom concerns, just a day before Secretary of State Antony Blinken arrives in the country as part of a tour of Africa.

The omission drew a sharp rebuke from a U.S. government commission that had recommended the Biden administration keep Nigeria as a so-called country of particular concern for engaging in or tolerating violations of religious freedom.

Blinken made an annual announcement on Wednesday of the countries on the list, naming Myanmar, China, Eritrea, Iran, North Korea, Pakistan, Russia, Saudi Arabia, Tajikistan and Turkmenistan as countries of particular concern. He also placed Algeria, Comoros, Cuba and Nicaragua on a watch list for religious freedom, and designated armed groups, including Islamic State and several of its affiliates, as entities of concern.

But Nigeria, which was added to the list for the first time in 2020, was not redesignated.

Blinken is expected to arrive in Abuja on Thursday, where he is set to meet with officials including President Muhammadu Buhari and deliver a speech on U.S. Africa policy.

The State Department did not respond to a request for comment, and it was unclear if the designation was related to the secretary's travel.

The U.S. Commission on International Religious Freedom (USCIRF) in April recommended that Nigeria remain on the list, citing "violence by militant Islamists and other non-state armed actors, as well as discrimination, arbitrary detentions, and capital blasphemy sentences by state authorities" in the country.

The commission, which had also recommended that India, Syria and Vietnam be designated as countries of concern, said in a statement that it was "appalled" by the removal of Nigeria.

"We urge the State Department to reconsider its designations based on facts presented in its own reporting,” Chair Nadine Maenza said, referring to the department's report on international religious freedom in May, which cited religious freedom concerns in Nigeria.

Reuters

 

At least three separate storey buildings have collapsed in Lagos State within two weeks, floating concerns over lack of enforcement of regulatory standards in the construction of residential buildings in Nigeria’s richest state.

On November 1, 2021, a 21-storey building in the Ikoyi area of Lagos collapsed in which over 44 persons were confirmed dead.

The tragedy continued on November 2, 2021, when a two-storey building caved in in Osapa London, in the Lekki area of Lagos after a midnight downpour. No casualty was recorded in the collapse as it was said to be under construction when the unimaginable happened.

On November 17, 2021, after two weeks of seeming break in the serial collapses, a two-storey building under construction at Flour Mill Estate, Magbon, in the Olorunda Local Council Development Area in Badagry, collapsed, killing four, with the number of injured persons put at five as of the time of filing this report, according to Spokesman for the National Emergency Management Agency, Ibrahim Farinloye.

The PUNCH had earlier reported that over 200 persons have lost their lives in major building collapse incidents in Lagos State in the last seven years.

This is just as at least 145 buildings have collapsed in the state between 2007 and now.

The figure is the summation of casualties in seven different incidents between 2014 and 2020.

It was learnt that while the state government had taken possession of the building sites and threatened sanctions, there has been no known conviction.

The Nigerian Institute of Structural Engineers blamed the lack of quality control, quality assurance, and structural inadequacy as possible reasons for the recurring building collapses in the state.

Lagos, with a rapidly increasing population of over 20 million people, is Nigeria’s economic hub and had witnessed a surge in the influx of people from the 35 states in the country as well as the Federal Capital Territory, Abuja. The soaring migration and attendant demands for housing units have led to the “microwave” construction of residential buildings in recent times, with many experts berating the Lagos State Building Control Agency for lethargy and tardiness in the discharge of its structural oversight function.

Punch

For three consecutive days, bandits have intensified their raid on communities in Munya Local Government Area of Niger State, the latest being the invasion of Zagaga community in the early hours of yesterday, where they killed two people and abducted 66 others.

Among those killed were two youths providing voluntary security services in the community due to absence of security agents, and a local vigilante who was butchered when gun bullets could not penetrate him.

Three other youths sustained gunshot injuries, one of them had his right leg broken, and are currently at a government facility in Minna, the state capital receiving treatments.

A source close to the community, who spoke to our correspondent on phone yesterday morning, said two children of the village Head, Musa Umaru, two wives of the counsellor representing Zagaga Ward, Saleh Adamu, are among the 66 people, including women and children who were abducted by the bandits.

It was gathered that the bandits, numbering over 80, stormed the community at about 1am, and shot sporadically to announce their arrival and, in the process, shot their ill-equipped victims at close range.

