WHY THE NIGERIAN ECONOMY IS DISTRESSED
WHY THE NIGERIAN ECONOMY IS DISTRESSED
The Yoruba people of South West Nigeria have a saying which goes thus, “Igi gogoro ma gun ni loju, ati okere, la tin wo” literally meaning that “a stitch in time saves nine”. Looking back into our recent past and the management of our national finances at the federal level, brings to mind the admonition that prevention is better than cure, else we won’t be where we are today, in financial distress in which the nonpayment of workers’ salaries across the federation has become a national shame and a violation of even the Holy Book scripture which asserts that, “A labourer deserves his wages”.
Meanwhile, one has listened to and read lots of commentaries on why states have been unable to fulfill their financial obligations to workers, but lots of the commentaries overlooked or was it an oversight, the fact that even the federal government was only able to pay her workers through borrowing according to the revelations of Mrs.Ngozi Okonji Iweala, the then finance minister. While some of the reasons adduced for this crisis is not far from the truth, one cannot but vehemently disagree when state governors are being made scapegoats for a crisis which is not wholly their fault.
While not trying to assume the role of spokesperson of the states, some of whom just like the federal government contributed to this crisis through injudicious use of their resources, the truth of the matter is that the federal government is the biggest culprit in this matter with the way it has mismanaged our commonwealth due to our faulty federalism.
A major reason why the Nigerian state will continue to bedeviled by crisis of this sort and others is due to the fact that we are not operating true federalism. What we are operating is a unitary system of government or better still, to borrow the words of the deputy senate president, Ike Ekweremadu “feeding bottle federalism”.
What we are operating in Nigeria is a system in which the collection of taxes, receipts, rents, licenses and royalties on natural resources is the sole preserve of the federal government and thus, will not allow for financial autonomy of the states. The system is so skewed and unjust to states such that they are only able to generate their revenues from taxes on citizens who are already economically traumatized through poverty and unemployment.
Thus, the revenues and economy of the states will remain poor without the commensurate returns on revenues collected on their behalf from their states by the federal government. Also, a situation whereby the federal government alone collects national revenues and makes declaration for distribution without the monitoring of the states to determine the validity of the total sum, allows for mismanagement by the collecting authority.
The truth of the matter is that the management of our economy by the previous administration was very untidy and a sore point in our political life. The Goodluck Jonathan administration mantra of stealing is not corruption was exploited to a dizzying height, so much that, it tolerated, supported and encouraged the pilfering of our commonwealth with reckless abandon and impunity, hence tales of missing oil sales funds, non remittance of revenues by state agencies, illegal granting of waivers, etc became the order of the day.
The political and economic system was abused to the marrow by the previous federal government such that even the revenue collecting agencies of the federal government like the customs and excise, federal inland revenue service, CBN, etc were engaged in running battles with defaulters who dangled waivers that were arbitrarily granted by the federal government on goods that were supposed to generate revenues into the commonwealth at the expense of the states and the national economy.
The profligacy and criminal complicity of the Goodluck Jonathan administration in mismanaging our finances was exposed early in the day after assuming office when she arbitrarily raised the prices of petroleum products locally against logic and common sense on January 1, 2012, to in its words, tackle the cabal that was unpatriotically benefitting from its fuel subsidy regime. The consequence was the public uproar and revolt that resulted in the national assembly conducting a public inquiry which exposed the untidiness of the government in managing the oil sector as being bedeviled by official complicity in corruption. The consequence was that till it left office, the Jonathan administration pursued the prosecution of alledged subsidy thieves with its usual sloppiness and incompetence.
Following which, the nation woke up to the rude and shock of the pilfering of oil sales funds when in 2013, former CBN governor and now Emir of Kano, His Eminence, Mallam Sanusi Lamido Sanusi raised the alarm of missing 20 billion dollars unremitted oil funds by the NNPC. Despite President Jonathan’s administration criminal complicit attempt to sweep the matter under the carpet by suspending Mallam Sanusi from office and commissioning PriceWaterHouseCoopers to conduct an audit of NNPC due to public pressure, that matter became an albatross from which the federal government was unable to come clean with regards to the pilfering of the commonwealth.
To lend credence to the argument of this write up are some noted concerns raised in the past which are pertinent to explain why we are in this economic distress;
The House of Representative ordered a probe of about $13.9bn crude oil revenue that could not be accounted for by the NNPC. Hon. Haruna Manu, who quoted from statistics allegedly generated by the NNPC, told the House that the value for crude oil sales from January to August stood at $20.9bn. He, however, said only $7bn was remitted to the Federation Account by the corporation. Manu added that “this shows that $13.9bn is not accounted for and it raises questions about how it was spent.”He claimed that from September to date, the corporation had not given an account of crude oil sales.- Nov 22, 2013.
