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Don’t draw down on excess crude account for election campaigns, Fiscal Responsibility Commission boss

Alhaji Aliyu Jibril Yelwa is the Chairman of the Fiscal Responsibility Commission the body established in 2007 to address issues around prudent utilisation of resources through a more transparent management of the nation’s wealth.

In this interview with our Abuja Bureau Chief, Emma Ujah, Alh Yelwa cautions against drawing down on excess crude oil account proceeds for the purposes of electioneering campaign. He also tells Nigerians to be courageous enough to ask their leaders questions on how public funds are being spent.

How operational would you say the Fiscal Responsibility Act has been in the country?
The Fiscal Responsibility Act became a law on July 31, 2007.  You may ask, what is it all about? What is this law? Why that law?  The best answer I can give you is provided in that law itself.  If you look at the preamble of the law, it says it is an act that provides for prudent management of the nation’s resources and ensures long-term macroeconomic stability of the national economy and ensures greater accountability and transparency in the fiscal operations within a Medium Term Fiscal Policy Programme.

This is a nation with vast resources but incapable of marshalling those resources for Nigerians.  There was a time when we used to think that money was not our problem at all.  It was how to spend it.  There were times we didn’t plan how to spend the money.  We didn’t consider that nature has provided two seasons for Africa.  We have the rainy season and we have the dry season.  In the dry season you harvest cocoa, you harvest groundnut, and you harvest everything.  When the rains come, everything comes to s stand-still.

Are you saying then that the time has come for us as a nation to plan our expenditure?
Exactly so. The Medium Term Fiscal Framework is the vehicle through which we intend to get there.

What does it involved?  It is a three-year development plan at the on-set of which we estimate what we must expect to get over the period as against what we intend to spend.  But even before we do that, you look at the situation critically and then ask yourself, “What is the rationale of governance in this country?   What are we aiming at?  Yes, you have x amount of money. In other words, our objective must be clearly spelt out?

It must be spelt out clearly and how to achieve those objectives must be clearly outlined.
From what you have said, would you say that we are adhering strictly to the Medium Term Fiscal Framework programme in the preparation of budgets?

There was an attempt last year.  We started this year.  If you remember, there was this row between the National Assembly and the executive a few years ago over certain provisions in the Appropriation Bill that were considered not to be within the Medium Term Framework.

But this year, we pressed and pressed.  We moved from sermons to cajoling to get the Ministry of Finance to ensure that the MDAs did the right thing because that is it’s responsibility.

It is for the Minister of Finance to ensure there is consultation with relevant agencies, the National Planning Commission, the state governors so that everybody knows where we are heading and we all walk towards the same direction-  what we want to get; what we want Nigeria to look like.  We want Nigerians to have good roads, decent schools, we want Nigerians to have electricity power supply and we want Nigerians to have well-equipped hospitals.

These are the targets for national existence- good hospitals and security of our lives and property.  So we say ok, this is what we want to get in a three-year term.  The next question is how much do we have and can that amount of money lead us to meet that objective?  May be by the time we finish the calculations, we find out that we need X plus Y to meet our target.  If our expected income cannot meet our expenditure for that year then we have to look at the options available to us.

I like to look at the nation from the perspective of the family unit.  If you look at your family and discover that you would need N 2 million to meet the needs of the family but when you look at your income, you have only N 1 million.  What does that mean?  You can now say ok, let me borrow or reduce the expenditure.  That is to say, you either cut you coat according to your cloth or you take a loan.
However, we have a provision in the Act that stipulates that governments in the federal must not borrow more than 3 per cent of the GDP (Gross Domestic Product).

Would you say that within the short period of your operation so far that you have been able to bring federal, states and local government agencies to appreciate the limits of borrowing put at not exceeding 3 per cent of the GDP?

That is one area we have difficulty as a matter of fact.  But we are working seriously at it. Take for example, if you take someone to a swimming pool, he would need a diving board.  Our diving board for that purpose is the determination of the existing loans.

