3 September 2011

Nigeria: States, SWF and Minimum Wage


The state governors seem determined not to pay the N18, 000 national minimum wage as they keep coming up with excuses for delays in doing what they must do. First, they demanded the restructuring of the revenue sharing formula as a condition for implementing the pay package. Later, it was the withdrawal of petroleum subsidy. Now, it is the Sovereign Wealth Fund (SWF) which they claim is unconstitutional and must be rectified and the money meant for the fund put in the redistributable pool of funds of the government.

Before the decision by the Jonathan administration to set up the SWF, not a few believed that Nigeria was behaving like a bad farmer who not only eats his harvest but also the seeds, thereby making a nonsense of the saying about saving for the rainy day. The country, being a mono-cultural oil-based economy based, has consistently been exposed to the vagaries of world market.

So, the idea of SWF was predicated on the wisdom of setting aside some of the nation's revenue to cushion the effects of unforeseen developments. The money in this fund is expected to be invested wisely in profitable ventures in order to generate more revenue for the country outside its primary source of income. But resource-greedy state governments are not persuaded by this wisdom. They are arguing that the SWF is unconstitutional and therefore should be jettisoned regardless of its good intentions.

We hope that the federal government will not fall for that ploy. The constitution is not Holy Grail. In this instance, its amendment will be most desirable if that is what it will take to make the SWF constitutional. The fact of the matter is that Their Excellencies are not sufficiently forward-looking, otherwise, they ought to have known that the main source of revenue for the country, hydrocarbon, is an exhaustible asset. We must take a cue from the United Arab Emirate was once an oil-producing country. Though her oil wells dried up a long time ago, she is richer now than when she was producing oil because she invested her oil revenue wisely.

State governments should start embracing prudence as a mark of governance. It is tragic that most states are not living up to the expectations of the people. Nigeria's resources must not be forced to suffer a similar fate with the Excess Crude Account, which was emptied in the name of financial federalism with nothing to show for the huge sums received by state governments except, of course, whiffs of corruption. The minimum wage is a constitutional obligation that must be implemented regardless of the perceived current inconveniences.

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