Tuesday, August 14, 2012
As a young lad in Ibadan, Oyo State, there was this jingle being played on Radio O-Y-O, the radio arm of the Broadcasting Corporation of Oyo State about a righteous man known as Muibi who returned to government (Police, more precisely) a large sum of money a passenger left in his taxi. The jingle encouraged all citizens to do likewise. In 2012, another Muibi surfaced, now in Abuja. Mr. Imeh Usuah, a taxi driver plying Abuja airport road returned N18 million a passenger forgot in his vehicle to the owner. Imeh said he was at the car wash when he discovered there was a bag left behind after dropping the man off in a hotel and immediately returned it. He was quoted as saying: “My mind went back to the man who I dropped at the hotel and I immediately alerted my chairman and he instructed me to go back to the place where I dropped him. I saw him and delivered his bag to him.” There was no account of who the owner of the money is or whether he gave the cab driver some of the returned money in appreciation. In this era of cashless banking, I wonder why some people still risk their lives moving huge sums of money in public transport.
The National Orientation Agency on Thursday, August 2, rewarded Imeh with a token of N30, 000 and an award while the Ministry of Aviation reportedly plans to organize a dinner in his honour. Kind gestures these are, but I think the Federal Government of Nigeria needs to include Mr. Imeh Usuah on the list of honourees for 2012 National Honours Award. Unsung heroes like Imeh are the true Nigerians deserving high national honours such as Commander of Federal Republic (CFR) and Commander of the Order of Nigeria (CON). People like him are more worthy than politicians and businessmen who are ripping off the country rather than adding value to it. It is high time the Act setting up the Nigerian National Honours Award is amended to include a clause that makes it mandatory for government to withdraw the certificate, medal and delist any of the awardees from the honours list if they are found culpable of any crime by a court of law. The good gesture of Imeh has shown that Nigerians are not all scammers.
I could not agree more with the findings of the World Bank which in its Investment Climate Assessment Report for the 2011 fiscal period chronicled the constraints that entrepreneurs face in doing business in Nigeria. The report titled ‘Nigeria, an Assessment of the Investment Climate in 26 States’ was released on August 9, 2012. The account observed among many other things that Nigerian business environment, in spite of the series of reforms being carried out by the current administration to attract Foreign Direct Investment into the country, remained hostile. The 202-page report said that investors were losing 10 per cent of their revenue to the hostile investment climate in the country. It stated that the areas that account for the 10 per cent loss include poor quality infrastructure, crime, insecurity, and corruption. The assessment reviewed the experiences of over 3000 surveyed business owners in 26 states of Nigeria about the aspects of the business climate that affected their businesses.
There is no gainsaying that the report largely affirmed what many Nigerian economic analysts know about their country. Labour unions such as Manufacturers Association of Nigeria (MAN) and entrepreneurs such as Richard Branson of Virgin Atlantic have also made similar assertions as contained in the World Bank report. The chairman of Virgin Atlantic was alleged to have said among other things that his former airline (Virgin Nigeria) had to fight battles against government agents who wanted to daily make a fortune from the company, politicians who saw the government 49 per cent as a meal to seek for all kinds of favour and regulatory body that didn't know what to do and persistently asking for bribes at any point. What can be more damning?
The aforementioned constraints are not only responsible for low investment drive in Nigeria but also high level of divestment and business mortality. Today, many once flourishing businesses have either collapsed like a pack of cards or their founders have relocated to saner climes where the cost of doing business is not as astronomic like ours. A case in point are our tyre manufacturing companies like Dunlop and Micheline; pharmaceutical companies; vehicle assembly plants like Steyr, Leyland, Volkswagen and even textile mills to mention but a few. Many warehouses of once productive businesses have been acquired by churches and turned to worship centres.
If Nigerian government failed to deal with the enumerated problems in the report we would only continue to mark time on the same spot, a case of motion without movement. It is a known fact that Nigeria is the primary investors’ destination in Africa given the potential of huge market in a country of over 167 million people and the largest black nation in the world. The country also has cheap skilled labour in abundance. However, serious attention must be paid to incidences of insecurity in all its ramifications, poor social infrastructures such as electricity, water, good roads, hospitals and even recreational facilities. The policy of government must also be investment friendly. Such policies include the tax regime and moratorium; customs duties and goods clearing process, industrial dispute adjudication procedures; labour laws and many others.
