Why states, LGs should embrace savings culture

Without savings, no state or nation can ever become great no matter the prayers involved. In 1990 Norway started its savings fund scheme with $10b, today it has over $1trillion in its Sovereign Wealth Fund. There was a period they were saving $1b every week. So am suggesting that all states and local governments in Nigeria should establish the savings fund scheme where the states will save a minimum of N200m every month from total income accruing to the states and N5m or N10m savings per month for local governments in the scheme for present & future generations.

Of this amount saved 40% or N80m will be invested in companies stocks in the stock market, another 40% or 80m will be invested in bonds & 20% or N40m will be fixed deposited with commercial banks. Due to the importance of this scheme we recommend it commences immediately(remember no savings, no future) subsequently a month, inclusive of federal allocation and internally generated revenue.

After salaries and some capital projects, nothing is saved and nothing is left. If states adopt this scheme over the next 15years most states will become very rich and also become rich in the stock market without additional income. They only need to engage reputable investment advisers. Even if today’s income is not sufficient, savings will create opportunity for states to defeat poverty by saving and then investing in big industries.

Between 2016- 2019 most states were paid Paris club debt refund, the fund actually belongs to the respective states, it’s not a bonanza. After the Paris club debt was settled in October 2005 by the Obasanjo government, the federal government discovered that excess funds had been withdrawn from states account from the 90’s, because the Paris club debt was discounted from $30b to $12b, so they had to refund the excess funds deducted during the course of the loan settlement to the states, It’s not free money, It is indirect saving.

All states got between N10b and N60b, out of all the states, its only Lagos state that invested its refund in her Eko transport scheme, the rest used the refund to pay salaries which is very unfortunate and unproductive. By 2005 Rivers state under Dr Peter Odili had a saving scheme, it saved N5b for the state and in 2014 former Anambra state governor Mr. Peter obi said he left a savings of over $110m for the state, since these savings were not institutionalized via a bill am not sure the savings have continued in these states up till today.

By the time former President Obasanjo left office in 2007 we had excess crude account of over $60b, but by the time President Buhari came in 2015 only $2b was left, am not sure there is an excess crude account today. In 2013 Jonathan government boldly established the national sovereign wealth fund with $1b, almost all the states opposed it, they wanted to share the money, while we were battling whether we should invest $1b or not Angola government invested $5b to start her sovereign wealth fund, a big challenge to Nigeria the Africa giant. The federal government can comfortably invest $2b-$5b annually in her sovereign wealth scheme if the will is there. Since 2013 federal government has only invested $2b, but ironically with a whopping $2b in our kitty we are not even investing in foreign/U.S stocks which is very rewarding. What a myopic investment attitude, a $1b invested in Amazon Inc in 2013 should be worth more than $3b today.

David Atta wrote from Abuja.