The battle over the appropriate structure of the state is by no means over. The other day, in fiscal garb, it surfaced on the floor of the Nigerian upper legislative chamber, the Senate. The scuffle is over the Sovereign Wealth Fund (SWF), now the preference of countries who believe in saving for the rainy day. The smart move is an initiative from Senator Bassey Albert Akpan, representing the people’s Democratic Party, Akwa Ibom State. The senator is seeking an amendment to Section 162 of the constitution to make the Nigerian Sovereign Investment Authority (NSIA) get 20 per cent of revenues accruing to the Federation Account monthly. In other words, amend the relevant provisions of the constitution to make the SWF a first-line charge beneficiary of the Federation.
It is to be noted that the SWF is a state-owned investment fund from money generated by the government. According to financial experts, the money could come from the country’s surplus reserves and other sources of revenues such as natural resources, trade surpluses, bank reserves from budgeting excesses, foreign currency operations, money from privatisation and government transfer payments among others. Its benefits for the citizens and country are immeasurable.
In a saner environment, SWF should not attract controversy for its inherent utility but in a society riddled with corruption and outwards consumption orientation and a motley of state actors habituated to primitive accumulation it is certainly an issue. No wonder that it is already attracting opposition from the governors who are used to the feeding – bottle fiscal arrangement in place. Indeed, there is an indication that this move could be truncated by the governors because should the bill pass through the legislative process the SWF is also being made to share directly from the Federation Account in the same manner as the federal, state, and local governments trumping the prevailing revenue sharing formula whereby the Federal Government takes 52.68 per cent, the states get 26.72 per cent and the local governments 20.60 per cent in addition to the 13 per cent derivation for oil-producing states.
However, the Bill still has many mountains to cross. It would require the approval of the House of Representatives and at least 24 of the 36 State Houses of Assembly. With most States’ Houses of Assembly under the heavy influence of the governors might be commandeered to oppose the Bill. It would be recalled that the state chief executives had strongly opposed the SWF the Goodluck Jonathan administration established. They had called on the Federal Government to suspend its operation until the conflictual issues were resolved because it was seen as unconstitutional. Now that the governors complain of funds scarcity and their inability to dispense welfare and implement developmental projects, it seems unlikely that the Bill will see the light of the day. The leadership of the Senate is already being heckled into a retreat.
This SWF issue once again foregrounds the foundation crisis of the Nigerian state. As Kenneth Wheare has argued in his “Federal Government”, you have no federation without being underpinned by fiscal autonomy. If states in Nigeria, erroneously called a federal republic, have fiscal autonomy and not relying on a monoculture economy, rentier in essence, there ought not to be an argument about the propriety of an SWF, as endowed even the most endowed states like Saudi Arabia are divesting from the oil into other sources to avert a predictable future of the irrelevance of the crude oil exploitation.
We should not be weighed down by any sophistry that the SWF is not provided for in the constitution: It is a good idea under the current spendthrift environment. It provides a buffer for the rainy day which is why many countries with a deep understanding of the global political economy have bought into the idea. Countries like Kuwait and Saudi Arabia aforementioned long dependent on oil resources have opted for the SWF as a worthwhile path to tow in the precarious global financial environment.
In our situation, there are, however, unresolved governance entanglements. One is how to safeguard the money from the itching palm of the federal executive. The president has the power to spend the money and might so decide to do so. We have today a disarticulated state structure, and power-sharing envisaged by the federalists is absent. Therefore, the modus operandi of spending the SWF money must be built into the amendment to ensure transparency and accountability so that the fund does not become another slush fund for the central authority in the skewed and quasi-federal structure operational in Nigeria. It needs to be said that the federating states are important components of the state structure in our country and must be factored into the spending design, and so they need not oppose it but should support for its long-term benefit for the citizens and the country. If Nigeria were to be practising true federalism, the debate would not arise as state governments or component units will be at liberty to create a similar fund in the interest of the units. In other words, so many states in the United States, including Texas, an oil-rich state parades two streams of Sovereign Wealth Fund for secondary and tertiary education. They don’t need permission from Washington D.C to save their money for the rainy day. There must therefore be an end to Nigeria’s unitary system of government that has remarkably paralysed the most populous black nation on earth.
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