As the country transits from one democratic dispensation to another, there is no gainsaying that the state of the nation’s economy is the focal point, especially with the unending fuel scarcity, which is gradually grinding the nation to a halt. No doubt, the best person to explain the state of the economy today is Dr. Ngozi Okonjo-Iweala, Honorable Minister of Finance and Coordinating Minister of the Economy, whose management of the nation’s resources in these past four years has elicited different reactions from Nigerians.
As a member of the National Economic Council, I had spoken out at different times at NEC meetings and even in public on the way the economy is managed under Dr. Okonjo-Iweala, again, I want to share my views with the public on some of the issues affecting the Nigerian nation.
Recently, Dr. Ngozi Okonjo-Iweala, the Honorable Minister of Finance and Coordinating Minister for the Economy (CME) has been all over the place, pointing in the wrong directions and blaming everybody but herself for the parlous state of the Nigerian economy. Coming after her deafening silence on the PricewaterhouseCoopers (PwC) audit of NNPC crude oil sales and receipts, which revealed massive abuse of public trust and stealing of our common patrimony in high places under her watch and the government she serves, it is quite intriguing that with barely few days left in office, she has suddenly woken up from her slumber to realize that oil marketers have been all along falsifying subsidy claims and defrauding the nation of billions of naira and dollars.
This latter day “policy activism” on her part deserves closer scrutiny and interrogation. Perhaps for fear of the incoming President, Gen. Muhammadu Buhari, come May 29, 2015, Dr. Okonjo-Iweala is now compelled to disclose to Nigerians that a cabal is holding the country and the government to ransom. Beside the abuse of the subsidy regime, we will insist that Dr. Okonjo-Iweala also comes clean on some other critical issues that demand accountability from her and her office.
According to Dr. Okonjo-Iweala, after paying N156 billion to the oil marketers, the marketers came with another claim of N200 billion, which includes a N159 billion coming not from actual supply of fuel but from exchange rate differentials. This resulted in a prolonged bickering that led to the current nation-wide fuel scarcity and total blackout.
The question to ask is: how come that it is now, for the first time, that we are hearing from the Minister of Finance about fraudulent claims by the oil marketers amounting to billions of Naira? At what point did the Minister of Finance and CME realize that these fraudulent and similar claims are going on? When did it start? Is it just recently or it has been going on all along? These questions are pertinent because we know that if the Petroleum Products Pricing Regulatory Agency (PPPRA) were doing its work diligently, all claims by oil marketers would be vetted on a daily basis before the Ministry of Finance processes their payments. Hence, there should be no dispute about the amount due to oil marketers at any point in time.
What the foregoing, therefore, suggests is that all along, PPPRA, the Ministry of Finance and the oil marketers have been involved in an unholy alliance, in the mismanagement of the fuel subsidy regime and in the process defrauding the nation of its revenues.
The Minister of Finance cannot stop at simply shedding crocodile tears about fraudulent claims by oil marketers. Having found her voice, thanks to the fear of Gen. Buhari, it is very necessary that Dr. Ngozi Okonjo-Iweala takes one more crucial step at full disclosure. She must disclose to the nation the full details of subsidy payments made to oil marketers in the last four years, including the parameters used to calculate the subsidies. This also must include how much of the subsidy was paid to the NNPC since the NNPC is also being accused of making the same fraudulent claims. In other words, the Minister of Finance should be prepared to provide more information and make more explanations regarding the management or mismanagement of subsidy payments in the last four years.
The squandering of the Excess Crude Account (ECA) is another area in which the Minister of Finance should come out, shed more light and put all the cards on the table. During several meetings of the National Economic Council (NEC), which has all the governors as members and with the Vice-President as Chairman, I had cause to observe that the State Governments, who are joint owners of the ECA, with the Federal Government, were not being adequately briefed on the status of the Account.
Accordingly, I had consistently demanded from the Minister of Finance a transparent and periodic disclosure of accruals to the ECA, at least on monthly basis. I had argued that even village associations do make available their financial statements from time to time, and as NEC, I see no reason why we will not even do better. All these years, my pleas fell on deaf ears. The Minister of Finance consistently failed to apprise the NEC with critical information on the management and operations of the ECA in black and white, when she eventually got to do that, it was usually verbal and casual, and hardly meaningful enough for decision-making.
