COUNCIL RENAMESEXCESS CRUDE ACCOUNT TO SOVEREIGN WEALTH FUND
A meeting of the National Economic Council, an umbrella body for the Governors of the 36 States and federal economic managers statutorily presided over by the Vice President, rose from its meeting yesterday in Abuja with a resolution to replace the Excess Crude Account (ECA) with a National Sovereign Wealth Fund (NSWF).
The NSWF is being envisaged to legally manage the nation's extra earnings from higher prices of crude oil. The current ECA has no backing in law but a political arrangement by the government of former President, Chief Olusegun Obasanjo aimed at saving some of the funds accruing to the nation as a result of the rise in the price of crude oil.
Others who attended the meeting presided over by the Acting President, Dr Goodluck Jonathan include the Ministers of Finance, National Planning and Attorney General and Minister of Justice, the Inspector General of Police and Governor of the Central Bank of Nigeria (CBN).
Minister of Finance, Mr Olusegun Aganga and his National Planning counterpart, Dr Shamsudeen Usman told journalists at the end of the meeting that the NSWF is meant to be a robust institutional framework and strong fiscal policy for managing excess crude earnings.
Aganga noted that the fund is very important to the future development of the nation as it does not make any economic sense for any country to spend its earnings especially from crude oil earnings.
He therefor explained that the proceeds of the fund will be deployed to the development of critical infrastructural needs like power and mass transportation.
Already, a Presidential Committee has been empanelled to concretize the proposal and educate all stakeholders on the need for the fund. The Committee will report back to the National Economic Council within three months. It is also expected to prepare the documents for the legal and legislative backing for the Fund.
Aganga also added that though the SWF is similar to the ECA, the NSWF will have legitimacy rather than being a product of political and economic expediency.
Usman regretted that the only member of the Organization of Petroleum Exporting Countries (OPEC) without a Sovereign Wealth Fund is Nigeria, saying that the idea was discussed by the Council about two years ago but that inconsistency on government polices delayed its implementation.
According to Aganga, “the Council also considered the idea of setting up of the National Sovereign Wealth fund. This is a concept which is quite familiar to particularly oil producing countries; it is a very robust institutional framework for managing excess revenue which today we do have in the excess crude account.The idea is that this is not only going to provide us stronger institutional framework which is a strong fiscal way of looking at policy. It will also support the development need of the country, meaning that we will be able to invest part of that portfolio in critical infrastructure. And as you know, that these are the major areas that we need to focus on in this country. It will also have a component that would be almost like stabilization fund. There will be another pool which will be a saving pool for future generations. The whole idea is that it is absolutely irresponsible for us to spend all the revenue we generate; we need to provide for the future. Basically, the idea is not to rely entirely on oil it will be presented to the council next week and we expect to be in the right position within the next two to three months. The acting president today said he wanted us to get to a position where we should be able to do something within the next three months.
_”Already there was a presidential committee set up by the Acting President which has been looking at this. The intention is that the fund will be funded by what we have in the excess crude oil account today. The only difference is that the money in the excess crude account today does not have legal framework and is not managed as the one I explained. By the way we are the only OPEC country that does not have the SWF. So, even if it is 1billion we start with, the idea, the institutional framework, the fiscal discipline is so important to the credibility of the country itself and the credit rating of the country.”
_Usman added: “It was one of those things about our system here, our lack of continuity or lack of consistency. We missed an opportunity but it is never too late.”
_Governors Gbenga Daniel (Ogun) and Theodore Orji (Abia), who were also part of the briefing announced the resolution of the Council that all governors should quicken the execution of prison inmates on death row or exercise their prerogative of mercy to commute the death sentences to life terms.
The governors are to also assist the judiciary and police in ways of reducing the number of inmates awaiting trial who account for 70 per cent of all prison inmates. It is believed that all these measures will go a long way to decongesting the prisons and reducing incidences of jail breaks.
The NEC further decided that the over N31 billion Universal Basic Education Commission (UBEC) Fund be made more accessible to states that are unable to provide their 50 per cent counterpart funding. The Fund will now be made available to commercial banks that will lend it to the states at single digit interest rate.
On the problem of double taxation, the Council resolved that states should do away with tax consultants or collectors and rather empower their state boards of internal revenue to do their professional duties while the federal government properly coordinates and implements national tax policies.
Meanwhile, a new central database of statistics to be gathered through electronic means is to be developed by the National Bureau of Statistics with the support of the African Development Bank and the United Nations Develoment Programme.