New Minister of Finance, Mr. Olusegun Aganga, recently disclosed that the Excess Crude Account would soon be abolished to give way to the creation of a Sovereign Wealth Fund.
The Excess Crude Account was one of the many illegalities that former President Olusegun Obasanjo created during his eight-year reign, during which Nigeria experienced an unprecedented stretch of oil boom, which had little or no positive effect on the ordinary person. Rather, it raised the level of corruption in high places and brought on the man-on-the-street untold suffering due to frequent rises in the prices of petroleum products.
The Excess Crude Account was the account into which all monies from the sale of crude oil in excess of the annual budgetary benchmark, was paid and later systematically shared among the three tiers of government as additional, bonus revenues beside revenues projected in the budget.
There is a lot of evidence that many state governments deployed money from this source to massive development efforts in their states. But the same thing could not be said for the federal and local government tiers, which are unable to justify the huge amounts they collected from the Account.
The new thinking in government is that once the relevant laws are in place, any money earned from our primary commodity â€“ oil and gas â€“ above the budget benchmark will automatically be transferred to the Sovereign Wealth Fund.
AÂ sovereign wealth fund is a fund created by countries which record budget surpluses. Usually, it is countries that do not owe heavily or at all that proceed to set up the fund, either as savings for the rainy day or as endowments for the future generationâ€™s use.
The logic is that if parents find it necessary to save and accumulate assets for the inheritance of their children, nations have even a greater obligation, when faced with surplus financial windfalls from produce or commodity sales in the international market, to save for the future generation and secure their future.
According to Aganga and his peer at the National Planning Ministry, Dr Shamsideen Usman, Nigeria is the only member of the Organisation of Petroleum Exporting Countries (OPEC) that does not have a sovereign wealth fund. On the other hand, tiny United Arabs Emirates (Abu Dhabi) has a whopping 627 billion Dollars.
Oil exporting countries have a total of 2,335 US Dollars out of the grand total of 3,867 in sovereign wealth funds of the world. Nations with this manner of funds usually float investment agencies to invest and manage the funds. They are able to peddle a lot of influence with it in top-notch financial circles of the world.
It is, however, important for the envisaged law to isolate this fund from the whims and caprices of politicians. The countries that have sovereign wealth funds are usually disciplined and focused on getting it to achieve the stated objectives.
We live in a country where leaders are unable to contain their impulses to dip hands into the till at the slightest sign of need. We have also seen how the Gulf War windfall disappeared overnight in circumstances that were condemned by the late Dr. Pius Okigbo probe panel. Till date, no other explanation has been offered other than that it was used for development purposes without showing concretely which areas it was spent.
We must make sure that when this fund is created it must be kept out of reach of thieving regime leaders. It must also be borne in mind that at this juncture when our power and other critical infrastructure are still in tatters, we need money to bring them up to date.
The fund must be organised in such a way as to save for the future while at the same time keep enough for development in the present.