The Minister of Finance had also developed the penchant for deliberately avoiding NEC’s crucial meetings, which many saw as a ploy to keep the governors in the dark. And when she is not around, no one gets any information, as if she was running a one-man show.
Coming to the specifics, it is interesting to note that by December 2012 the ECA had a balance of over $10 billion. This has been depleted to $2.07 billion by May 2015, according to the Finance Minister. Between January 2013 and May 2015, not more than $4 billion was shared from the ECA. Indeed, the last time any money was shared from the ECA was in May 2013.
For six clear months in 2013, NEC did not meet, an act many believed was contrived to conceal information on the operations of the ECA. When eventually NEC met after those six months, the Minister of Finance reported that the ECA had dropped to $4 billion. This prompted me to ask a very pertinent question: if the closing balance of the ECA as at December 2012 was over $10 billion and that for three years running Nigeria’s budget have been based on the average of between $77 and $79 benchmark while the average price of Nigeria’s crude has been $108 per barrel, suggesting an average of about $30 per barrel, how come that there was no accretion to the ECA? Indeed, based on a rough estimate, we should be expecting not less than $30 billion accretion based on the official oil exports of 2.3 million barrels per day. The question, which Dr. Okonjo-Iweala should answer, therefore, is why did Nigeria not make any savings during the unprecedented boom years from 2011 to August 2014?
The explanation offered by the Minister of Finance, which was as usual oral, and of course, far from satisfactory, was hinged on three factors, namely: (a) because of oil theft not much accrued to the ECA; (b) part of ECA was also used to fund petroleum subsidy and SURE-P; and (c) part of the ECA was also shared to the three tiers of government at the request of the state governments. Her claims in my view are untenable, fraudulent, illegal, unconstitutional and clear breach of extant financial regulations.
In the first place, ECA is not an exclusive preserve of the Federal Government. It belongs to all the tiers of government: federal, state and local governments. Moreover, the Minister of Finance has no power whatsoever to spend monies without the express consent and approval of the State Governments. Until questions were asked as to the status of the ECA, no State Government was put in the picture about the fact that money was taken from the ECA, why it was; and for what purpose.
It is also a fact known to all that under the 1999 Constitution (as amended), only the National Assembly (NASS) has the power to appropriate monies for subsidy. Similarly, nobody spends money that is not appropriated or in excess of what was appropriated without recourse to NASS. And with regards to funding subsidies and SURE-P from ECA, there was no indication anywhere that NASS authorized the use of ECA for that purpose. The amount in question is also evidently far in excess of what the country can consume of petroleum products, even if every Nigerian is a consumer of petroleum products. In this regard, therefore, the Minister of Finance has a lot of explanation to make; particularly in the manner she knowingly enriched oil marketers and condoned abuse of due process in the operations of ECA.
Regarding the funding of SURE-P, the understanding from the outset was that SURE-P would be funded from the difference between new and old price of petroleum products, after the partial removal of the subsidies in 2012. Why the Minister should fund SURE-P from the ECA is inexplicable, because it is a complete violation of the law and due process. In this regard, it is necessary that Dr. Okonjo-Iweala makes available to the nation SURE-P’s financial statements, indicating clearly the sources and uses of funds.
The Minister of Finance also made allusion to the sharing of the ECA as requested by the State Governments. This is obviously one-sided and being economical with the truth. What Nigerians are asking is not what was shared but the whole story about the operations of the ECA itself. At any rate, considering that not more than $4 billion was shared, this is not adequate to explain how the country went from $22 billion at the end of 2007 to the current paltry $2.07 billion balance in the ECA in 2015, bearing in mind, the oil boom period from 2011 to 2014. For the sake of transparency and accountability Dr. Okonjo-Iweala has a duty to herself, to the nation and the international community to account for what transpired in the ECA by giving full disclosure of how much accrued to ECA on a month-by-month basis and the subsequent outflows.
On the question of oil theft, I can proudly say I was among those whose probing questions compelled NEC to set up a Committee to investigate the problem of crude oil theft. It became quite apparent in our interaction with security agencies that crude oil theft has indeed, become official. Some of the military officers confessed that whenever they apprehend oil thieves on the high sea, a telephone call from above would compromise all their efforts. When we suggested that any ship caught in the act be immediately destroyed, we were told that that would pollute the waters. Hence, till date not a single person was caught or prosecuted on account of this heinous crime against the nation.