Nigeria has Bank of Industry and Agricultural and Cooperative Bank, yet access to finance has been problematic. A case is point is the $200 million entertainment fund pledged by President Goodluck Joanthan during his campaign last year. More than a year after, the bulk of the money has not been disbursed with potential beneficiaries crying over the stringent conditions attached to accessing the loan facility. The entire lending process and procedures set by financial institutions need to be simplified and made investor friendly. We must also combat corruption not by paying lip service but by effectively prosecuting corrupt elements in our society.
The good thing is that Nigerian government is already working to resolve most of the issues raised in the World Bank report given the pronouncements of our Minister of Trade and Investment at the launch. According to Dr Olusegun Aganga, in order to make Nigeria the preferred destination for investment globally, his ministry has already commenced an Investment Climate Reform Programme in October 2011 with support from the World Bank and DFID.
He volunteered further that his ministry was partnering the Ministry of Power on the provision of uninterrupted electricity to nine industrial cities by the first quarter of 2013 and is currently working with the Corporate Affairs Commission, to reduce the number of days it takes to register a business, the processes and the cost. In addition, his ministry is also working to ensure that business registration can be done from the comfort of homes and offices.
Additionally, the Trade Minster said as a pilot, his ministry is working with the Ministries and Agencies under the Lagos State Government to reduce the cost and time of obtaining construction permits, registering property and enforcing contracts as well as working with the tax authorities at both the Federal level and in Lagos State on how to reduce the time and cost of filing taxes. In these initiatives, I do not see any plan to deal with the mounting insecurity and corruption, twin monsters that may render other noble intentions useless. Nonetheless, these are commendable efforts that I wish will bear good fruits such that Nigeria will be able to realise its full investment potentials without government officials necessarily having to globe-trot in search of the elusive foreign direct investments.
Effort at the fourth alteration of the 1999 Constitution is gradually gathering momentum with the submission of the report of the Presidential Committee on the Review of Outstanding Constitutional Issues headed by the former Chief Justice of Nigeria, Hon. Justice Alfa Belgore. The Committee which was inaugurated on November 17, 2011 submitted its report to President Goodluck Jonathan on July 10, 2012. The committee was saddled with the responsibility of reviewing outstanding issues from the recent constitutional conferences with a view to determining their relevance to national development.
Media report has it that the committee came up with a bouquet of recommendations. Some of them include the following: Devolution of powers from federal to state government while the Federal Government retain powers only necessary for maintaining the sovereignty of the country; Creation of “an optimally independent, incorruptible and stabilising local government system that shall always be administered by democratically elected officials that must be accountable, responsive to local needs, directed, controlled and sanctioned by appropriated laws.”; the scrapping of the State Joint Local Government Account Committee and establishment of the States Revenue Mobilisation, Allocation and Fiscal Commission (SRMAFC), which will allocate funds to the state government, local government councils and between local councils of a state, using the same distribution principles for revenue allocation formula adopted by RMAFC when allocating funds from the Federation Account.; Legal backing for power rotation; Retention of immunity clause for President, Vice-President, Governors and Deputy Governors; Establishment of the Office of Independent Counsel; Creation of at least one more State in the South-East; and, Reduction of number of judges at election tribunals from three to one to hear petitions other than that of the Presidential and Governorship elections.
I commend the Justice Belgore committee for coming up with thought-provoking recommendations. While I am in total agreement with some of the recommendations, I however have reservations with others. For instance, I wholeheartedly endorse and adopt the recommendation on devolution of power. Nigeria federalism is warped as it has all the appurtenances of a unitary system. A cursory glance at the Second Schedule of our 1999 Constitution, as amended which details legislative list will buttress this view. There are a whooping 68 items on the Exclusive Legislative List while there are just 30 items on the Concurrent Legislative List. A further examination will reveal that some items like Labour matters; Insurance, Mines and Minerals, Pensions and Gratuities, Post Telegraphs and Telephones, Railways, Police and other government security services established by law, Prisons, Public Holidays, Stamp duties, Taxation of incomes, profits and capital gains are all under the exclusive list. This omnipotent status of Federal Government has been an unabating source of tension in inter-governmental relations. Time is thus ripe for the Federal Government to hands off some of the non-sensitive areas.
I am in support of moving the afore-listed items to the concurrent legislative list. I see no reason why Railways, Labour matters or public holidays should be the prerogative of the federal government. Even the issue of state police is doable if the political will is there. After all, there is State High Courts, State Electoral Commissions, and State Boards of Internal Revenue; by the same token there should be state police and prisons. This will ensure that there is complete judicial system (Police, Court and Prison) in State as there is at the federal level. The fear of abuse is genuine but all that is needed is proper guidelines with in-built checks and balances. In America where we borrow our idea of federalism, this is the norm.
