IN the wake of the recent controversy over the reported bid to dispose of some national assets to raise funds to finance the 2016 budget, the Senate came up with a resolution meant to address some fundamental issues belying the current predicament of the Nigerian federation. It advised the Federal Government to initiate a process for the amendment of Section 162 of the Constitution so as to make it compulsory to save part of the money accruing to the federal pool. The Section expressly states: “The federation shall maintain a special account called ‘Federation Account’ into which shall be paid all revenues collected by the Government of the Federation, except the proceeds from the personal income tax of the personnel of the armed forces of the federation, the Nigeria police, the ministry or department of government charged with responsibility of foreign affairs and residents of the federal capital territory, Abuja.”
In advocating the amendment, the Upper Chamber of the National Assembly canvassed a paradigm shift from the current culture of spending all revenue to a culture of institutionalizing savings. Belated though it might seem, the advocacy is instructive given the drawbacks of the pernicious road that the nation travelled to reach the current economic quagmire and national embarrassment. The opportunities that should have been deployed during the era of surplus to plan for tomorrow were frittered away on the altar of profligacy and mundane mentality. Having failed to harness and plan meaningfully with the huge funds accruing to the Federation Account, the nation is paying dearly for that failure today on so many fronts and in so many dimensions.
Long before the Senate’s proposal, some senior citizens such as Professor Bolaji Akinyemi had, at different times, lent their voice to the clamour for a pragmatic shift by the country from the irrational and illogical, spend-all mentality. Akinyemi advocated what he called the Norwegian model, asking President Muhammadu Buhari to personally drive the constitutional amendment to that effect. The Norwegian model is about instituting a government fund into which 100 percent of the revenue from royalties and dividends are paid. The system, Akinyemi said, allows for no more than four percent of earnings to be drawn from the account. According to the erudite scholar, given the peculiarities of the Nigerian federalism, the model could include a provision that any withdrawal from the fund should be with a unanimous decision of the members of the National Economic Council (NEC). Of course, any model adopted would have to be domesticated. In our previous editorials, we also advocated a formula for national savings given the peculiarity of the times.
However, while it is necessary to diversify the economy from the prism of crude oil, it is imperative for the elite to relocate from the myopic mindset of momentary comfort and pleasure to that of informed and enlightened thinking, clear vision and flawless planning. And we believe that such a mental reconditioning requires honest and dogged political will. To mark the new thinking, there has to be serious lobbying of all key stakeholders by the authorities, since the proposed amendment requires the endorsement of two-thirds of the members of the National Assembly and state Houses of Assembly. The Federal Government should embrace the idea and ensure that the proposal becomes a reality and contains very stringent conditions for drawing down on the savings.
Of course, we appreciate the fact that the predicament of the country is not really about laws because, ordinarily, the nation should not need a law to tell it to save for a rainy day. But these are abnormal times when leaders do not value the economic wisdom that borrowing must always be a fraction of savings. In retrospect, the administration of President Olusegun Obasanjo and that of President Goodluck Jonathan took pragmatic steps towards institutionalizing a culture of savings. This was through the introduction of the Excess Crude Account and the Sovereign Wealth Fund. But the efforts were mired in political gerrymandering and legal cum constitutional gymnastics, with state governors as the agent provocateurs. Ironically, the majority of those that threw spanners in the works via judicial instruments then are today in strategic positions either in the executive or the legislature at the federal level. They also constitute the most vocal critics of the current awful state of Nigeria’s finances.
It is high time the governing elite in the country abandoned the ignoble syndrome of being kobo wise and naira foolish. The proposal by the Senate is timely and should be actualised as soon as possible.