I recall during one of NEC’s meetings with the Vice-President presiding, one of the Governors was on record, as having expressed concerns that the inability of the government to deal with oil theft might be because the proceeds of such a crime flow into political coffers as one of the means to compromise the 2015 election. Still, under her watch the problem persisted; the country keeps hemorrhaging and all we get are banal excuses and obfuscation of our concrete realities.
The recent nationwide fuel and energy crisis, adjudged the worst in the economic history of Nigeria, is merely a reflection of the gross mismanagement of the economy, which characterized Dr. Okonjo-Iweala’s tenure since 2011. As we speak, there is a widespread and popular feeling that she has presided over the wanton mismanagement of the Nigerian economy since the inauguration of the democratic order in 1999. Aspects of this could be seen from the reckless borrowing and debt accumulation since 2011, as well as the manner in which government’s recurrent budget has been continuously funded through borrowings, while about a quarter of the national budget is allocated to debt servicing.
Under Dr. Okonjo-Iweala, government borrowings were programmed to support wasteful expenditures. In the same vein, budgets were so poorly formulated and skewed towards consumption such that 90% of budgetary releases were meant for recurrent expenditures, which is injurious to the economy.
There is the urgent need to launch an audit trail of the sources and uses of the borrowed funds we have accumulated in the last five years amounting to over N8 trillion. It does not make sense to accumulate such huge debts without a tangible infrastructure project that we can point to as evidence of fund utilization.
Dr. Okonjo-Iweala was quick to blame State governments for not paying salaries, but the situation with the federal government employees is even worse. Things have gone so bad that even salaries of federal employees have to be paid by recourse to irresponsible borrowing from the capital markets.
Let me state for the record at this juncture that while Dr. Okonjo-Iweala, as Minister of Finance is borrowing recklessly to pay salaries of federal employees, in Edo State we are paying salaries as and when due, including teachers employed by Local Government Councils without recourse to borrowing.
The implication of this reckless borrowing on the part of Dr. Okonjo-Iweala is that the future of workers’ savings in the form of pensions is clearly at stake. It means that there is no guarantee that workers and pensioners will have value for their hard-earned savings in the future. In the first place, she has effectively withdrawn the entire savings of workers meant for pensions through issuance of bonds to fund payment of workers’ salaries and other wasteful spending. Secondly, excessive borrowing has devalued the Naira. At the time Dr. Ngozi assumed duty, the exchange rate was within the region of N100-N116 to one dollar, now it has been officially devalued to about N200 to one dollar. This has done incalculable damage to the value of savings of the pensioners, and when inflation is factored in, it is clear that by the time the Nigerian pensioner accesses his savings, the value will have been drastically reduced, no thanks to the gross mismanagement of the Nigerian economy by the Minister of Finance.
In this regard, the Minister should swallow her pride and admit that her tenure as Minister of Finance is a total disaster and colossal failure as far as economic management is concerned. In the same vein, given her so-called background as an international bureaucrat with the World Bank, our present sordid economic realities present a huge embarrassment to the country, particularly her penchant for violating financial regulations and all tenets of fiscal responsibility.
Finally, I will like to briefly touch on the Sovereign Wealth Fund. It is understood from the law establishing the SWF that the State Governments are part of the decision-making regarding the operations of the Fund. However, till date, no State Government has any idea about how the Fund operates or how it is managed. Like the ECA, its management is opaque.
The only information we stumbled upon, as State Governments is that the Minister of Finance had unilaterally and without recourse to NEC and the State Governments, withdrawn money from the SWF to fund consultancy services in the name of the Second Niger Bridge. In this regard, I wish to remind the Minister of Finance that before she leaves the stage, she is duty bound to inform the State Governments, as critical stakeholders about the financial status of the SWF backed up by convincing evidence.
There is too much of secrecy surrounding the management of our public finance. The earlier the Finance Minister comes clean on the management of our financial resources, the better for all of us, so that the incoming government will derive the baseline from which to launch its economic recovery strategies to combat our present morass. This is the irreducible minimum that is expected of any Minister of Finance worth his/her salt. Otherwise, for now, Dr. Okonjo-Iweala’s tenure is bile in the dish.
*Oshiomhole is Governor of Edo State