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Nigeria: Let the sovereign wealth fund begin(2)

AND  so in the light of the absence of a direct express prohibition as well as the laudable purpose of the SWF a court will be too hesitant to take a narrow view that can prove a disservice to the national interest.

The court would have to consider the likely inconsistencies, absurdity and inconvenience between a single account (the Federation Account) and the expediencies of subsidiary funds aimed at savings and investments (Excess Crude Account, SWF, etc.) in pursuit of welfare, good governance and national prosperity.

The court would then follow a view, which may seem ‘’less proper’’ to ordinary reading of the provisions but which will vindicate the true purpose of the Constitution when read deeply for bold and good governance to secure national prosperity.

It will be of interest to know if the governors are the new praetorian guards of the Nigerian Constitution, faithful to all its precepts and so concerned now about complete legal fidelity to the sacred document; or if on the other hand they are in this high level campaign as a mere pursuit of narrow fiscal self-interest for increased money allocation and free wheeling spending.

Most of the monies shared out of the ECA are in open violations of the provisions of the Fiscal Responsibility Act, 2007 wherein section 35(2) mandate savings by all tiers of the government in Nigeria by stating thus: ‘’Where the reference commodity prices rises above the predetermined level, the excess shall be saved’’; while section 35(5) prohibits access to the savings stating: ‘’No government shall have access to the savings….unless the reference commodity price falls below the predetermined level for a period of three consecutive months’’.

The framers of the Nigerian fund drew extensively from the experiences of other nations with similar fund. The several resource rich and high priced commodity nations with such funds are Norway, Kuwait, Russia, Abu Dhabi as well as Korea, China, Singapore, Australia, etc. Some had their funds focused on savings majorly, pension security, infrastructure upgrade, investments, etc.

Nigeria’s fund however took the chance to be more universal in content with three clear pillars to wit: These needs were well addressed in the three fund-heads created in the Act (section 4), that is, a: The Future Generation Fund; b: Nigeria Infrastructure Fund; c: Stabilization Fund.

In addition, each of these sub-funds are ring-fenced, separating each from the other in terms of assets and liabilities as well as against any likely meddlesomeness by any agency or government entity.

In addition, to save the fund from other risks of dissipation the Act in section 32(3) stated that ‘’the federal, state, federal capital territory and local government shall not transfer, redeem, assign, dispose of, sell, mortgage, pledge or otherwise encumber any interest of any kind in the Authority’’.This provision precludes the fund from being used for raising capital anywhere.

The NSIA Act 2011 set its mandate clearly thus – to ‘prepare for an eventual depletion of Nigeria’s carbon resources’’. The Act further mandates the funds authority to have the responsibility of receiving, managing and investing the fund on behalf of the fund; re-investing portions of the profit or proceeds yielded by primary investment to generate further risk adjusted returns’’ s.4(2)(b); also, develop and foster the skills in asset management by Nigerians, attract further investments and co-investors in order to enlarge the funds capital base, pursue and encourage best practices along the line of the Santiago Rules/Principles.

Funding of the SWF as stated in Part iii (1) of the NSIA Act shall be by way of the initial one billion dollars set aside for take off; additional and subsequent funding to assure the growth of the fund going forward as stated in section (2) shall be by way of contributions from each tier of government based on their allocated percentages of revenue sharing; further funding shall, by way of residual funds from the federation account, be transferred to the SWF Authority.

The governance structure of the Nigerian SWF over-patronised the governors by having the 36 members on board rather than the recommended six representatives from each geopolitical zones. This should be very reassuring. What the governors should be concerned with is the efficient management and of the fund to achieve its intended purpose of our collective national welfare and prosperity. We know there is money in the Nigerian system.

Lets look at this: From implementing the Oronsaye report, Nigeria will likely save N862bn between 2012 and 2015 (N124.8bn from agencies to be scrapped, N100.6bn from agencies to be merged, N6.6bn from professional bodies; also, N489.9bn to be saved the report says from universities, N50.9bn from polytechnics, N32.3bn from colleges of education). Subsidy report shows that NNPC would refund N310.4bn to the Federal coffers plus another N285bn equally misapplied  apart from the fake importers who collected $337,842,663 for non-authenticated oil imports.

These kinds of scenarios paint a poor picture of our public finance system as bedevilled with waste, graft and corruption. An SWF can help curb some of these wastes if, for example, these kind of loose funds are channelled to the ‘’Nigeria Infrastructure Fund’’ rather than leave it for a well-connected few to pillage. In effect, there is much to profit from the fund and let it begin now before we lose our entire windfalls and the earnings from hydro-carbon and other commodities as the NSIA Act 2011 warns that we must prepare for eventual depletion of this resource.

Mr. TONY ODIADI  wrote from London.


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