On the suggested local government reform, am also in total agreement with the Belgore committee. The system of local government administration in Nigeria has been greatly perverted by the state governors. Section 7 (1) says “the system of local government by democratically elected local government councils is under this constitution guaranteed….” However, experience has shown that this has not been the case in some states. Some state governors have blatantly refused to adequately fund their State Independent Electoral Commission to enable them conduct periodic elections while preferring to appoint caretaker committees or sole administrators to man the saddle of local governments in their states. Another perversion in the local government administration is the joint state-local government account which has enabled the governors to have stranglehold on local government management. Mercifully, Belgore committee has called for the abolition of this account and its replacement with States Revenue Mobilisation, Allocation and Fiscal Commission (SRMAFC). This is better.
Am also delighted that the presidential committee has proposed that the power to create local government areas should be wholly vested in states and that in order to avoid a situation where states will go on local government creation spree for the purpose of collecting more allocations from the Federation Account, the committee advised that the number of local governments shall not be a consideration in the allocation of national revenue, rather allocation of revenue between the states shall be based on the established allocation principles of population, equality of states, internal revenue generation, landmass, terrain, as well as population density, as already enshrined in Section 162 (2) of the Constitution . This proposal, if adopted by the National and State Assemblies will help to solve the endless agitation for creation of additional local governments or development centers. Past experience in terms of local government creation has been unsavoury. Location of the local government capital had been highly contentious while many states have had to create development centres hoping to have them listed as local government in the constitution. Lagos State is a case in point. With this proposition, any state wanting to create additional local government is free to do so but will have to take sole responsibility of funding the bureaucracy.
I am however not pleased with the call for additional State either in the South-East region or anywhere else. There are far too many states already than for any new one to be contemplated. The excuse of creation for equity sake does not hold water as there are currently two centres of disequilibrium in the permutations of the geo-political zones. North-west has seven states, namely, Kaduna, Kano, Jigawa, Sokoto, Zamfara, Kebbi, and Katsina while South-east have five viz. Ebonyi, Enugu, Imo, Anambra, and Abia. If an additional state is created in the South-east, it brings the number to six while North-west will remain seven. Are we then going to create additional state in all the other zones to bring them to seven each? In real term, agitation for state creation will not cease in as much as people have the notion of marginalization. Fiscal federalism, greater resource control and review of revenue allocation formula in favour of state can be adopted rather than encouraging further balkanization of the extant insolvent states which ideally should warrant mergers of state for viability purpose. I am also in support of one term for executive and power rotation. However, I am of the opinion that the power rotation clause should be in the constitution rather than in subsidiary legislation as an affirmative action clause to be operational for a period of term, say 50 years, after which the constitution can be altered to remove it when we may have overcome our marginalization fear.
Come to think of it, should we be talking of altering the constitution or writing a new one? If the judiciary is proposing 52 recommendations as submitted by the immediate past Chief Justice of Nigeria, Dahiru Musdapher and many other stakeholders are also coming up with their plethora of proposed amendments, shouldn’t we take the bold initiative of rewriting the entire Constitution?
Thursday, August 2, 2012
Nigeria has often been cited by political finance experts as an example of a country with strong laws on political finance regulations. The country’s statutes, viz: the 1999 Constitution of Nigeria, as amended; the Electoral Act 2010, as amended; the constitutions of the political parties, the Political Finance Manual and Handbook, the Companies and Allied Matters Act and the Code of Conduct for political parties all contain provisions that aim at regulating political finance in Nigeria. Be that as it may, there are inherent problems with the laws, hence the need for further reform of the legislations. Good enough, Nigeria’s National Assembly is in the process of altering the 1999 Constitution. Aside the weaknesses in the law, there is the challenge of law enforcement by the regulator. Some of the following proposals are targeted at legislative reform; policy reform and institutional reform.
It is proposed that candidates must have the obligation to submit election expenses report to the Independent National Electoral Commission (INEC) in the case of general elections and State Independent Electoral Commissions (SIECs) in the case of Local Government elections. The rationale behind this is that candidates spend more on their campaigns than their political parties. More so, the electoral law limits election expenses candidates can incur (Section 91 of Electoral Act 2010, as amended), they should therefore be made answerable for any breach of political finance regulations.
