FG, National Assembly Must End State Hijack of 13% Derivation, Create Derivation Fund Boards Now

The alarm raised by the Niger Delta Civil Society Forum (NDCSF) over the payment of N141.36 billion in 13% derivation funds to state governments in the October 2025 FAAC allocation has once again exposed a long-standing structural injustice in Nigeria’s fiscal system. 

For more than three decades, a constitutional provision designed to compensate resource-bearing communities has been systematically diverted into state coffers with little or no impact on the people whose lands and waters bear the brunt of extraction.

Section 162(2) of the 1999 Constitution is explicit: the 13% derivation exists as a form of compensation for oil-bearing communities.

 These are the communities whose environment is polluted, whose farmlands are damaged, and whose rivers and creeks are contaminated by decades of oil and gas activities. 

Yet, nowhere does the Constitution state that these funds should be administered by state governments. 

Despite this, billions of naira continue to be paid directly to states while the actual beneficiaries remain abandoned.

The NDCSF’s condemnation—issued by its Coordinator, Comrade Ezekiel Kagbala—underscores a growing national consensus: the current derivation framework is unjust, unaccountable, and indefensible. 

It has turned host communities into victims of a system designed to protect them.

For years, Niger Delta state governments have utilized derivation funds to service debts, build political infrastructure, finance state-level projects, and strengthen political machinery.

 Meanwhile, oil-producing communities continue to suffer from lack of potable water, collapsed roads, inadequate healthcare facilities, and mass unemployment. 

This stark disconnect between revenue inflow and community wellbeing represents a failure of governance and a distortion of constitutional purpose.

This is why the NDCSF, supported by host community leaders, has submitted a detailed position paper to the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), calling for an urgent overhaul of the derivation administration process. 

Their demands include:

- Full implementation of Section 162(2)

- Creation of 13% Derivation Fund Boards in all oil-producing states

- Establishment of a Presidential Monitoring and Compliance Agency

- Direct allocation of funds to oil-bearing communities

These recommendations are neither radical nor new. They reflect the long-standing call for accountability, transparency, and fairness in the management of Nigeria’s resource revenues.

 They also offer the most practical pathway to ending the persistent underdevelopment of the Niger Delta.

During a November 17 engagement with the National Assembly, the NDCSF delivered a clear message to lawmakers:

“If the National Assembly truly represents the people, it must end this 30-year injustice.”

The ball is now firmly in the court of President Bola Ahmed Tinubu. As oil and gas fall squarely under the Exclusive Legislative List, the President has both constitutional authority and moral responsibility to act. Executive silence is no longer tenable.

The Federal Government must immediately:

- Establish Derivation Fund Boards across all oil-producing states

- Approve direct payment of derivation funds to host communities

- End diversion and misuse of derivation revenues by state governments

-Back legislative amendments that prioritise community benefits

- Ensure stringent federal oversight and transparent reporting

This is not a cosmetic reform. It is a necessary correction of decades of fiscal injustice.

Legislature Cannot Remain Neutral

The National Assembly must initiate work on a Derivation Transparency and Community Rights Bill to ensure that the constitutional intent of the 13% derivation is protected.

 Anything less would amount to legitimising a system that has failed millions of Nigerians.

The NDCSF’s position echoes the collective frustration of Niger Delta residents who have endured environmental degradation, economic hardship, and political neglect despite being the backbone of the nation’s oil wealth.

The time for rhetoric has passed.

The time for structural reform is now.

The Federal Government, the National Assembly, and RMAFC must urgently redesign the derivation framework to ensure that funds reach the communities for whom they were constitutionally intended. 

Until this happens, the 13% derivation will remain a symbol of injustice rather than compensation.

Nigeria owes its oil-bearing communities more than lip service. It owes them justice.