ECA and Nigeria’s drunken sailors

KING Pharaoh slept one night and had too troubling dreams. He first saw seven plump cows by the Nile and another seven lean cows came and ate the plump ones. He woke up only to sleep and saw another seven  good looking ears which another set of seven ugly ears came to devour.

He could not get any interpreter until they brought Joseph who told Pharaoh that the two dreams are one. That God was telling the king that there would be seven years of plenty in the land to be followed by seven years of famine that would make the people to forget there was ever a bountiful season. He advised him to look for men of integrity who will keep a fifth of the plentiful for the days of scarcity. The king asked Joseph to lead the prudent men for the assignment so, the affairs of the nation would not be in the hands of drunken sailors who messed up Nigeria’s season of plenty which has now turned our people into Almajiris in less than a month of COVID -19. They are even stealing the little palliatives available.

It was in like manner it occurred to Olusegun Obasanjo as President of Nigeria to set up Excess Crude Account (ECA) 16 years ago to put in whatever we sold oil above projections.

The logic was to protect the economy from fluctuating oil prices by saving excess over a benchmark to be used in the event that prices fell.

It was a brilliant  idea that had no legal backing, and challenged in court by opposition states led by Lagos spearheaded by today’s Vice-President, Professor Yemi Osinbajo who was then AG Lagos State. The same Lagos, Rivers and Benue states were to later oppose the Sovereign Wealth Fund (SWF) introduced later under the Jonathan administration. Suswan met Aganga the then Finance Minister and said money should be sourced from alternatives sources other than oil to save. Fashola argued that the Federal Government cannot force states to save and they have to take that decision on their own. I am not aware of any state that saved $1.

The NGF under Rotimi Amaechi opposed both ECA and SWF. It approached the court for all funds in ECA to be taken into the federation Account and be shared. The House of Representatives Leader then, Honourable Femi Gbajabiamila took a similar court action.

The case Osinbajo instituted against ECA on behalf of Lagos was not pursued with any real seriousness as there was a general collective acceptance that ECA was despite its legal challenges a good and prudent idea. Lagos that spearheads opposition to any saving idea is today the most indebted state nationally. Osun that it outsourced leadership for was ruined by debts along Lagos pattern of borrowings in just eight years! The balance on ECA reached as high as $20 billion and it was used to protect Nigeria during the 2008  global economic crisis.

Despite record  high oil prices, of up to US$140 per barrel, ECA did not grow under GEJ regime but was used to support FAAC as oil prices began their decline in 2014.

By the time PMB came in, balance on the account was $2 billion.

Despite 2016 recession, and prices as low as US$28, Mrs Kemi Adeosun as Finance Minister refused to allow the government to touch the ECA.

As soon as prices recovered and recession was deemed over she commenced saving into the account increasing it to Us$2.3 billion. With agitations from Governors of oil producing region about a lack of clarity on credits into the account, she set up a FAAC Committee to agree on rules under David Edevbie, the Finance Commissioner of Delta State. The  clear message was that credits into the ECA were a necessity.

Unfortunately, in her first month as Minister of Finance, Mrs Zainab Ahmed joined our drunken sailors who spend money as if it was going out of fashion to reduce the balance from $2.3 billion to $621 million citing pressure from state governors. Were these new governors, was there a decline in oil price that demanded withdrawals form that account? With oil price at US$58 and no change in the leadership of NGF, the answer is a resounding NO!

The plunder of the ECA continued, within a year the balance was US$324 million and by March 2020 it stood at just US$70 million, prompting calls for the account to be closed. Worryingly despite oil prices averaging US$60 no single credit was made into the ECA since the current Finance Minister took over, perhaps suggesting a fundamental policy decision to abandon ECA saving.

In February 2020, With oil prices already plunging as Russia and Saudi Arabia squared up for an oil price war, the slumbering National Assembly hastily set up a committee to investigate the ECA. Beyond identifying withdrawal of a dubious US4 million in ‘legal fees’, nothing came out of their tardy pursuit.

Now we face a dwindling of oil prices, millions of barrels of unsold oil and the very real prospect of an economic collapse that will make the 2016 recession look like a tea party. Now is the time that we should be turning to an ECA to help us through the perilous months ahead.

