FG, states shared N6.744 trillion in 2010
FINANCE Minister, Olusegun Aganga, yesterday appeared at a public hearing held by the Senate and House of Representatives Joint Committee on Finance where he disclosed that the Federal Government would soon set up the proposed Nigerian Sovereign Investment Authority (NSIA) with $1 billion (N150 billion) and proffered argument on why the country must inaugurate the NSIA now.
The Senate held the second reading on the bill to set up the authority last week and asked its Committee on Finance to conduct a public hearing on it.
Also, in its stewardship account yesterday, the Federal Government said the three tiers of government last year shared N6.744
trillion from federally generated revenue in fiscal 2010.
Aganga, who rendered the nation’s account in Katsina, said statutory revenue alone stood at N5.281 trillion up from the N4.295 trillion generated and shared in 2009.
And worried by the apparent lack of evidence or value for this whopping revenue generated and distributed in one year, the National Council on Finance and Economic Development (NACOFED), a platform for the exchange of ideas amongst public sector finance managers, has moved to change the situation by ensuring that Nigeria achieve sustained growth and development through intervention in the financial and real sectors of the economy. Its membership includes states finance commissioners.
At the public hearing, Aganga explained that the fund would help the country to diversify its investments, stressing that Nigeria would not be able to fund budget deficit from the oil proceeds alone.
He added that the oil market was volatile and advised that now that the price of oil in the international market was high, it would be “better for Nigeria to invest against the rainy day.”
Stating that the decision was reached after a wide consultation among stakeholders, including federal, state and local councils, the minister said: “Action on the bill started in 2005. The road that has brought us here together to support the creation of the Nigerian Sovereign Investment Authority - the NSIA- is wide.
“The governors of the 36 states, the attorneys-general of the states, ministers of our federation, financial and legal experts – all these people have worked together to realise a common vision of success for our Nigeria. The National Economic Council (NEC) after extensive deliberation, consultation and evaluation, approved that the bill to establish the NSIA be sent to the National Assembly.
“The NEC also set aside $1 billion as seed capital for the authority. For this, I salute their foresight. This bill is a testimony to what can be achieved through a commitment to excellence and the spirit of working together,” he said.
He added that the present oil that the country boasts of is finite. And there is a need for strategic planning for Nigeria to continue to survive.
On the benefits Nigeria would derive from the fund, the minister said: “The NSIA will put Nigeria’s oil and gas resources to work for Nigerians; for our common future; and for the future of our children. This is one of the unique opportunities that we have to transform our economy and put it on the path of becoming one of the leading economies in the world in the nearest future’’.
Nigeria, Ecuador and Iraq are said to be the only Organisation of Petroleum Exporting Countries (OPEC) members without a sovereign wealth fund. Both Ghana and Uganda have moved forward with establishing their sovereign wealth funds, even when their oil production is not yet fully on-line. Algeria established its sovereign wealth fund in 2000 to save the difference between the actual and projected revenue generated from petroleum resources. That Algerian fund is currently estimated to be worth $56.7 billion.”
The minister further painted a gloomy picture of the nation’s economy without the sovereign wealth fund thus: “We naturally spend too much during the boom times; and when oil prices fall, we face the necessity of having to cut social spending and critical public investment - at sometimes terrible human cost. And economic studies have shown that these costs are asymmetric. That is, it is most often the case that the cost of cutting back when oil prices fall is greater than the benefit of the initial investment.”
The committee, chaired by Senator Ahmed Alkali and John Enoh, said the governors of the 36 states of the federation and the Federal Capital Territory (FCT) minister would be invited for further consultation on the bill.
Aganga, who was represented in Katsina by the Minister of State for Finance, Hajia Yabawa Wabi Lawan, urged members of NACOFED at their 2011 conference, to produce an actionable plan to ensure that Nigeria gets value for its money through sustainable growth and development.
Vice President Namadi Mohammed Sambo, who opened the event, presented a roadmap by the administration on how to sustain the achievements recorded by the Federal Government in the past 10 years.
Represented by the Minister of National Planning Commission (NPC), Dr. Shamsudeen Usman, the Vice President said: “The prospects for internally generated growth in Nigeria are very bright, going by the achievements recorded in the past 10 years and the current reforms in various sectors of the economy.
“However, for us to consolidate on these economic gains and move towards the frontlines of growth and development, it is absolutely essential that we deepen those reforms that improve human capital, promote high quality public infrastructure, and encourage competition.
“The pillars to sustain this consolidation must include a firm fiscal policy, transparent fiscal operations, development-oriented monetary and exchange rate policies, strengthening of the financial sector, strict adherence to the rule of law, respect for the sanctity of contracts, as well as commitment to the fight against corruption.
“This administration is resolute in the pursuit and realisation of these ideals, as we strongly believe that their attainment will propel Nigeria towards the envisioned socio-economic status. We must therefore break away from the past, to deliver a new Nigeria that future generations of Nigerians would be proud of,’’ the Vice President said.
Aganga gave the breakdown of the revenue generation and distribution thus: “The sum of N5.281 trillion was distributed from the Federation Account in 2010 as against the sum of N4.295 trillion distributed in 2009.
“In addition, the sum of N563 billion was distributed to the three tiers of government as proceeds from Value Added Tax. Equally, the sum of $6 billion was also shared from the Excess Crude Account (ECA) to the beneficiaries in the period under review. However, as you may recall, the distribution of funds from the ECA has drawn a lot of criticisms thereby raising some fundamental issues. It is envisaged therefore that the establishment of the Sovereign Wealth Fund would address some of these concerns.
“I wish to restate our commitment to refocusing the economy on the path of sustainable growth and development through active collaboration with all sub-national governments. It is my hope that this conference will further strengthen our collaboration and remain an avenue for creating a beneficial experience for us all,’’ the minister further stated.
This year’s NACOFED conference with the theme: “sustainable growth and development through intervention in the financial and real sectors of the economy,” examines the Sovereign Wealth Fund as a viable alternative to the ECA; the current intervention by the Central Bank of Nigeria (CBN) to boost the real sector activities, progress, prospects and challenges; the impact of poverty reduction measures; Millennium Development Goals (MDGs) programme scorecard in Nigeria and the interventions in the financial and real sectors of the economy: An overview of the overall impact on job creation and the way forward.
The Chairman of State Finance Commissioners’ Forum, Alhaji Usman Rebo, assured of state governments’ preparedness to collaborate with the Federal Government in the task of achieving sustained growth in the country.
Rebo recalled the states’ partnership with the central government in the power infrastructure project and pledged that the states would do more, provided it is in the greater interest of the nation.
The Katsina State Governor, Ibrahim Shema in his goodwill message, spoke of how his administration had placed emphasis on prudent management of public funds, pointing out that the measure had helped to stabilise the state.
He also enumerated several projects undertaken by his administration to empower the youths and women.
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