The operation, which lasted till 4am yesterday morning without resistance from any quarter, saw the bandits break into no fewer than 11 shops and a number of houses, where they looted provisions and other food items.

Our source said the victims, especially women, were used to evacuating all the looted items in sacks as they matched them through the bush path, heading towards a place called Mangoro, and Pole wire.

For the four hours that the operation lasted, our source said no security agent came to the rescue of the community despite communicating with them throughout the operation.

“We informed the security agents and we were communicating with them, but no response. Up till this morning (7am), we have not seen anybody, either from the government or the security agents.

“The entire community is now deserted because we don’t know what will happen next. The remaining people in the community have been moving out since morning with their properties,” he said.

The military, on April 23 this year, closed down its camp stationed in the community since 2018, after armed bandits, numbering about 70, invaded the camp and killed the RSM and injured others.

The military were also said to have, during the bloody attack which community source said lasted for over three hours, killed a number of the bandits.

Ever since the military shut down its camp in the community, there has never been any security presence in the area, as the people continue to rely on God and the little help from the ill-equipped local vigilantes to provide security.

Although the community has a police outpost with two personnel, there is no accommodation for them to be used as offices. They are also said to be ill-equipped.

Sun

Nigerian tech startup TeamApt Ltd. is in the market raising its third round of funding at a value of more than a $1 billion, which will result in the fintech firm joining a spate of Africa-tech companies to become so-called unicorns. 

“The money will be used for our expansion to Egypt, Ghana and Cameroon,” said Eniolorunda. “And building out our digital banking product targeted at the under-served.”

While Africa has a rapidly growing and tech-savvy youth population, the continent often lacks financial infrastructure such as banks and tellers. TeamApt is trying to address the gap by using mobile technology and authorized agents to give people banking services such as cash deposits and fund transfers. 

TeamApt is aiming to join a growing number of African startups valued over $1 billion, including Flutterwave, OPay and Jumia Technologies AG.

The boom in payments firms is a reflection of the rapid take up of smartphones and improving internet speeds across Africa. Still, telecom companies such as MTN Group Ltd., OPay and Paga are also using agents, or people within communities to explain and sell their products and services, while commercial banks in Nigeria such as Access Bank and FirstBank has also started using agent networks.  

TeamApt now processes $3.5 billion in transaction values monthly, with 150,000 agents on its platform, and has 14 million users, Eniolorunda said.

Bloomberg

 

Head of the United Nations (UN) World Food Programme (WFP) has released a detailed plan on how spending $6.6 billion of Tesla CEO Elon Musk's money could help alleviate world hunger.

Musk engaged with WFP chief David Beasley on Twitter late last month after Beasley said that about $6 billion of Musk's wealth, equal to gains he at one point received in a single day, could help world hunger during a CNN interview. Musk shared an article on the interview and asked Beasley to show how the money would "solve world hunger," challenging him to provide a plan "in detail" and offering to "sell Tesla stock right now and do it" if he did.

"This hunger crisis is urgent, unprecedented, AND avoidable.@elonmusk, you asked for a clear plan & open books," Beasley tweeted on Monday. "Here it is! We're ready to talk with you - and anyone else - who is serious about saving lives. The ask is $6.6B to avert famine in 2022."

This hunger crisis is urgent, unprecedented, AND avoidable. @elonmusk, you asked for a clear plan & open books. Here it is! We're ready to talk with you - and anyone else - who is serious about saving lives. The ask is $6.6B to avert famine in 2022: https://t.co/eJLmfcMVqE

— David Beasley (@WFPChief) November 15, 2021

Beasley's tweet was accompanied by a link to a page on the WFP website titled "A one-time appeal to billionaires." The page argues that a "perfect storm of conflict, climate crises, the effects of the COVID-19 pandemic and rising costs for reaching people in need is causing a seismic hunger crisis," while asserting that the $6.6 billion "would help stave off starvation for 42 million people across 43 countries."

Details of the plan show exactly how Musk's money would be used to alleviate hunger. The largest portion, $3.5 billion, would be used to buy and transport food to areas where food is needed the most. The next-largest amount, $2 billion, would be used to issue food and cash vouchers in areas where markets are available.