The chairman of the Nigerian Governors Forum, Dr Kayode Fayemi already hinted that zero allocation awaits FAAC from June with nothing to fall back on.

 

Unanswered questions:

If there was a fundamental policy decision not to save for possible fluctuations in oil price, then those who made that decision are surely obliged to let us know what alternatives they have put in place.

If, as is becoming clear there is no such alternative beyond a panic approach to a number of multi lateral lenders for loans, including the dreaded IMF, then those responsible for this act of economic hara kiri should understand that generations will suffer for their reckless conduct and economic sabotage.

 

..Now Zamfara leads the way out

All the loudmouths who led the charge that advocates of restructuring are out to kill the north economically should now burry their heads in shame as Zamfara State from the North is now showing the pathway out of a unitary terminal crisis Nigeria has found itself.

We have been saying it over the years that a complex country like Nigeria can only be managed successfully and productively along federal lines. In the days of federalism, northern Nigeria was harvesting 650,000 metric tones of groundnut annually, and that was riches going into pockets of farmers.

Since the days we switched to unitary arrangement and mono-product (oil), it has been national sharing of poverty. Today we are the poverty headquarters of the world.

At the 2014 National Conference, we shared the resource map of the country which showed there are more solid minerals in the North. But the apostles of command and control never wanted us to diversify. They are okay with sharing oil receipts that continue to keep us poorer only enriching the few who have access to power.

Zamfara State for instance has high reserves of solid minerals including gold, copper, zinc etc. The Zamfara solid minerals deposits occur in alluvial and eluvia places and primary vein from several parts of the schist belt in the state. The most important occurrences are found in Maru and Anka areas.

Until the coming of Governor Bello Matawale, the mineral deposits were the exclusive reserves of criminals, bandits and other illegal miners. Our military-imposed constitution says all such deposits are on the exclusive list and belong to the Federal Government that is only interested in oil which we may soon be dashing out on high sea very soon.

Matawale has used his brain in less than a year as governor. He has worked out a plan that will make Zamfara the new ‘Akwa Ibom’ in post-oil Nigeria. He is putting the best of mining companies around the world together who will bring out the stuff under Zamfara soil. He has approached the Federal Government to work out how the sate and the Federal Government will benefit from the deal as against criminals having a field day and turning the state into a killing field.

In the global downturn we are entering, solid minerals would become source of payment for our infrastructural needs as we may not be able to afford cash payments

A state like Zamfara possesses about 50 per cent of Nigeria’s solid minerals.

Other governors should open their minds to fresh ideas in a season coronavirus is restructuring Nigeria on all fronts.

Most of the states in my region of the country rely on tomato, pepper and yam from the northern area of the country. If the pandemic continues and those produces do not come down again, I want the governors to tell me that such things have never grown on Yoruba soil before now.

My most favourite airline on the Lagos-Abuja route before the lockdown has been Ibom Air.

Any state that is waiting for any bailout from Abuja or until we formally restructure post-coronavirus will go bankrupt eternally. Mr Femi Falana (SAN) and I have been on this subject for several months now.

Re: Voice of Courage

Hello, Comrade Yinka, I’ve been following you for a very long time. I was opportune to meet you at Akure during Afenifere meeting in the house of Baba Fasoranti.

You are indeed a man of courage.

Just to wish you well and pray for God’s guidance over you, your family, every other defender of the Yoruba race and humanity in general.

God bless you.

Sir, I will suggest you address the state of education in Yorubaland in the nearest future. The legacy of the late Chief Obafemi Awolowo in the area of education must be upheld. The Yoruba people cannot afford to wait for other regions!

—Kunle Ogunrekun.

 

Sir, thank you for acknowledging my message. We are waiting to read another Voice of Courage next Sunday. When I was a young boy, I always liked reading Tai Solarin’s column in the Tribune. The late Uncle Bola Ige too had a column titled “State of the Nation” before his demise. You are making history. God bless you. Let me appreciate you for your courage. The Lord will guide and protect you. The trio books of the late Obafemi Awolowo published by Fagbamigbe and others written by him should be recommended for History students in secondary school to be read.

Thank you.

—Rotimi Omotoye.

 

NIGERIAN TRIBUNE

 

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