Still on Excess Oil Earning – By Yushau A. Shuaib
Many arguments and debates had been made on the contentious issue of the oil windfall. The Central Bank, which represents the federal government, has warned against the disbursement, saying it may cause galloping inflation in the economy. The International Monetary Fund, which represents the international multilateral financial institutions, has also cautioned that it may dislocate financial equilibrium by increasing unemployment rates and affecting our balance of payment. The labour groups and manufacturers, for fear of further dwindling value of local currency, are among those against the sharing at this critical time.
However, on the other side of the divide are some bankers who professed to have the capacity to invest the fund for infrastructural development and to help the financial sector from further distress. There are also state governments too where some of their chief executives have even declared that they might deny their workforce their monthly remuneration, to drive home their argumentation and arm-twist the federal authorities to succumb to their demands for the release of the excesses immediately.
Governor Ahmed Bola Tinubu, who seemed to speak the minds of the state governors in his recent article, “Use and misuse of Nigeria’s oil windfall Myth and reality,” reasoned that the federal government had no constitutional or legal right to impound or save on behalf of other tiers, federally collected revenues due to other beneficiaries of the federation accounts. He argued further that the federal government had no proof of being a better economic and financial manager. He stated this in apparent reaction to the allegations of financial recklessness against some state governments.
This windfall would not be the first, as the country has, on several occasions in the past, witnessed such huge manna from heaven but was unfortunately misappropriated. It had happened during military dictatorships where accountability, transparency and openness in governance were alien concepts. The accruals, which were never disclosed, were also surreptitiously disbursed and expended on frivolous programmes and projects for selfish aggrandizements. A vivid case that comes to mind was during the nine-month Gulf war in 1990 when a foreign medium disclosed to our bewilderment that the country had earned about $12 billion as excess revenue from oil during the crisis.
The military era may be pardoned for lack of accountability and mismanagement of funds, afterall they did away with the constitution and enacted laws to suit the whims and caprices of their dictatorial leadership. But in this democratic dispensation, there are enabling laws and relevant bodies that serve as guide and are responsible for ways and manners such funds should be utilized in the national interest. In fact, there are also institutions that determine the necessity or otherwise of the disbursements of such funds.
From all these, one thing is clear and this is that the excess from the sales of crude oil as a result of upward swing in the price of oil does not belong to only one but all the beneficiaries of the federation account. These include the federal, state and local governments. It is unfortunate that while the clamour is going on, it seems nobody is bothered about the fact that the country has over relied on the earnings from oil, which makes all the economic variables and indicators to exclusively rely on it. It is the bedrock of our creditworthiness, government revenue, gross domestic products, real income, foreign exchange transactions, boosting the external reserve and also the only sustenance of many states and local governments in the country.
It is surprising to learn that the country, in this democratic dispensation, is so blessed that monthly allocations from the federation account in recent times, excluding the excesses, have reached an average of N90 billion against the less than N30 billion shared during the preceding military governments. Even some states are so lucky that they receive their allocations in billions of naira, courtesy of the derivation principle. Yet many are asking, where is the dividend of democracy, apart from frequent tussles on the sharing of the national cake?
The militant posture of some of the beneficiaries, to the question of whether or not to disburse the excess accruals, is unfortunate, and uncalled for, if the constitutional provisions are strictly adhered to by all the parties. Recently, the Chairman Revenue Mobilization Allocation and Fiscal Commission, Alhaji Hamman Tukur, disclosed that there is nothing to be christened “oil windfalls” because budgetary projections are made based on certain estimated amounts, therefore anything that is realized outside the budget cannot be labelled a windfall but can be transferred to the stabilization account which belongs to the Federal Republic of Nigeria and not any particular tier of government. He explained further that withdrawals from such an account are constitutionally the prerogative of the President through approvals from the National Assembly. It can therefore not be disbursed arbitrarily.
The constitution is very explicit on the sharing of the revenue from the federation account. Section 162 of the 1999 constitution states that the federation shall maintain a special account to be called the federation account into which shall be paid all revenues collected by the government of the federation. It goes further to state that the president, upon receipt of advice from the revenue mobilization allocation, proposes for revenue allocation from the federation accounts. The said section of the constitution and subsequent subsections categorically empower the National Assembly to prescribe the distribution of any amount standing to the credit of the federation account as it is necessary in the interest of the national economy.
The fundamental reason for having a national reserve account is for a future inevitability. Some see the present imbroglio on the disbursement of the funds as misconception and misinformation between the states and the Federal Ministry of Finance, which surprisingly meet monthly on the platform of the Federation Account Allocation Committee in Abuja. If that forum cannot provide a better understanding, and improve cordial intergovernmental relationships, one may wonder the significance of the body in the face of the fact that it is not constitutionally recognized.
Since the excess revenue is an unexpected and unbudgeted proceed, it is necessary to keep the fund to take care of the rainy day. After all, it is said that spending above estimated budget is a deficit, a liability which most of the time is abhorred by economists and is open to abuse and misappropriation. One might not have opposed the disbursement if the beneficiaries would be able to judiciously and appropriately spend the money for worthwhile capital projects towards creating more employment opportunities once the huge funds are released. But who can guarantee this?
Since the constitution is clear on this, it becomes necessary for constituted bodies, especially the National Assembly, to exercise its statutory power to legislate over the sharing or otherwise of the funds based on the reality on ground. It is reasonable, however, to recommend that once a budget is passed for implementation by the National Assembly, all other excesses acquired above the expected revenue should be saved in a special account for subsequent fiscal seasons. This would enable the relevant tiers of government prepare comprehensive and achievable budget proposals for economic rejuvenation and for the betterment of the electorate and the populace in the following financial period.
It is also necessary for all the stakeholders to observe the importance of dialogue as a veritable tool of resolving conflicts. Disagreements over such sensitive and delicate issue should be handed more maturely and professionally so that the global investment community we crave for, would take us seriously by developing interests and having full confidence in our economic environment.
Stakeholders in this matter and other contentious issues should learn to embrace dialogue as a means of resolving issues. This is a mature way of making progress, especially in a democratic dispensation. The system ought not be overheated. Continued heightening of tension is dangerous to the polity. It could lead to dislocation in the system, with serious consequences.
This article originally appeared in Nigerian Tribune October 11, Daily Trust October 15, Anchor October 18, The Comet October 18, Vanguard October 22, 2001, Post Express October 22, 2001
Search for “RE: Oil Windfall Palaver” to read a rejoinder from a serving Finance Commissioner.