The IMF has apologised but can Nigeria save for future generations
Last week, it was reported that the IMF ranked Nigeria’s Sovereign Wealth Fund (SWF) as the second worst managed, after Qatar’s but later apologised because the Washington-based Institution had mistaken the SWF for the Excess Crude Account (ECA).
The International Monetary Fund may have referred to the wrong institution in Nigeria; however, the Bretton Woods Institution is right in believing Nigeria’s management of its excess crude oil revenue in the last 15 years has lacked transparency and translated into little human, social and economic capital.
Some experts have attributed Nigeria’s squander manic tendency to the fact that the Constitution of Federal Republic of Nigeria does not provide for mandatory savings from excess crude sales. And to reverse this tendency, the Excess Crude Account needs to be institutionalised through a constitutional amendment.
Nigeria’s 1999 Constitution as amended Section 162 deals with public revenue management. Sub-section of Section 162 (1) provides for “the Federation Account”; (3) provides that amounts standing to the credit of the Federation Account shall be distributed among the Federal and State Governments and the Local Government Councils in each State on such terms and in such manner as may be prescribed by the National Assembly.
Sub-section (4) provides that any amount standing to the credit of the States in the Federation Account shall be distributed among the States on such terms and in such manner as may be prescribed by the National Assembly.
The Constitution ab-initio provides that revenue accruing to the Federation Account should be distributed. This means that the Excess Crude Account, which is revenue accruing to the Federation Account, should be distributed according to the established revenue sharing formula. There is no Constitutional backing to save money from sales of crude oil above the budget benchmark, which is $60 dollars for the 2019 budget.
“There is no legal backing for the excess crude account, the Constitution says revenue accruing to the Federation Account should be shared, there is no provision to save for future generations” said Oby Ezekwesili, who was part of the economic team under president Olusegun Obasanjo that proposed the establishment of ECA.
The States in the Federation normally demand that withdrawals be made from the account to augment low revenues distributed monthly at the Federation Accounts Allocation Committee (FAAC), where Federation revenues are collated and distributed among the Federal, States and Local Governments.
In principle, accruals in the account domiciled a the Central Bank of Nigeria (CBN) are supposed to be transferred to the Sovereign Wealth Fund to be managed by the Nigeria Sovereign Investment Authority (NSIA), which is mandated to deploy such funds in commercially viable investments at home and abroad for the benefit of all Nigerians.
But successive administrations have routinely shared such accruals every month during the Federation Accounts Allocation Committee (FAAC) meeting attended by the three tiers of government. The current administration has also been accused of illegally using part of the funds in the ECA without the approval of the National Assembly.
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