By Oscarline Onwuemenyi
THE Minister of State for Finance, Mr. Remi Babalola, on Tuesday advised States to reduce their reliance on sharing of oil revenue from the Federation Account if the country is to achieve economic transformation. He stated that the oil revenue should be allowed to provide the cushioning stability for the nationâ€™s economy in the face of volatility in the international oil market.
The minister gave the advice while presiding over the Federation Account Allocation Committee (FAAC) meeting, in Abuja, attended by the Accountant General of the Federation, Alhaji Ibrahim Dankwambo; Director of Home Finance in the Federal Ministry of Finance, Mr. Lexy Omoha Lexy; and the 36 statesâ€™ commissioners for finance and accountants-general, among others.
He said, â€œAs policy makers, we should reduce our oil revenue dependency levels, check unnecessary grandiose projects and seek alternative and more sustainable routes to economic transformation so as not to suffer from possibility blindness.
â€œWe need to rein in urgent reforms, deliver business services more efficiently, provide better infrastructure and increase access to financial services and information economy.
He said though current crude oil production and market price are favourable, â€œwe still experience augmentation from excess crude account to shore-up our monthly allocation to the three tiers of government. â€œThere is thus a compelling urgency more than ever before to have another perspective to this oil revenue sharing dependency at all levels of governance in this country.â€
Babalola further noted that despite the unusual volatility in crude price due to global economic meltdown, the average annual price has been a positive development for the nation.
â€œWe have only a decade to actualize our vision 2020 and oil resource should be considered as a shot in the arm for the needed economic transformation. We cannot but continue to emphasize the importance of enhancing competitiveness and diversifying our economy,â€ he said. He urged the lower tiers of government to rein in urgent reforms and ensure more efficient business services as well as to provide better infrastructure and increase access to financial services and information economy.
The minister explained that the nation has witnessed four oil booms in this country namely; Period 1 which spanned 1974 to 1978; Period 2 spanned 1979 to 1983 while Period 3 covered 1990 to 1994 and we are still witnessing Period 4 from 2004 to date.
â€œIt is clear that we are yet to optimally harness the benefits that should have accrued from these booms as a nation. This God-given resource should have catapulted our dear nation into the new emerging market league of nations like the Asian Tigers and the BRIC countries â€“ Brazil , Russia , India and China ,â€ he added. The meeting considered the reports of the revenue collection agencies for August 2009 and also approved distribution from the Federation Account among the three tiers of government.
The revenue shared includes: statutory allocation, value added tax and augmentation from excess crude proceeds.Babalola, who noted that the average annual oil price had been a positive development for the country, said the excess oil revenue should be seen as the Nigeria â€™s war chest to avoid the boom and bust cycles arising from the volatility in the international oil market. The minister maintained that if the benefits from the oil booms had been optimally harnessed the country would have been catapulted into the new emerging market comprising Brazil , Russia , India and China Meanwhile, a new composition of the Post-Mortem Sub-Committee is expected to emerge today (Tuesday) at the FAAC meeting.
The minister, who dropped this hint in Abuja , disclosed that the re-constitution of the Post-Mortem Sub-Committee was aimed at institutionalizing an enduring succession process in the sub-committee and the need to make it all inclusive and very representative.
â€œWithout prejudice to the discussions on the report of the Post-Mortem Sub-Committee, there is the need for us to consider issues concerning the composition, terms of reference as well as the tenure of the membership of the sub-committee,â€ he stated.
The Post-Mortem Sub-Committee is made up of 44 members including the Revenue Mobilisation, Allocation and Fiscal Commission, revenue generating agencies like Nigerian National Petroleum Corporation, Federal Inland Revenue Service, and Nigeria Customs Service, and some selected statesâ€™ commissioners of finance.
The current composition of the sub-committee has been in office since 2004.