It is also advocated that public funding of political parties should be restored. However, stringent conditions must be set for political parties to access this fund. Political parties could be asked to write a funding proposal to INEC stating what they intend to do with the required fund. This proposal could be assessed by a select committee of internal and external assessors to be appointed by the Commission. The disbursement could be in tranches to be released upon satisfactory performances and achievement of certain benchmarks or milestones. This will ensure that there is value for money remitted to these political parties.
Nigerian law should capture third party spending. It has been discovered that high profile candidates use third parties such as Committee of Friends or other pseudo Non-Governmental Organizations to spend above the permissible limits. In the recently concluded election in Edo State, a TV advert was alleged to have been sponsored by members of one of the parties contesting the election who are based in Dublin, Ireland. Not only does the Constitution in Section 225(3) prohibit possession of foreign funding, the monies spent by third party are difficult to track and pin on the contestants.
For effective enforcement, Nigerian political parties will need to introduce internal control mechanisms in the form of financial agents and managers, code of conduct, accounting procedures, financial checks and balances and ethical committees to help oversee financial management and fundraising activities. Electoral law can be amended to make this mandatory for all registered political parties. Political parties should outlaw separate campaign office by aspirants and candidates. Such practice usually weakens party supremacy, and promotes corruption. Moreover, Nigeria should borrow a leaf from the Liberian example where all party candidates are made to publicly declare their assets before they can be issued a nomination form by their parties. Besides, anyone who wins an election without a financial report will not be sworn in.
It is also imperative to review the Act setting up the Code of Conduct Bureau to declassify the asset declaration forms of all elected public office holders and political appointees This is to enhance transparency and accountability. Furthermore, there should be a law permitting the auditing of campaign donations to candidates; any excess not expended on the campaign should either be forfeited to government or donated in aid of some public cause. The law should be amended to grant Nigerian citizens locus or recognition to engage in public interest litigation on political finance enforcement. This can be hinged on the Freedom of Information Act 2011. Citizens can also go to court to seek order of mandamus to compel INEC to enforce political finance regulations.
On policy reforms, it is imperative to have an impartial and timely enforcement of the existing regulations by INEC, SIECs and anti-corruption agencies that brings at least some kind of sanctions against violators. It is hoped that INEC particularly will take advantage of the prosecutorial powers granted it by S. 150(2) of the Electoral Act 2010, as amended. INEC needs to make a scapegoat of perpetual violators of political finance regulations by prosecuting them in courts.
There is an imperative need to educate Nigerians on the legal restrictions on campaign finance; damaging effects of political corruption as well as the need to demand for accountability from their political parties and candidates. Political parties should be true to their Code of Conduct as contained in the section on Political Finance. Other Nigerian political parties should take a cue from the Peoples Democratic Party by establishing enterprises and economic ventures that can help boost their internally generated revenue. It would be recalled that a news report in one of the Nigerian newspapers had reported in June 2012 that PDP is planning to set up a holding company that will acquire oil and telecommunications licenses as well as engage in real estate business. The party through its holding company also plans to establish print and electronic media companies. This is exemplary.
In terms of institutional reform, there is a need for robust collaboration between and among INEC, SIECs, Federal Inland Revenue Service (Tax Office), Corporate Affairs Commission (CAC), State Security Service, the Police, the Judiciary, professional bodies like the various accounting organizations, Nigerian Bar Association and anti-corruption agencies like EFCC, ICPC and Code of Conduct Bureau (CCB) in the crusade against political corruption.
Government at all levels needs to join in the fight against poverty and corruption which are bane of our democracy. It is also imperative to strengthen the capacity of SIECs and INEC to deal with the problem of party finance. The capacity of political parties should be adequately built to keep proper records of financial transactions. The standing Inter-Party Advisory Committee (IPAC) whose duties includes the consideration of any breach of the political finance provisions should be alive to its responsibilities.
The aforementioned are some of the practical ways to sanitize our polity. These, coupled with attitudinal change will reduce the corruptive influence that money currently has on Nigerian politics.
