Last week, it was reported that the International Monetary Fund (IMF) ranked Nigeria’s Sovereign Wealth Fund (SWF) as the second-worst managed, after Qatar’s, but the Washington-based institution later apologised because it had mistaken the country’s SWF for its Excess Crude Account (ECA).
Thought the IMF may have referred to the wrong institution in Nigeria, the Bretton Woods institution was 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 tendency towards squandermania to the fact that the country’s constitution does not provide for mandatory savings from excess crude sales. To reverse this tendency, they argue, the Excess Crude Account needs to be institutionalised through a constitutional amendment.
Section 162 of the 1999 Constitution of the Federal Republic of Nigeria (as amended) deals with public revenue management. Sub-section (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, and 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 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 former 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 at 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.
STEPHEN ONYEKWELU
