The Sov­er­eign Wealth Fund should sub­sume the Ex­cess Crude Ac­count

Financial Nigeria Magazine - - Contents - CEO, Nige­ria Sov­er­eign In­vest­ment Author­ity, Uche Orji

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,

Newspapers in English

Newspapers from Nigeria

© PressReader. All rights reserved.