16 July 2012

Nigeria: Governors Should Make Up Their Minds On Subsidy - RMAFC Chairman


Chairman, Revenue Mobilization Allocation and Fiscal Commission (RMAFC) Engineer Elias Mbam in this interview said every penny paid for subsidy should be appropriated for to avoid controversy. He also urged state governors to make up their minds on subsidy, whether there should be it or not. Elias also said that a lot of works have gone into producing a new revenue formula for the country. Excerpts:

Governors have gone to court to challenge federal government over what they called illegal deductions from the federation account in the name of subsidy, excess crude account and sovereign wealth fund. What is the position of the Commission in this?

Well, the constitution is very clear on the beneficiaries of federation account. In the Supreme Court judgment of 2002, it is very clear that it is only federal, states and local governments that are the beneficiaries. For any other entities that benefit, the law must be amended. If not we are contradicting the law.

In essence, deduction from the federation account into sovereign wealth fund is not right?

Constitutionally it is not right. In one of my appearances I criticized the governors because we are briefed by the formal minister of finance Olusegun Aganga, that at the inception of it everybody agreed that the idea was good. The process is a different thing. The then minister briefed us at the National Assembly that it went through the national economic council, federal executive council, national council of states and the governors were present and they all agreed. They went further to recommend that all attorney generals of the states should meet with the attorney general of the federation to analyze the content of that fund and at the end they accepted. It was then sent to the National Assembly and they invited memoranda from the public and then finally passed it as law. Where were these people throughout these periods? It was when it was passed that they now realized they were not in support of it. I think we should learn to do things at the right time. If you have an issue and it is being discussed present your case at that time and not when it is concluded that you come up and start things. I was not happy with them.

When the sovereign wealth fund was being set up the then minister of finance Aganga said the excess crude account would seize to exist but it appears that is not the case now?

I am not aware that apart from the N1 billion that was set aside for the fund that any money was paid into it. I am not also aware that the set up has been concluded. Apart from the seed money for it as far as I am concern it is not yet in operation.

Once the fund is in operation should it run side by side with the excess crude account?

The reason that the Excess Crude Account was set up was the same reason while the Sovereign Wealth Fund was established and I see no reason why they should work side by side. Once it starts functioning, the Excess Crude Account should seize to exist.

The governors are also against the deduction from the federation account to pay for subsidy payments.

We have to take a position on subsidy. As far as we have subsidy somebody must take the bill. You cannot say there would be subsidy and at the end of the day marketers are not paid. I think the issue is whether there should be subsidy or not. If the governors say there shouldn't be subsidy then so be it. Early this year there was a strike, it is a very sensitive issue and I am not sure that anybody enjoy any of those moment. As far as we have subsidy we must provide for subsidy.

The position of the Commission is that it should be appropriated for. All money removed from the public revenue should be appropriated and we should do the appropriation and have reasonable statistics behind us. And not to just give the subsidy of X when you don't know the consumption level. First of all, if we are to continue with subsidy we have to determine what level of subsidy we need and it should be provided to the National Assembly to appropriate. If that is the issue the governors have nothing to complain. It should pass through the normal appropriation. We cannot consume something and expect not to pay.

So the position of the Commission is that the money paid for subsidy should first go to the National Assembly?

It should go for appropriation.

Presently, it is not like that?

It is appropriated for but the issue is, does it correspond with the reality on ground? How much is appropriated and how much do we need. If the two does not add together then there is a problem. If you appropriated more than is required, once it goes more than is appropriated then it becomes a legal issue. Because you are now acting beyond the law - what is appropriated at the National Assembly and somebody can catch on it.

How does the Commission view the current management of the Ecological Fund, do you think it is well managed?

Ecological Fund is one of the special funds that is been held in trust by the federal government. We have not found any fault except that we feel the Commission should be a member of that management.

So, presently the Commission is not a member?

Well, the Commission by law is suppose to be a member.

You told us early this year that there will be a new revenue formula by the end of the second quarter and here we are with no one, what happened?

We have done a lot of work in that direction and we hope that all things been equal we would be able to produce a new revenue formula at a no distance time.

Before the end of the year?

I would not be able to give you a definite answer because once bitten twice shy. We have done some studies on similar environment like Brazil, India, Canada, Malaysia and we exchanged experiences with them and how they are operating their own and why it is working. Many of them have similar challenges with us.

We have visited the 774 local governments and the thirty six states to verify the data we received from them in that direction. We have also study literatures on revenue formula in the country. We have really done a lot of job.

What is the next stage?

The next stage is to go round the country for advocacy, workshops and memoranda from the zones. We have received memoranda from the public.

Any other message?

I want to thank the media and also appeal to them not to be sensational in reporting the new revenue formula, it is very sensitive for the unity of this country. I wish to appeal to Nigerians to have patient with the Commission because the Commission is determined. They should give us some times, we are capable of doing that. We don't want to politicize it and that is why we don't want to join issue in the debate.

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