Shehu Musa Yar’Adua Foundation has advocated the amendment of Section 162 of the 1999 Constitution to include the establishment of the Excess Crude Account (ECA) and also make it automatic for the fund to be domiciled in the Nigeria Sovereign Investment Authority (NSIA).
This is even as they advocated that the law should also stipulate stringent measures from withdrawing from the account. The Foundation at a roundtable on ‘The Savings and Stabilization Mechanism for Nigeria’, expressed grave displeasure that despite earning over one trillion dollars from oil between 1970 and 2018, there were no measurable investments or savings.
They therefore expressed support for sustainable and frequent injection of funds into the Sovereign Wealth Fund account. The event which is the second in the series was organized by the Oil Revenue Tracking Initiative of the Shehu Musa Yar’Adua Foundation and the Nigeria Natural Resource Charter (NNRC).
According to them, the absence of rules of practices governing deposits, withdrawals and investments of the Excess Crude Account (ECA) led to Nigeria being ranked the most poorly governed sovereign wealth fund among 33 resource-rich countries in a 2017 report by the Natural Resource Governance Institute.
They charged the political class to negotiate and agree binding rules for ECA revenue inflows and outflows until such a time as the constitutional amendment is effected to entrench the Excess Crude Account.
Participants included Obiageli Ezekwesili, former Vice President (Africa Region) of the World Bank; Andrew Onyeanakwe, a professor, at the Centre for Petroleum, Energy Economics and Law, University of Ibadan; economic analysts Bode Longe, civil society organisations, development partners among others.
They said Nigeria has failed to make the transition to a capable state in order to enable it to produce enviable development outcomes such as the diamond rich nation of Botswana. In her submission, Ezekwesili, a former Minister of Solid Minerals and co-founder of Transparency International, expressed disappointment at non-compliance with the legal framework setting up the Fiscal Responsibility Act with regards to fiscal discipline.
She maintained that why the ECA must be effectively operated was to create stabilization in expenditure, such that when there is excess the nation will save and only draw when there is a deficit. Ezekwesili decried the situation where Nigeria has experienced five oil booms and had not been able to take full advantage of it, warning that the nation only had 37 more years of oil exploration, a resource which she said is unpredictable.
“Part of the challenge that we have is that contrary to what countries like Brazil, New Zealand and Australia from where we looked at best practices in Fiscal Responsibility Act to set up the Fiscal Responsibility Commission is that unlike those countries, we were unable to find the political consensus around this issue.
“So far, fiscal indiscipline is rewarded. Our system hasn’t figured how to make it costly to those who indulge whether at the state level or at the federal level. And so, we have rendered both the Fiscal Responsibility Commission and the Act toothless bulldogs.
“So they exist but almost as a mere agency of government. That was not what was intended. And that is part of what will help us begin to fix this problem of fiscal indiscipline,” the former Director General of the Bureau of Public Procurement (BPP) said. She called on the Federal and State governments to seek speedy resolution of pending Supreme Court cases on the constitutionality of remittances to the Excess Crude Account and the Nigeria Sovereign Investment Authority, even as she urged all tiers of government to diversify the economy through investment in non-oil sectors.
The roundtable also asked all tiers of government to regularly meet their financial obligations to the Sovereign Wealth Fund account and called for the collapse of the ECA and 0.5% Stabilization account into the Sovereign Wealth Fund. Similarly, they demanded a change in the institutional framework guiding the country’s Savings and Stabilization Funds and urged CSOs to demand transparency of revenue inflow and outflow from the Federation Account.
Other members of the group who made presentations at the Roundtable, decried the manner in which the proceeds from oil is shrouded it top secrecy. An Economic Analyst Bode Longe who made a presentation titled: “Review of Stabilisation Programmes in Nigeria” explained the stress he underwent in getting figures about revenue made by Nigeria from oil. Speaking with particular reference to the Excess Crude Account, he said that it was worrisome that the balances in the account changes at will without any corresponding evidence of withdrawals or approvals of such withdrawals.
Exemplifying with Norway, he said that there was need for good transparency in the matter in which the nation’s oil business was conducted, stressing that the mismanagement of the revenue from the sector had a direct consequence on the nation and its citizens. According to the statistics which he presented, he argued that Nigeria should have over $80 Billion in its Excess Crude Account and not the less than $4 billion it now had.
He added that the foundation in its research, found that over 52 per cent of revenue from oil in the last three years could not be accounted for according to the statistics available to the foundation. He however urged the custodians to put in more efforts in record keeping, saying that sometimes, records between some government agencies did not tally. Longe also supported the move for a constitutional framework that will make saving and investing excess oil revenues compulsory and automatic. NAN