Federal Government reform activities and economic liberalisation (Part 3)

Impact of Pension Reform

The Pension reforms carried out by the Bureau has engendered the following positive impact:

•Over twenty Pension Fund Administrators (PFAS), seven Closed Pension Fund Administrators (CPFAS) and four Pension Fund Custodians (PFCS) have so far been licensed.

• Over 6.2 million contributors have been registered from 180,586 employers while 55,904 retirees, currently receive their monthly pensions as and when due. The total value of pension industry assets under the Contributory Pension Scheme is currently over N4.7 trillion and generates over N6.9 trillion annually.

• Investment of long term assets in economic development, helping in increasing domestic savings and investments, while also helping in the development of the Capital Market by contributing to increase in the volume of intermediated funds, increase in level of trading, modernization and deepening of the capital market.

• Pension funds act as intermediaries to a lot of financial assets, including corporate equities, government bonds, and so on, while also providing long term financial intermediation to the real sector through corporate debt instruments and investment funds.

• Pension funds serve as long term project finance for potential investors. The banking sector is yet to effectively and efficiently finance the real sector of the economy, bridge the infrastructural gap and provide affordable housing in Africa, due to the short term nature of its deposit liabilities and cost of funds.

Competition and Anti-trust Committee

This Committee was inaugurated on the 18th of June 2001 with membership cutting across both the Public and Private sectors. The Committee was charged with the following responsibilities, amongst others:

•Review of existing studies, reports and background material on monopoly and competition in Nigeria, including position papers, probe and panel reports and Government white papers where applicable.

Review of existing anti-trust regimes, studies, reports and background material on competition in other countries.

Identification of all legislation, industry practices and customs that inhibit competition or in any way confer monopoly/restrictive powers on any firm – whether public or private, in all economic sectors.

• Preparation of draft legislation to completely eliminate monopolies, remove restrictive conduct and foster competition in all economic sectors. The legislation shall also establish a regulatory agency for each sector to ensure that detailed rules for corporate conduct are drawn up and enforced.

The Committee produced a draft Competition Policy for Nigeria and a draft Federal Competition Commission Bill. The Policy and Bill were approved by the NCP in 2004.

The proposed Federal Competition Commission Bill is designed to, among other things,

Prevent the concentration of economic and political powers in the hands of a few large organisations;

•Promote maximisation of con-

sumer welfare using market principles and efficiency criteria;

•Encourage local control of business and protect against the effects of labour dislocation;

•Nurture small businesses, and

create an economy characterised by many sellers competing with each other;

•Ensure access to many more people previously denied an equal opportunity to participate in the economy;

•Prevent restrictive practices and abuse of dominance, on account of ownership concentration;

•Stimulate growth, innovation and expansion of economic opportunities;

•Maintain and encourage competition and enhance economic efficiency in production, trade and commerce;

•Prohibition of contracts or arrangements and restrictive practices (e.g. price fixing, bid rigging, price discrimination, fixing quotas, etc) that substantially lessen competition;

•Regulates mergers, takeovers and acquisitions; and

•Prohibits monopolies. The Bill provides for the establishment of the Federal Competition Commission.

Determination and Resolution of Cross Debts

The Committee was inaugurated in June 2001 with membership that cuts across stakeholders from Federal and state ministries and the private sectors. The terms of reference of the committee include:

•Determine the exact amount of total indebtedness by all public enterprises as at December, 2000

and assess its impact on the efficient running of the affected enterprises;

•Ascertain the authenticity or otherwise of claims of indebtedness by each of the affected enterprises and develop a cross-debt matrix between the affected enterprises and between them and government as at December 2000;

•Examine the items and nature of these debts by checking balances into Trial Balances and other control accounts of such enterprises;

•Advise on the most efficient ways of settling various existing indebtedness by all affected enterprises prior to privatisation or commercialisation of some of the enterprises under the current privatisation and commercialisation programme.

•Recommend in the light of its findings, precautionary measures (i.e. system design) to be put in place and appropriate steps to ensure prompt settlement of financial obligations between public enterprises;

•Recommend such other actions as may be considered desirable as this stage having regard to the current policy of privatisation of major public enterprises.

The NCP approved the report of the Committee in February 2003 and directed that the cross debts estimated at N350 billion should be forwarded to the Debt Management Office.

Solid Minerals

The Solid Minerals Sector Steering Committee submitted its report to the NCP on Monday, December 13, 2005. After detailed deliberations, the NCP directed BPE to process the draft Mineral Sector Policy document for the attention of both the

National Economic Council and the Federal Executive Council.

BPE also collaborated with the then Ministry of Solid Minerals Development to develop a new legislation for the sector. The draft bill was passed into law in 2007.

Regulatory institutions

When an economy is liberalised, proper regulatory machinery must be put in place. In all the sectoral bills drafted, there are provisions for regulators. This is to ensure that the rights of all stakeholders, especially the consumers are protected. For instance the Nigerian Communications Commission (NCC) has been overseeing the telecommunications sector while the Nigerian Electricity Regulatory Commission (NERC) is in charge of the power sector.

One of the challenges envisaged in the post-privatisation era is the regulation of the sectors. Hitherto, this was done by either Ministries or statutory bodies that performed both regulatory and operational functions. Some public enterprises were often organised to achieve political objectives not to solve market failures. Many have been tools of special interest groups and corrupt officials. There is a danger that such rent-seeking coalitions, aiming to avoid financial losses from privatisation and competition, will subvert the regulatory process.

Credible and stable regulation is required to achieve the benefits of privatising and liberalising infrastructure. A regulator should be coherent, independent, accountable, transparent, and predictable and have capacity to carry out its mandate.