The creation of Sovereign WealthFund (SWF) by the Federal Government is perceived to be a noble idea. but its implementation is now dogged with resistance from no less a quarter than the governors of various states of the federation, culminating in a suit before the Supreme Court. The state governments are challenging the legality of the excess crude account and the Federal Government’s alleged transfer of $1 billion from the account to SWF.
in this interview, Kayode Sofola (SAN), an experienced commercial lawyer, who has always participated in various national assignments, including those relating to the swf, explains the idea behind it. he also spoke on other related issues.
THE governors and some other prominent personalities such as the former Governor of Lagos State, Bola Tinubu, had kicked against it, arguing that all monies accruing to the Federal Government must be shared according to the provisions of the constitution.
Ironically, some of them supported the idea at the legislative level.
Reacting to this controversy, Sofola said: “First, I don’t even think I agree that it is controversial. You can ask that I explain the philosophy behind the overdue enactment of the Sovereign Wealth legislation, which has been passed in every other jurisdiction where they derived their wealth from minerals such as oil.
It is a way of ensuring that the benefit of that resource endures to the benefit of generations yet unborn. When we exploit the wealth under the earth, we should not consume it alone. We should realise that we have children and those after them. They are entitled to share from it. So, there is an aspect of it that is for future generations.
The second aspect of it is for infrastructure development, which we are in dire need of.
And the third aspect is to cushion the effect of economic stress by putting some money aside and to augment strategies when those years have come. Those are the three envelopes contained in the legislation of the Sovereign Wealth Fund.
The other one is an omnibus idea. That the monies we raised for Sovereign Wealth do a few other things. First of all, it tells the world about our fiscal responsibility - that we are a country that does not consume everything as it is.
Secondly, like the minister at that time said: for every one billion, other Sovereign Wealth bodies and other investors were prepared to give seven or eight of that amount in concessional offering to the country. So every one billion amounts to nine billion that the nation is amassing by way of interest to help grow our infrastructure and to deploy and invest properly to cater for Nigerians now and yet unborn.
To me, it is not controversial at all. The question is: why have we waited for so long to do so?”
On how the Sovereign Wealth Fund is different from the Excess Crude Account, he stated: “Excess Crude Account, although it is beneficial, is on a very dicey constitutional footing. Our Constitution is very clear in Section 162 that all revenues, however it is derived, should first of all be paid into the Federation Account. This is because, prior to that situation there were leakages; accounts that the head of state did not know anything about in countries were prevalent and so on. It was open to abuse. So, it will first of all report to that Federation Account. When it is being distributed, it is to the three tiers of government, apart from derivation to the littoral states that produce the oil.
“Our constitution does not say that we must consume immediately all that we earn. That will be a recipe for destruction. What it says is that it must accommodate savings of our resources and the husbanding of the savings to maximize the enjoyment of the entire country. We ought to have savings, we ought to save for the future and we have to invest our savings.
However, there are different instructions concerning what to do when you are distributing it; you can’t tamper with it in any way. The constitution is a holistic document. Are those sections enforceable? They are enforceable in a particular way. The constitution makes for planning in terms of what is due by way of the economic objective of the country. And those things are matters, which can be actualize by the legislation of the National Assembly, which is why Section 162 sub-section 3, says we should divide it to the three segments of government under the term prescribed by the National Assembly.
It didn’t say distribute it to the three tiers of government but stressed the terms prescribed by the National Assembly, which include provisions already available in the constitution for savings and having economic planning for our resources.
And the Supreme Court, over time, had said that the constitution should be read as a whole and that when you have provisions such as economic objectives and so on, it can be actualized but only by the National Assembly.
I am concerned. The constitution is totally complied with because all monies report to the federation account and the distribution to the three tiers of government have not been breached in anyway. So if anybody says we should consume everything now; he must require medical attention.”
“If Sofola says that the creation of the Sovereign Wealth Fund is not controversial, why then are the state governors kicking against its implementation? This is how he responded: “Why should you be surprised at the position of the state governors? They want to give dividends of democracy to their subjects, which is a noble idea. However, when we say save for the rainy day, they say it is already raining. But when the mother of all rains comes, like in a world depression, we will have no cover and our people will be stressed. So we are talking about the future. It is essential. Not considering their need to earn money now, we have to apportion how much is to be spent now and how much of it would be put away and invest for future and shock in shortages due to fluctuations in oil prices. And to have a robust support for the infrastructure we need so badly.”
On fiscal federalism, he explained: “It is organic. It can be improved in many ways. We have to improve on our fiscal federalism. Everybody is rushing to the centre, which is seen as the consumption headquarters of the nation’s resources. But having said that, no state government has shown better fiscal discipline than the Federal Government. What they are complaining about the Federal Government, they are guilty of it with the local councils.
“I think we have to take a holistic approach as to how we shall get to our Utopia. I think we shall get there in gradual steps so as not to cause unplanned havoc. We have a long way to go in terms of fiscal federalism. But it is not an absolute thing. It is something we have to graduate into in line with the progress we are making in other parameters of governance. Realizing fiscal federalism is inevitable in the fullness of time. But personally, I believe that the presidential system is just too wasteful and so much resources are being consumed by the ambition of the individuals concerned. The Parliamentary System is much simpler and less expensive. Right now, we are following blindly the way it is practised in the USA without bearing in mind our level of development. I will really prefer the Parliamentary System.”
Terrorism suspects who are apprehended hardly get tried. Do we lack legislation to do so? He said: “We have ample legislation that is more elegant and better drafted, which are not being fully implemented because of deficiency in infrastructure, capacity-building, commitment and so forth. We have to improve on all of those to enjoy a saner society. Having said that, there is an extra-ordinary crime of terrorism, which is a recent development. However, a new bill has been passed to cater for offences relating to terrorism: The Prevention of Terrorism Act 2011. But for most of the other crimes such as economic crimes and so forth, we have more than enough.”
On the issue of reviewing the Evidence Act to accommodate computer-generated documents, Sofola stated: “I don’t think it is open to controversy. When documentation of transactions explodes with the coming of the Information Technology, it is ideal to say that the whole weapon that should be used to combat international crimes and crimes that are generated through new technologies have to be upgraded. But a measure of reform of Evidence Act 2011 already accommodates the admissibility of statements in Section 84 and electronic signatures in Section 93.
On the Petroleum Industry Bill, which has lingered in the National Assembly for a long time, he said: “The challenge is: how do we overcome personal interest; not just in this particular exercise, but in all exercises? We have lobbyists in the US, but they have less coverts presence but more influential. We are more coverts here. So in the interest of ordinary Nigerians, we must have a way to circumvent the influence of extraneous bodies in legislative process, who use their personal and limited interest to truncate clear national objective and interest. So we have to be very strong and it needs a lot of political will to let people know that the interest of an individual cannot subjugate that of the general group.”
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