Friday, July 25, 2008

Nigeria: Saving For The Future

ONLY 56 of Nigeria’s 109 Senators were on their seats when a bill that proposed a fund to make savings for the future had its second reading last Tuesday. The other 53, almost half the number, were absent. Just 34 Senators supported the bill, 18 opposed it and three abstained

These revelations are important.

An otherwise urgent matter of saving for future generations turned into an acrimonious issue, with Senators drawing tenuously from the Constitution to strengthen their opposition to the bill.
Senate President David Mark ruled out the bill.

The tenacity of its prime mover Senator Bassey Ewa-Henshaw saved the day. He was dissatisfied with Mark’s ruling; relying on Order 73 of the Senate Standing Rules to call for a division. He won.

Ewa-Henshaw’s bill wants a certain amount from the Consolidated Revenue Fund for an investment fund that cannot be spent in the next 25 years. The life of the fund would be renewed at expiration.

Those opposed to the bill point to the Constitution. Section 162 (3) states, “Any amount standing to the credit of the Federation Account shall be distributed among the Federal and State Governments and the local government councils in each State on such terms and in such manner as may be prescribed by the National Assembly”.

The Senators argued that this provision ruled out the retention of any money in the Federation Account, and most unlikely, one that would be saved for 25 years. And they are right. Nigeria is a multi-party federation where different parties canvassed for votes on different manifestoes. Once the Revenue and Fiscal Mobilisation Commission shares revenue from the federation account according to the law passed by the National Assembly, the National Assembly makes Appropriation Law only for the Federal Government - not the states, not the local government.

It is true that Section 80 (3) awards the National Assembly tremendous powers over public funds. Section 80 (3) states, “No moneys shall be withdrawn from any public fund of the Federation, other than the Consolidated Revenue Fund of the Federation, unless the issue of the moneys has been authorised by an Act of the National Assembly”.

But that money is the share of the federal government according to the revenue allocation formula - which in itself is a creation of the law of the National Assembly. This means that the National Assembly can make laws on the appropriation of the federal fund. Hensahw’s bill can only set aside part of federal fund for investment. Section 80 (4), “No moneys shall be withdrawn from the Consolidated Revenue Fund or any other fund of the Federation, except in the manner prescribed by the National Assembly,” clears any further doubts about the powers of the National Assembly in this regard.

There is no ambiguity about ownership of the money, as it affects States and local government councils. Their respective legislatures may so decide what to do with their portion of money from the Federation Account. They may follow the federal path to start saving for the rainy day too.
Nigeria’s future is frightening notwithstanding the platitudes about Vision 2020.

By the most conservative estimates, crude oil sales fetched Nigeria $600 billion in the past 40 years and about $232 billion in the last eight years alone. Where is the money? If a fraction of it was meaningfully invested 40 years ago, Nigeria would easily raise the $50 billion required to finance the NDDC master plThe future is important enough for the National Assembly to have committees studying and providing for it.