Wednesday, August 1, 2012
On Wednesday, July 18, 2012, the Nigeria Petroleum Industry Bill began its second journey to the National Assembly when President Goodluck Jonathan forwarded the 223 page bill to the lawmakers for consideration, adoption and speedy passage. It would be recalled that the bill had earlier been introduced by late President Umaru Musa Yar’Adua to the national parliament in 2009. This piece of legislation had been enmeshed in controversies as several versions were being circulated so much so that it was difficult to ascertain the original. Some Senators were also accused of having been sponsored by an International Oil Company on a retreat to Ghana thereby engendering conflict of interest. Even while addressing the media to inform the general public that the President has sent the bill to the National Assembly, Minister of Petroleum Resources, Dieziani Allison-Madueke disowned the versions that were being circulated on the internet prior to July 18. She said the authentic one has some security features which include Coat of Arms and petroleum industry bill 2012 signature in red pen on each page.
There is no doubt that the petroleum industry bill which is an agglomeration of about 16 extant legislations governing the oil sector, some of which have been in existence for over 50 years, need complete overhaul. The importance of the bill could be seen in the 11 objectives which it seeks to achieve. These are: “To create a conducive business environment for petroleum operations; enhance exploration and exploitation of petroleum resources in Nigeria for the benefit of Nigerian people; optimize domestic gas supplies, particularly for power generation and industrial development; establish a progressive fiscal framework that encourages further investments in the petroleum industry while optimizing the revenues accruing to the Government; establish commercially oriented and profit driven oil and gas entities; and, deregulate and liberalize the downstream petroleum sector.”
Other objectives include, “to create efficient and effective regulatory agencies; promote transparency and openness in the administration of the petroleum resources of Nigeria; promote the development of Nigerian content in the petroleum industry; protect health, safety and the environment in the course of petroleum operations; and, attain such other objectives to promote a viable and sustainable petroleum industry in Nigeria.”
One of the key features of the new bill as enunciated by the Minister of Petroleum Resources, Mrs. Deziani Allison-Maduekwe, include the unbundling of the Nigerian National Petroleum Corporation (NNPC) into several companies. According to her, the new firms that will be created with the passage of the PIB include National Oil Company, Asset Management Corporation, National Frontier Exploration Services, National Gas Company and the Petroleum Host Communities Development Fund. News report also quoted the Petroleum Minister as saying that the difference between the previous bill which was stalled by the sixth National Assembly and the new version presented to the seventh parliament lies in the fact that “The fiscal regimes used are so much different. The manner and templates for various calculations have been looked at differently, and other fiscal areas. The issue of domestic gas and fiscal regime for domestic gas has been looked at robustly. The issue of the reconfiguration of the NNPC is to ensure that going forward, it becomes the commercial entity that it is supposed to be and we can actually grow a first rate national oil company that over the years will grow to compete with other national oil companies such as Petronas and Petrobras.”
From the forgoing, it will seem that the long awaited new Petroleum Industry Bill will serve as a panacea to the many malaise of the petroleum sector. Labour and civil society groups have been calling for the quick passage of the magic bill. I align myself with this patriotic call. Unfortunately, a day after the presentation of the bill to the National Assembly, the lawmakers decided to proceed on their annual vacation to resume on September 18, 2012. In fact, the House of Representatives lambasted the presidency for submitting the bill late and for bringing insufficient copies. The House alleged that out of the 500 copies requested from the executive, only three were brought.
Sure, the House of Representative have a valid point to criticize the executive for the late submission of the PIB for consideration, however, honourable members must not use that as an alibi for stalling the speedy passage of this all important legislation that is set to revolutionalize our oil and gas sector. While arguing for quick processing of the PIB, President of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), Babatunde Ogun observed that “the Nigerian oil industry has been in a state of suspended animation since 2009 with investors cautious about making investments, industry workers apprehensive about their jobs and the Nigerian people clamouring for the restructuring of the state oil company to ensure transparency and deliver more value to Nigerians” PENGASSAN president further noted that “With new discoveries of hydrocarbons all along the west coast of Africa – Ghana, Sierra Leone, Liberia, as well as on the east coast – Tanzania, Kenya, Uganda, Mozambique not to mention our traditional rivals in the Gulf of Guinea, foreign direct investments have flowed to these new players with none coming our way in Nigeria” According to industry analysts, some $40 billion in exploration and production investments has been halted while the government debated the nature of the PIB. The labour leader therefore enjoined early passage of the bill before countries and companies cum investors start making their budget for next year.
I beseech Distinguished Senators and Honourable Members to please cut short their vacation and resume immediately after the Ramadan Eid-el-Fitr celebration to start the consideration of this pivotal bill in earnest. Considering the huge loss the country has been incurring for its years of inertia in having a comprehensive legislation to drive the oil and gas sector, it is high time this new PIB is granted accelerated review and passage.