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At last, the governments in the 36 states of the federation are up in arms with the federal government over the constitutionally contentious imposition of the Sovereign Wealth Fund (SWF) on them. Of course, the surprise is that Nigeria Governors Forum is only just waking up late in the day to grasp the implication of a development which, apart from further extending the frontiers of the fiscal powers of the federal behemoth, is clearly in practice, antithetical to the principles of fiscal federalism.
Like the excess crude account which preceded it – a federal imposition and a constitutional anomaly at that, the federal government obviously assumes that it can make the extant bad fiscal practice good, by fiat of legislation – while ignoring the grave matter of its constitutionality.
The point about the Sovereign Wealth Fund is not so much about the merit of the idea or even the principle underlying it. The beef its complete disregard of the law which establishes the autonomy of states as fiscal entities in the Nigerian federation.
We are certainly not opposed to the idea that federal and state governments should set aside something for the rainy day. For a wasting asset such as oil to which generations unborn are equally entitled, a trust fund such as the SWF ordinarily recommends itself as a moral imperative as well as a practical, fiscal necessity.
But then we say that good intentions are not enough. Clearly, the SWF idea, as currently propounded ignores the fundamental truth that the constitution is unambiguous in its provision that all monies accruing into the federation account should be shared in accordance with the existing revenue formula. The 1999 Constitution, as Amended is unequivocal about where the powers of appropriation for each tier of government in the federation lay and grants no exceptions whatsoever: for the federal government, it is the National Assembly while the state houses of assembly are the prescribed authority for the states.
The SWF Act, by implication, purports to impose the savings on the states while also effectively ousting the powers of state parliaments to appropriate monies belonging to them.
The SWF Act, as it is presents an example of legislative overreach by the National Assembly. It is not hard to see that the law flows from the seed sown and nurtured during the administration of President Olusegun Obasanjo that the 36 states are no more than appendages of the federal government. It feeds on the same mindset that the central government is all-knowing, infallible, and like a powerful unchallengeable principal, has the monopoly of knowledge on what is best both for itself but also for the states.
That is clearly nonsense. Our constitution is unpretentiously federal and hence must be nurtured to remain so in practice. The federal government is at liberty to save its monies in whatever instruments it desires. What it cannot do is impose any savings on the states in flagrant disobedience of the constitution. Much as the idea of savings seems "good", SWF as it is – is incurably defective on constitutional grounds.
The bottom-line is that each state has its own peculiarities and priorities. Why should the federal government impose the burden of extortionate savings on Osun State for instance, which has crying needs for funds for development? Isn't today's capital investment laying the foundations for tomorrow's prosperity?
Why should the federal government – after keeping its own – also seek to keep what belongs to Osun simply because it thinks it knows what is best for the people?
We have no problems with states being encouraged to subscribe to the SWF; our contention is that it must be strictly on their own terms and in accordance with the constitution. The federal government should perish the notion that it alone is fiscally responsible when the reality is that it is far more culpable in fiscal recklessness than the states whom it often accuses.
We endorse the position of the Nigeria Governors Forum on the workability of the SWF as presently designed. The governors have the support of the people hence they should stand firm on the federal principle. Their capitulation can only be at the cost of further eroding the sacred precincts of our federalism.
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It's well!
Osun Defender