How much have the various governments borrowed externally and internally.  How do they compare with the 3 per cent allowed by the law?  That is one thing that we have not been able to clearly master.  We have to master it to the extent that we can know exactly how much the federal and states governments have borrowed externally.

The DMO is supposed to have that information which you can easily obtain
That is not true. The people there too know that.  They know that they have very little information.  I don’t think anybody has a definite idea about what the governments (federal, states and local) have borrowed.  This is a federation:  36+1=1.  If you only know a part and you don’t know the larger chunk, you are not likely to spring a surprise on anybody.

That is why we said let us establish the level of indebtedness and monitor the states in order to be able to tell them, look, you can only borrow within a limited framework.  If one party is not obedient enough to follow the law then there is a problem.

Do you even have the capacity to obtain the necessary data from the state governments in order to monitor their borrowing activities?

We have the power
Does your commission have the necessary human resource to do that and how are the states cooperating with you?
We have personnel that are well equipped for this job.  On cooperation, I think gradually we are getting there.  But don’t forget the fact that operationally this Commission is only one year old.  Of course the Act came into effect on July 31, 2007, nothing happened in 2008.  Activities started in 2009.  There is an adage that “habits die hard”.  The people are used to a carefree lifestyle and suddenly you come and say “my friend takes your time”. Organise yourselves.  The first reaction may be “this man doesn’t like me”.  But he is telling you the truth.  If you don’t organise yourself, you will be in a mess.

We have been in a mess as a nation before.  In the early 1980s we were in such a mess when we couldn’t buy on credit at the international market. But we were lucky enough that after many efforts we got out of it and people started to trust us again but before long we went on a borrowing spree until we became so heavily indebted that we had to go cap-in-hand because we could no longer meet our debt obligations to our creditors.  What happened?  After much pleading, we had the debt deal.  That was the situation we had to accept for lack of discipline.  Now we have started again.

Some Nigerians are worried that once again we are relapsing into the same situation of the past borrowing spree that landed us in unsustainable debt before the debt deal.  We again owe about $4 billion external debt.

Yes.  We have the right to be concerned.  If we cannot operate the law that we ourselves have made to control our borrowing then there is a problem.  If we were able to follow the law, we wouldn’t have been in that situation you talked about. We have a situation where we have 36 states and each of them operate as if their economies are independent of the rest of the country. But no, we have one economy.  They cannot appreciate the fact that 36 +1 =1.

That 35 states plus the federal government equals to one because we operate within the same economy.  For us within the political regime to bring our governors and people to realize this fact will take some time but we will keep at it.  It will require concerted efforts of the Commission, you the media and all other stakeholders to achieve that objective.

When you look at this law, it tells you what to do.  But you must appreciate our situation before we can benefit from the provisions.  After all Nigeria’s budget is such that about 60 per cent is out of the control of the federal government.

Let us build a scenario.  As you budget, you would say let us look at what the price of oil would be over a given period of 12 months.  Then you set your target, for instance, $ 57 per barrel.  Then you say ok if for any reason fortune smiles on us and the price as well as the quantity we produce is more than the targeted figures, we shouldn’t take that since we have more money, let us go and throw a party.  Let us save it.  That is why we have the excess crude oil revenue account.

That raises a question over provisions of the Fiscal Responsibility Act on the utilisation of the proceeds of that account.  Section 35 provides that money in the account can only be withdrawn if the price of the commodity maintains a consistent fall below the budgeted benchmark for at least three months.  But that is not what the Federation Accounts Allocation Committee (FAAC) has been doing. Money is being withdrawn from that account indiscriminately owing often to pressures from the state governors.

This is where I talked about discipline and self respect.  This law was passed by our own legislative organ of government which means it is binding on all of us.  To derive the benefits of this law we must respect the law ourselves.  The law says we should put the excess over and above the pre-determined price of the commodity aside.  Nobody says it is not your money.  It is your money.  But the law says you can fall on it if there is a drop in price below the pre-determined price for three months, consecutively.