Another $700 million would be used for "country-specific costs to design, scale up and manage the implementation" of the program, while $400 million would be for "global and regional operations management, administration and accountability."

The plan is further broken down to explain that the $6.6 billion would provide one meal per day, each costing $0.43, to people in 43 hunger-stricken countries. The WFP said that Musk's money "would feed 42 million people for one year, and avert the risk of famine."

Beasley, who is also a former Republican governor of South Carolina, first responded to Musk immediately after the Tesla CEO challenged the WFP to show him how his money would solve the issue. The WFP chief pointed out that the article Musk was commenting on wrongly stated that he believed the money would "solve" hunger, arguing that it would instead "save 42 million people on the brink of starvation."

"I can be on the next flight to you," Beasley tweeted at Musk. "Throw me out if you don't like what you hear! ... We can meet anywhere—Earth or space—but I suggest in the field where you can see @WFP's people, processes and yes, technology, at work. I will bring the plan, and open books."

Newsweek

 

Sahil Bloom

The Cantillon Effect is the most important economic concept you’ve likely never heard of.

Here’s a simple breakdown of the Cantillon Effect—what it is, how it works, and why you should care.

Background

Richard Cantillon was an Irish-French economist and philosopher born in the 1680s.

He is something of a mystery man—not much is known about his life. Early in his career, he achieved material success as a banker and merchant—success that historians have attributed to the formidable political and business connections Cantillon made through his family and employer.

This fact would prove relevant to his work later in life. At a young age, he had learned of the impact and importance of proximity to power...

In the early 1700s, Cantillon is believed to have accumulated significant wealth through speculation in a variety of ventures, including John Law’s infamous Mississippi Company (which would collapse spectacularly).

Around 1730, influenced by his experience to date, Cantillon wrote a paper—Essai Sur La Nature Du Commerce En Général (translation: Essay on the Nature of Commerce in General)—today considered a foundational work in the study of the political economy. It is a broad, overarching paper with significant contributions to the study of economics.

While it achieved wide circulation in manuscript form, it was not published until 1755, well after his death in a house fire in 1734.

 

The Cantillon Effect

While recognized for a variety of insights and contributions, Essai is most well known for its discussion of the distributional consequences of new money creation and the concept of relative inflation.

In the paper, Cantillon posited that the early recipients of new money entering an economy will benefit more significantly than those it trickles down to.

In other words, the "flow path" of the new money through a system matters.

In 18th century terms, Cantillon effectively observed that those closest to the king—the source of money and power of the era—benefitted first when new money entered the economy. In the 18th century, proximity to money and power really mattered.

Broadly speaking, Cantillon noted that new money creates disproportionate effects based on where it enters the system.

The Cantillon Effect was born...

 

A Simple Illustration

To bring this theory to life, let's walk through a (very) simple story to illustrate Cantillon's central point.

Imagine you live in a tiny, enclosed island society.

One morning, you wake up to find a small package on your doorstep. You open it up and gasp—it has $1 million in it.

 

Great! But now what?

No one else knows you received this package. You now secretly have $1 million new dollars. Naturally, you start spending it (and maybe investing it) quickly. Prices are still low, because no one knows these new dollars exist yet!

Your standard of living improves rapidly. You buy yourself the nicest house, the most beautiful clothes, and a bunch of land.

But now, the other island inhabitants start to see and feel this new money flowing through the system. Prices begin to rise as demand surges but supply has yet to "catch up" to the new consumption. It takes time for supply to ramp.

So while the money improved your life, it didn’t benefit others in the same way:

The sellers of the goods—who received your cash—now face rising prices when they consume.

The workers who produced the goods—who earned wages from the sellers—similarly face rising prices (despite stagnant wages).

You benefitted materially from the new money, but they didn’t. There were distributional effects—the flow path of this new money mattered!

This is—quite obviously—an ultra-simplified example, but it gets at the essence of the problem that Cantillon highlighted almost 300 years ago: Proximity to the source of new money is relevant—the entry point and flow path have distributional consequences.

But why should you care about all of this today?

 

The Cantillon Effect in Action

Well, with the "money printing" activity of central banks globally and an ever expanding wealth inequality problem, mentions of the Cantillon Effect have accelerated.

It's a useful framework through which to evaluate the monetary and fiscal response to Covid (and any future inevitable crises).

