The Sovereign Wealth Fund should subsume the Excess Crude Account
The controversial Excess Crude Account (ECA) has been in the news since it was reported in December 2017 that President Muhammadu Buhari had obtained the approval of the National Executive Council (NEC) to withdraw USD 1 billion from the account to tackle the Boko Haram insurgency. Unsurprisingly, the approval to withdraw the funds has drawn suspicions both in respect of its timing in relation to the 2019 general elections and its supposed aim.
Indeed, the ECA has been controversial since its inception and it is a wonder that the current administration still runs the account. It was the belief of many that the ECA would be subsumed into the Sovereign Wealth Fund (SWF), which is at least established by statute. The SWF is structured to ensure more productivity and transparency. But it would appear that we needlessly run both fiscal funds.
The ECA is a government account used to save oil revenues in excess of the budgetary benchmark price. It was established in 2004 under the administration of President Olusegun Obasanjo. The misgivings about the account are so legendary that some writers have suggested the account had existed at the Central Bank of Nigeria (CBN) since the General Ibrahim Babangida administration. The account was popularly referred to as the ‘Gulf War Windfall,’ which later became the subject of a probe headed by the late Nigerian economist, Pius Okigbo.
The claim is that the succeeding military administrations of General Sani Abacha and General Abdulsalami Abubakar continued to maintain the account as some sort of slush fund controlled at the pleasure of the Head of State for extra-budgetary expenditure of the Federal Government. It is no wonder that the formal creation of the account in 2004 was met with a deep sense of mistrust, allegations of mismanagement and abuse; and a barrage of lawsuits have challenged its constitutionality and legality.
On the contrary, one of the reasons given for setting up the SWF was to address the controversies surrounding the legality of the ECA. The Nigeria Sovereign Investment Authority (NSIA) Act establishing the SWF was signed into law by President Goodluck Jonathan on the 26th of May, 2011 after it was passed by both houses of the National Assembly.
The CBN defined Sovereign Wealth Fund in a 2012 publication of its ‘Understanding Monetary Policy Series,’ as a state-owned investment fund, which comprises financial assets such as stocks, bonds,