And even if you have to draw down, don’t draw for party campaigns.  Don’t draw down to pay salaries.  The law provides that this money can only be drawn down for capital and human development projects. But I wonder when we would have the honesty to stick to that law.  I told someone that I am not concerned about the sharing of the money but about the accumulation.

As far as I am concerned the division should be based on the formula for sharing the federation revenue among the beneficiaries of the Federation Account.  But I don’t see how each state would say let me have a separate account and put my own excess crude oil proceeds in it.  This is why we have aggregate investment.  Even in terms of economics, if you are saving N1 million and I am saving N2 million, I am likely to have higher interests on my deposit.

Certainly now that we are moving close to the end of tenure and the general elections, the call to draw down the proceeds of the account would be intensified.

Let us be honest with ourselves.  The law has made clear provisions on the utilisation of the funds.  If you have any issue with revenue, the first thing you do is to look at the budget afresh. You may find that certain items could be delayed to latter time.  But simply because this money is in the account, everybody is saying, bring the money it is already raining.  Let’s bring out the whole money and share.

The law also provides that the government should publish its annual accounts in the media as part of the push for greater accountability and transparency but this is not happening.

That is why I said the law can make our society what we want it to be if only we all work together.  It is between me, you (media) and the government.  What is a budget?  It is a covenant between the governed and the governors.  Yes, we are going to have so much and we are going to do this and this and this for you.  The law provides that the budget

implementation must be published.  And that publication has to be in the print (newspapers) and the electronic media.  Well, I know for certain that they (government agencies) are producing the reports because we insist they must be produced.  But publishing is what we don’t have yet.

I believe that publishing the accounts in the media is very critical because that is when members of the public can read and then be able to ask questions.

I agree with you completely and I hope very soon we will get there.  When you look at the MDAs, there are about 28 ministries and other agencies of government. The agencies are also expected to produce their annual accounts and publish them.  According to the Fiscal Responsibility Act, the accounts must be produced and published within three months of the end of their financial year.  There are some of them that just produce for their boards.  There are even some of the agencies and departments that think they don’t need to be accountable to the public. Our duty is to ask them and to the extent of contemplating suing them if they fail to follow the law.

To us, the most important provision of the law with regard to transparency is section 51 which gives every member of the public the right to take the federal government or any of its agencies to court and seek to know what is being done.  Right now, I now there is one such on-going at the High Court in Lagos where an individual has taken the president and the federal government to court.

Over what particular issue?
Seeking to know what is being done about the implementation of the budget. In the past, the chief executive officer of a government agency can shrug his shoulders and say “what is your business?  After all you are not the only Nigerian.”  That has changed. Now the law has given every Nigerian the right to seek to know how far government and its functionaries are complying with the covenant between government and the people.

To succeed, I believe your commission has to do a lot of public enlightenment campaign which is not the case currently.

I agree that we have a lot of work to do in order to educate the Nigerian public.  We will partner with the media a great deal in this respect.  Very soon we will organise a forum to meet stakeholders including the media and civil society organisations with a view to adopting strategies for the realisation of the commission’s objectives in that regard.

We intend to, within the shortest possible time, engage Nigerians on a heart-to-heart talk about the law; the macro economic situation of the country and what everyone can do to improve transparency, accountability and prudent management of our national resources.  Nigerians must have the courage to ask questions.  That is the only way to improve governance and make the country a better place for all us.

One thing doesn’t seem clear to me about the prosecution of public officers who breach this law.
If in the cause of our work, anyone is indicted, we can ask the Attorney-General of the Federation to take that person to court.  We haven’t done that yet.  We are now dangling stick and carrot. Many of them don’t want the stick to come down on them.

In order words you are recording voluntary compliance?
Yes. Of recent, we have got occasions to talk to the big agencies of government.  I told one of them clearly that he either complies or we would institute a full-blown investigation on the agency.  And I could see the effect on the officer right there.


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