 

The simplistic view of what I see today:

The Federal Reserve's escalating asset purchases have an injection point at the top.

Direct stimulus checks—on the other hand—have an injection point at the bottom.

The former was much larger $$$ than the latter—$4.5 trillion vs. $400 billion.

The asset purchases—and rock-bottom interest rates, among other things—generally benefit asset owners (the wealthy). Those with a significant portion of their net worth in equities, real estate, or similar assets have benefitted tremendously over the last 18 months.

Wage earners—who received some degree of support via direct stimulus but did not benefit in the same way from the asset appreciation—are seemingly getting the short end of the stick.

Inflation—particularly across food and energy prices—will have a disproportionate impact on their standard of living.

 

Conclusion

By now, everyone has heard that inflation is running hot in the U.S. But perhaps more importantly, it's also running disproportionately hot.

So what do you think? Was Cantillon right? Are there clear distributional consequences to these new money policies that must be considered? And if so, what can we do about it?

I hope this piece provides you with a solid foundation of understanding on the Cantillon Effect.

My goal is for this to be educational, not political. In my view, this should not be a political debate—it should be a grounded discussion we all have when we consider the impact of various monetary and fiscal policies proposed by our leaders.

Kalu Aja

Between 1956 and 1967, groundnut was one of Nigeria’s most valuable export crops. There were groundnut pyramids in Kano by 1960; Nigeria was the world’s largest exporter of shelled groundnuts, with a 40% global market share.

Today, Nigeria has a 0% market share. Specifically, groundnut exports fell from 502,000 tons in 1961 to 291.000 tons in 1970 to zero by 1980.

Why did the groundnut pyramid disappear from Nigeria? Sure there was the Aflatoxin contamination that affected the groundnut exports. Why could the Northern region not just fumigate and fix the contamination? Why did it just allow exports of this cash crop to cease?

The story is similar in Palm Oil. In the year 2020, Indonesia made $18.45 billion from exporting palm oil. This is more than the entire 2020 budgets of the states in the South-East, South-South, Lagos, and Ondo combined. A Center for International Forestry research paper dated 2017 and titled “A short history of palm oil in Indonesia,” authored by Alice Baudoin, Pierre-Marie Bosc, Cécile Bessou, and Patrice Levang, states “the African oil palm, Elæis guineensis, originates from West and Central Africa. The first seeds of the oil palm were brought from West Africa by the Dutch and planted in the Bogor Botanical Garden (Java Island) Indonesia in 1848 (Wahid et al. 2004)”.

In 1832, 75% of the global palm oil export came from Nigeria. Between 1961 and 1965, world oil palm production was 1.5 million tons, with Nigeria accounting for 43% of that production. According to a report by PWC, Nigeria ranks behind Malaysia and Indonesia in palm oil output, accounting for less than 2% of the total global market production of 74.08million MT. See Figure 1. They are also crude oil-producing nations; they have crude oil.

Why has agriculture collapsed? Well, everyone says crude oil, but that’s a bit simplistic; why didn’t exports of Palm Oil and Groundnut expand when crude oil prices fell? From 1960 to 1973, crude oil prices were sold below $3 a barrel. Why did Nigeria not return to exports of palm oil?

In the same decade, palm oil saw a steep decline in production and exports from Nigeria.

To summarize, from 1960 to 1965, Nigerian crude oil revenues to total revenues were zero. By 1970, Nigeria’s crude oil revenues as a share of total revenues jumped to 26%, but crude oil was sold at below $3 a barrel from 1960 to 1972. Also, in the same period, Nigeria’s palm oil exports fell from 167mt to 8mt, same for groundnuts, 502mt in 1961 to 291mt in 1970. By 1975, crude oil share was at 77%, but crude oil prices were $10 on average a barrel.

Crude oil did not eclipse palm oil. Instead, palm oil exports fell, and oil became the most significant contributor to revenues for Nigeria. Central Bank of Nigeria is quoted as saying, “if Nigeria had maintained its market dominance in the palm oil industry, Nigeria would be earning approximately $20b annually from cultivation and process of palm oil as at today (2019)”.

If palm oil had continued to be exported, Nigeria would have earned from palm oil alone, the equivalent of the 2020 budgets of Lagos, all South East and the South-South States combined.

