Withdrawal of $1bn, Abuse of ECA | Punch

THE decision to withdraw $1 billion from the Excess Crude Account to fund the perennial war against insurgency raises some fundamental questions about the state of the war and the seemingly arbitrary nature of the management of the account over the years. At the end of a recent meeting of the National Economic Council, the Governor of Edo State, Godwin Obaseki, said that the go-ahead for the withdrawal of the money was given by the governors, under the aegis of NEC, chaired by the Vice-President, Yemi Osinbajo.

First, it is strange to hear of $1 billion being sought for the prosecution of a war that the Federal Government claimed had been won “technically” two years ago. President Muhammadu Buhari reiterated the claim in his New Year speech. Nigerians were told that Boko Haram had been chased away from its fortress in Sambisa Forest and posed very little or no threats at all to the corporate existence of the country. Since then, however, suicide bombings and ambush of troops by the fundamentalists have been recurrent. Villages have been sacked and a whole contingent of experts prospecting for oil in the Lake Chad Basin – including 10 members of the University of Maiduguri research team – went missing, either kidnapped or killed.

If the government is now to raise $1 billion to prosecute the war, then Nigerians deserve to be briefed about the true state of the war. This has become even more compelling in the light of a report last year by the United States Department of State and the claim by the United Nations High Commissioner for Refugees that the bombings and killings by Boko Haram had not relented, contrary to the official position.

Although Osinbajo and other top government functionaries have made spirited efforts to convince Nigerians that the money is not just to fight Boko Haram but to tackle the security challenges of the entire country, the justification by some of the officials that other administrations also made such withdrawals gives cause to worry. The Zamfara State Governor, Abdulaziz Yari, for instance, said that $2 billion was withdrawn during the Goodluck Jonathan administration to fight Boko Haram, while the late Umaru Yar’Adua took N5 billion from the ECA to fund the Niger Delta Power Holdings power generation projects.

Yari’s argument shows that beyond the justification for putting forward a $1 billion war chest for fighting insurgency, there is also the very important issue of how arbitrariness has taken over the management of the ECA by successive administrations since its creation by President Olusegun Obasanjo. The account, not backed by law, was designed to serve as a buffer against the volatile nature of the prices of oil, which is Nigeria’s main source of income. Established in 2004, it is the savings from oil revenue above a defined benchmark price for budgeting purpose.

Unfortunately, rather than serve the purpose of cushioning the budget against any revenue shortfall that might occur as a result of fluctuations in crude oil prices, the ECA has become a slush fund into which the government just dips its hands and spends according to its whims. During the last administration, there was a row between the then Edo State Governor, Adams Oshiomhole, and the former Minister of Finance, Ngozi Okonjo-Iweala, over unauthorised spending of money from the ECA.

Oshiomhole was quoted in an outburst as saying, “You have heard of the last instalment of $4.1 billion that was in the Excess Crude Account as of November 2014; and from that time till today, we have not – when I say we, federal, state and local governments – have not touched that money. We have not agreed to take anything out of it, and yet it has been drawn down to about $2 billion, which means $2.1 billion has disappeared.”

If Oshiomhole’s allegations and those of Yari are anything to go by, then the management of the ECA has been anything but tidy; it has become a source of opacity in government accounting and the time has come for it to be scrapped. It should be noted that even though the Zamfara State governor claimed that approval for the withdrawal of the money was given by the governors, nothing was said of the LGs, who are also stakeholders as the money belongs to the federal, state and LGs.

Other countries which found themselves in a similar situation as Nigeria’s, devised a transparent way of investing the excess in Sovereign Wealth Funds. Norway’s SWF, started in May, 1996, topped the $1 trillion mark on September 19 last year. Having successfully built up the fund to become the largest in the world, the country made its first withdrawal in 2016 and was expected to make a total withdrawal of $70 billion last year, according to Bloomberg news agency. Similarly, the Kuwaiti SWF stands at over $500 billion and is the fifth largest in the world. By contrast, Nigeria’s SWF as of September last year was put at $2 billion, according to a news report.

Although the original concept of an ECA was noble, there is no doubt that, like every noble idea introduced in Nigeria, it has been thoroughly abused. In the absence of any legal framework for the continued existence of the ECA, the Federal Government should consider sharing the fund to all the stakeholders, according to the current revenue sharing formula. In its place, the Federal Government can consider investing its own share in the NSWF. As a federal entity, it is wrong for the Federal Government to force others to continue to operate the ECA against their will.

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