Accordingly on Nov 24, 2013, “Governor Amaechi said that contrary to the minister’s position that he (Amaechi) was part of the decision making to share the $5billion by the three tiers of government, he and the other 35 governors were privy only to the withdrawal of $1billion from the ECA.
He insisted that due process was not followed by the Federal Government in the withdrawals made from ECA. Continuing, he said: “There is a position of the National Economic Council’s (NEC) on the matter of the Excess Crude Account. This position is that the savings in the ECA belonging to all the states is not to be touched. Indeed this is in tandem with the position of the minister that the ECA is savings for all to be set-aside for the rainy day and not to be “shared” in the manner she now seems to suggest.” The Rivers State Government, he stressed “finds it curious and very disturbing that our rainy day savings has been ‘shared’ in complete breach of the known procedure for doing such and in what might be considered an under the table and clandestine manner.”
He said it was worrisome that ECA was being managed like a “piggy-bank.”
Also former President Obasanjo in his famous letter “Before it is too late” to former president Jonathan on 23rd December, 2013, stated, “Let me repeat that as far as the issue of corruption, security and oil stealing is concerned, it is only apt to say that when the guard becomes the thief, nothing is safe, secure nor protected in the house. We must all remember that corruption, inequity and injustice breed poverty, unemployment, conflict, violence and wittingly or unwittingly create terrorists......... The serious and strong allegation of non-remittance of about $7bn from the NNPC to central bank occurring from export of some 300,000 barrels per day, amounting to $900 million a month, to be refined and with refined products of only $400m returned and Atlantic Oil loading about 130,000 barrels sold by Shell and managed on behalf of NPDC with no sale proceeds paid into NPDC account is incredible.
And on June 19, 2015, it was widely reported in the media how the Jonathan administration sold an oil block for $1.85b but made available a meager amount of $100m. Haba, what manner of government?
In order to examine the financial records of its predecessors in the management of the oil sector, the Federal government on June 29th constituted a four-man committee to probe NNPC over N3.8 trillion unaccounted for by the corporation in the last three years. According to the Edo state governor, who is part of the 4-man probe committee, investigations by the federal government show that NNPC made N8.1 trillion from 2012-2015, paid N4.3 trillion to the federal government and withheld N3.8 trillion which the management of the corporation has not accounted for.
However, on July 1, 2015, Mrs. Ngozi Okonji Iweala, the erstwhile minister for finance engaged the Edo State governor, Adams Oshiomole in a verbal warfare over the latter allegation that she spent 2.1billion dollars Excess Crude Account funds without authorization. She stated that, decisions on withdrawals from the ECA were discussed at monthly meetings of the Federation Accounts Allocation Committee, FAAC, attended by Finance Commissioners from the 36 states. This ridiculous defence of Mrs. Okonji Iweala was punctured by the Federation Accounts Allocation Committee, FAAC, which denied her claims and explicitly stated that it was only the National Economic Council (NEC) that had the powers to order such withdrawals. Like a thunderbolt, madam Okonji made a 360% turnaround and spoke, tongue in cheek, alledging that it was former President Goodluck Jonathan who ordered her to do so in violations of the statutes. Oh, what a minister?
On his part, Raymond Omachi, the acting chairman of Fiscal Responsibility Commission (FRC) stated that the past administration led by Goodluck Jonathan and its Finance Minister, Ngozi Okonjo-Iweala mismanaged funds in the Excess Crude Account (ECA). Short of mentioning names, he frowned at the practice of the federal government to pay subsidy from the ECA or to share to states from the ECA when available funds are not adequate to meet revenue projections.
He said that the ECA was established in 2004 to protect planned budget against shortfalls due to volatile crude oil prices, but that was not how the funds from the account were spent today. - July 5, 2015.
Meanwhile, at a meeting recently, Senate President, Dr. Abubakar Bukola Saraki ordered the Central Bank of Nigeria (CBN) to recover N30billion which was the cost of waivers illegally granted to some category of importers.
All the above testimonials are just a tip of the iceberg of the rot perpetuated by the previous government in the management of our commonwealth which manifested in the federal government and states being unable to fulfill their financial obligations because of a thieving collector (federal government) which pilfered collective funds in her care to the detriment of all.
In the interim, we must commend President Muhammadu Buhari for his statesmanlike leadership role in bailing out the states with funds from NLNG receipts within two months of assuming office, which was a remarkable departure from his predecessor’s unaccountability system for four years and for putting in place, transparency and accountability in the management of our commonwealth by ordering that all revenues of government must be paid into the federation account unlike what obtained in the past.
However, until we return to true federalism whereby states should control their destiny by being allowed constitutionally to appropriate their God given natural resources through granting of licenses, collection of taxes, royalties, rents, etc instead of the federal government which has no land of its own, only then will we be able to hold each and all levels of government accountable and responsible for their actions and entrench true federalism in the land as envisioned by our founding fathers.
Nelson Ekujumi