Crude oil is not the problem; the problem is how Nigeria has structured its fiscal federalism. I explain.

Below is the progression of the fiscal allocation formula.

1953 Sir Louis Chick: The penultimate revenue allocation formula for Nigeria was done by Sir Louis Chick.

Export duties were 50% to the State of origin of export.

1958 Raisman; Commissioner Raisman amended Sir Chick formula.

Export duties were 100% to the State of origin

1963 constitution….

Export duties maintained at 100% of the state of origin

1970 Decree no 13, the Military steps in. the States lose fiscal autonomy, maintain derivation. The Distributable pool was gone

1975, Decree 6: the military further reduced derivation to 20%.

1977, Aboyade Commission. The military created the Federation Account. Derivation abolished. Export duties are now 0% to the State of origin.

Thus in 13 years, Nigeria took Regional/States share of export proceeds from 100% to 0%. Groundnut exports never recovered when States in the North lost the export revenues of agriculture after 1970.

There remains NO incentive for state governments in Nigeria to encourage agriculture. States own the land where the land is commercially farmed. Still, the companies that run commercial agriculture pay Corporate income taxes to the Federal Government (FGN) when the cash crops are exported. The states are left with nothing. The states receive a share of these taxes via Consolidated Revenue Fund, but not according to the derivation principle. During this period that states lost derivation right in the fiscal federalism framework that commercial agriculture crashed in Nigeria.

What did the Federal Government do with crude oil and non-oil export proceeds revenues? The FGN shared it back to the States and Local Government according to a formula. States got on average 32%, Federal 47%, LGAs 15% (*note there are statutory transfers to Ecology, Agric development, etc.)

Export and corporate income taxes remain 0% to states by derivation except for solid minerals like gold. This means states do not retain as revenue to their budgets the export duties on cash crops produced within their states like palm oil. They only get PAYE on worker salaries.

But wait, there is more;

That 31% the FGN shares to states, is it shared equally? No, the sharing formula is called the horizontal revenue allocation formula. The critical sharing heads are:

Equality 45%,

Population 25%,

Landmass 5%. Lets pause here

This means that just being a state in the federation with a high population guarantees 65% of the allocation to states from the federation purse.

The FGN took the mineral and non-oil export earning to a central account, retained 47% of that account, then returned 51% to the States and LGAs but determined it will be shared out based on “equality” and “population”… not derivation, i.e., where the income was generated. Thus all States now focus on their population figure, not agriculture. Population and “equality,” not exports or derivation, determine how states receive revenues from the 51% allocation.

Palm oil, for instance, can be farmed in 24 states in Nigeria, including Kaduna. Specifically in Abia, Akwa Ibom, Cross River, Rivers, Bayelsa, Imo, Anambra, Ebonyi, Enugu, Delta, Edo, Ondo, Ogun, Osun, Oyo, Ekiti, Benue Kwara, Kogi, Nassarawa, Plateau, Taraba, Adamawa, and Kaduna…but why should a state bother incentivizing the planting palm oil? If groundnut export revenues still went to Kano State 100% via derivation, there would still be groundnut pyramids in Kano today. Kano lost the export proceeds funds to FAAC, thus no incentive to support planting groundnuts by the State.

Solution?

Reward what you want to improve; if you wish for safer drivers, you reward drivers with zero car scratches. Unhook states from crude oil-funded FAAC by giving them a derivation share of their export proceeds from their agriculture cash crops. Return to the states the fiscal principle of derivation on agricultural exports. That will mean states see a direct relationship between commercial farming and IGR, which will spur agriculture investment. Governors will seek out agriculture investors the same way and vigour they seek out Shoprite Malls.

If States retained even 13% derivation on income taxes and export duties on agricultural produce just as they enjoy with solid minerals, they would see the incentive to attract companies to come to their states and push non-oil exports.

Derivation on agriculture is also fair. All states have land; all states farm, graze or fish. Agriculture is still a significant contributor to Nigeria’s GDP growth, and it still employs millions of Nigerians. A fiscal amendment to give states even 13% export earning can have two massive impacts. In the short term, it makes agriculture attractive, and in the long term, it makes all states fiscally viable.

The problem with agriculture in Nigeria is not crude oil but Nigeria’s faulty fiscal federalism (FAAC).

Nairametrics