Approval by President Bola Tinubu for the establishment of the Infrastructure Support Fund (ISF) to assist states cushion the effects of petroleum subsidy removal is a notable fiscal measure which, if properly implemented, can achieve its objective. That Nigeria’s infrastructure is decrepit is all too glaring; be it power supply, roads, communications, transportation, road and rail network, the story is the same. Nigerians struggle to get simple things done due to these deficits.
Yet infrastructure is vital to the attainment of all the goals set by the Federal Government in relation to fuel subsidy removal. It is just as well that the government recognises that infrastructure acquisition can only be meaningful if the states, and even local governments collaborate with the central authority. The three tiers of government should therefore collaborate and demonstrate reasonable commitment in the Tinubu infrastructure agenda.
The approval for the fund was announced at the monthly meeting of the Federation Account Allocation Committee (FAAC) in July, where Special Adviser to the President on Special Duties, Communications and Strategies, Dele Alake, said the fund is to enable states “intervene and invest in the critical areas of transportation, including farm-to-market road improvements; agriculture, encompassing livestock and ranching solutions; health, with a focus on basic healthcare; education, especially basic education; power and water resources, that will improve economic competitiveness, create jobs and deliver economic prosperity for Nigerians.”
In addition, the government promised that the Federation Account Allocation Committee would save a portion of the monthly distributable proceeds to minimise the impact of the increased revenue occasioned by the subsidy removal and exchange rate unification on money supply as well as inflation and the exchange rate. Of the June 2023 distributable revenue of N1.9 trillion, the government announced that only N907 billion was to be shared among the three tiers of government, while N970 billion would be saved and the rest to be used for statutory deductions.
As part of a larger relief package, this appears to be a good way to capture and apply revenues that accrue to the Federation Account since the fuel subsidy regime has been abolished. The pain that is borne by citizens, who now pay very high prices for Premium Motor Spirit and related inflationary trend, can only be assuaged by a diligent plough-back of expected savings.
It has been a chequered history for Nigeria, supposedly Africa’s leading producer of oil when it comes to appropriate deployment of revenues accruing from the resource. Similar accruals in past windfalls from higher PMS prices were misapplied, with almost nothing to show for them.
There was the 1991 Gulf War oil windfall of about $12.4 billion whose receipt and application were shrouded in secrecy. Similar savings from increased petroleum prices were misapplied. For instance, mass transportation vehicles that were procured over the years to assuage hike in cost of living due to fuel price increases were roundly mismanaged. The only evidence of those disbursements are the carcasses of vehicles that litter garages across the country.
There was the notorious Petroleum Trust Fund (PTF) set up by the late Head of State, Gen. Sani Abacha, as an intervention development agency between 1994 and 1999, to administer revenue generated from increased petroleum prices. Former President Muhammadu Buhari was the chairman of Abacha’s PTF.
Just like Tinubu’s ISF has outlined, Abacha’s PTF also ventured into areas such as road and waterways, supply of educational materials, rehabilitation of educational infrastructure, food supply, health etc. with about N144.51 billion to disburse. But details of Abacha’s PTF revenue and expenditure were shrouded in secrecy and there were no checks on its activities. It was scarcely surprising that when former President Obasanjo in 1999, ordered an Interim Management Committee to bring the activities of Abacha’s PTF to a close, it was discovered that the fund was badly managed, despite the Buhari persona that cloaked it. The verdict was that the activities of the agency were not conducted in a transparent and accountable manner.
Given that background, there is a need for a legal and administrative framework that will enable President Tinubu’s ISF to deliver optimally and differently. Will the ISF run as a separate agency of government in its areas of operation, or will it be embedded in the various ministries to support calls for a leaner bureaucracy and reduced cost of governance? Or will FAAC just be sharing money to states to carry out projects in their respective states? Who will oversee the utilisation of the funds shared to states and what will be the duration of the intervention?
These posers are necessary to enable the government to fine-tune the rough edges of the proposal and create room for citizens’ participation, particularly in states where citizens have little or no confidence in their governors when it comes to delivering the dividends of democracy. There should be a process for citizens to hold governors accountable for the resources allocated to them. We recommend that a team of neutral monitors be put in place in each state to oversee activities relating to the fund.
On the sharing formula between the federal and states, there should be a revisit of the subsisting revenue sharing arrangement that gives more to the Federal Government and less to states where human activities take place. For instance, ‘Trunk A’ roads that crisscross states are said to belong to a Federal Government that obviously has not shown capacity in fixing them. Federal roads are perennially in a mess, particularly during rainy seasons when the integrity of previous ad-hoc interventions fail repeatedly, while the citizens agonise all through the rains, only for the government to rush in at harmattan seasons to do repair works that don’t last.
Edo State Governor, Godwin Obaseki has lamented his inability to fix deplorable federal roads traversing Edo because the Federal Government has embargoed any intervention. Other states have lamented similar encumbrance. There used to be an understanding between states and the Federal Government on fixing Trunk A roads passing through states. Whatever misunderstanding should be resolved now using the infrastructure fund as an opportunity. The Federal Government should not hesitate to handover roads to states where it clearly has no capacity or proximity to fix them. This is time to avoid frivolous areas of friction on partisan or ego basis that hamper growth and development.
Moreover, governments should avoid the poor governance and opacity that becloud deployment of the Ecological funds, another initiative meant to mitigate ecological challenges in the country. Between 2017 and 2021 states have shared N300 billion from the Ecological Fund with very little to show for it.
Besides, governors that are in a rush to deploy populist measures in the name of palliatives should desist from such misadventure. This is not a time for tokenism, but a comprehensive application of lean resources to facilitate growth and alleviate citizens’ pains. In doing all that, it is important to make use of local content reasonably.
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