Obasanjo, governors and economic recession - Flatimes

Wednesday, 19 October 2016

Obasanjo, governors and economic recession

Written by the Editorial Board of The Guardian Newspaper

The most striking lesson from discussions and biting effects of the current economic recession has been that both the state actors and non-governmental individuals now have some awareness about where the rains began to beat us. Besides, people are beginning to draw lessons from almost this newspaper’s almost weekly editorials on the values and indeed benefits of practising federalism whereby the federating states will govern and rule according to the endowments in their locations.

One of the most telling stories of self-awareness about economic recession broke the other day when former President Olusegun Obasanjo at a World Pension Summit ‘Africa Special’ co-hosted by The Netherlands-based World Pension Summit Organisation and the National Pension Commission (PenCom) in Abuja noted that at the core of economic recession was governors’ refusal to save for the rainy day. Specifically, he was referring to the governors from 1999-2011 when oil revenue was remarkable.

According to the former president whose government faced multiple litigations by governors and Revenue Mobilization, Allocation and Fiscal Commission (RMAFC) over excess crude accounts, government would have laid the foundation for solid sovereign wealth fund if the governors had cooperated with the Federal Government’s initiative to save part of the oil money for a time of economic downturn as we have now.

Obasanjo recalled: “I remember when I was the president, I initiated the idea of saving the Excess Crude Account (ECA) for the rainy days, but the governors resisted it and told me there was no need saving because it was already raining. If it was raining then, what do we have now?”

It was in that context that he cautioned President Muhammadu Buhari against investing Nigerian workers’ pension fund, which is building up to almost N6 trillion in risky and unsecured portfolios no matter the pressure or promise of high returns from such investments, so as to guarantee the security of the workers when they retire at old age.

Obasanjo was on point only to some extent. This view is only part of the fundamental reasons for the way we are now. Some experts have noted too that the faulty foundation of the governors’ proclivity for consuming all earnings is the constitution, which provides that no money should be saved for any extra-legal means outside the provisions for depositing all revenues into the Federation Account in the 1999 Constitution as amended. These provisions are in Sections 80-83 of the 1999 Constitution as amended. Section 80 (1) states that: All revenues or other moneys raised or received by the Federation (not being revenues or other moneys payable under this Constitution or any Act of the National Assembly into any other public fund of the Federation established for a specific purpose) shall be paid into and form one Consolidated Revenue Fund of the Federation. 80

(2) provides that:
No moneys shall be withdrawn from Consolidated Revenue Fund of the Federation except to meet expenditure that is charged upon the fund by this Constitution or where the use of those moneys has been authorized by an Appropriation Act, Supplementary Appropriation Act or an Act passed in pursuance of Section 81 of this Constitution…

This economic recession time is, therefore, not a time for lamentation; rather it is a moment for reflection and critical thinking about how to survive and grow. It is really a time we should be conceptually correct. What is more, it is the time the government ought to be audacious to ensure that the nation’s economy is healthy enough to sustain the citizens. And so all that is needed to ensure, for instance, that wasteful spending and lifestyle are well managed will be supported.

Again, those in authorities should note that citizens have been living with some perception that the country is fast receding into a failing state. We must not fail. Besides, there is a terrible assumption that miracles will always bring us back from the brink. This is a dangerous construct as miracles do not just happen to people who do not think and work hard in the fast changing world in which economic management skills are critical.

Therefore, instead of the blame game on who is responsible for the parlous state we are, we should face fundamental issues in the years of locusts such as commercialisation and professionalisation of politics in the country. There is no question, that monetisation of politics has been part of the cankerworms responsible for today’s ubiquitous economic woes. And the people have not been raising issues around a calling that is supposed to be for service that has been turned into avenues for looting the national treasury with so much impunity. Now is the time for the people power – to ask questions about wealth, wealth of individuals everywhere without work. What is worse, even most people want to be bribed to vote for our leaders. This is part of the impurities embedded in the common wells.

Again, there is a sense in which we should not dismiss points that the only federal constitution we all rely on to manage a complex federation of 36 states and Abuja is part of the problems we must tackle in the long run. This arrangement has failed us. And so the authorities should listen to those who daily suggest now that there must be federalism and concomitant devolution of powers from the centre to the regions where the pre-independence laws and indeed 1963 Constitution set the tone for development that we enjoyed then till the tragic 1966 coup set us back.

For instance, at a time, the excess crude account had a whopping $22 billion and indeed when some past leaders who are blaming and being blamed at the moment suggested a saving for the rainy day, all the governors then raised hell and brandished the constitution that the money should be shared for all. The state governments actually exploited the loopholes in the constitution and went to court for a declaration that saving was illegal, after all. The excess crude saving account was depleted and behold there is still nothing, no critical infrastructure to show for it anywhere.

Although the Excess Crude Oil Account was converted to Nigeria Sovereign Investment Authority by the Jonathan administration to manage the Nigeria sovereign wealth fund, the initial capitalisation of only US$1 billion was too late and so little to be reliable now. That is exactly what Senegal has invested too. Whereas Abu Dhabi that came to Nigeria for a bilateral loan in 1977 for its sovereign wealth fund now has a capitalisation of $875 billion while Saudi Arabia has $584 billion. They are oil producing too. 1977 was the year Nigeria wasted billions of Naira on a cultural exhibition called FESTAC 77.

In other words, a federation in which all the federating units converge on the capital every month to share revenue that has accrued to the common purse cannot prosper. Let truth be told to the powers that be now; there is no modicum of federalism in the country at the moment. In a proper federalism, the centre of power should be in the states, not in only one capital that rakes in revenue for all. The states should actually pay taxes to the centre as it was in the 1963 Constitution.

The current structure whereby all the states depend on one lean purse in Nigeria is a deception. It is not more than the federal republic of the Nigerian Army only. That is why we will reiterate our regular calls on the authorities to use the 2014 conference report as a guide on the road to restructuring of the federation. And so all issues that do not enhance true federalism should be discarded.
There will, therefore, be no lesson in this present economic condition if there is no change in the structure of the federation and the way we manage it. The people of this country have been disconnected and disoriented from the scheme of things, especially as they affect production and productivity. The crumbs from the centre table have been distracting and taking the steam out of wealth creation, which can only emanate from what the people produce in different centres that the states should be.

In the main, instead of time-wasting rhetoric on blame game, there should be actionable plans on how to restructure this convoluted federation that has not worked since 1966 when the military regime created a unitary system they have always worked into constitutions they dubiously proclaim “for we the people”. It is a political fallacy that must be discarded for the emergence of a people power, a constitution that can enable power to flow from the states to the centre of the federation as it is with all federations in the world.

No comments:

Post a Comment