CBN wants Sovereign Wealth Fund in new constitution

The CBN has suggested to  the National Conference Committee on Public Revenue and Finance to ensure that the country’s Sovereign Wealth Fund (SWF) was included in the constitution.

The acting Governor of CBN, Dr. Sarah Alade, who was represented by Deputy Governor, Corporate Services, Alhaji Suleman Barau, gave the advice during a presentation to the committee on Tuesday in Abuja.

Alade said that the fund was intended to replace the Excess Crude Account (ECA) in order to provide long-term savings for economic stabilisation, development of infrastructure and generational equity.

“The ECA has been criticised as a mere arrangement based on a memorandum of understanding among the three tiers of government, thus necessitating a need for constitutional backing for the SWF.

“This is to provide for a stable longer time savings to address the country’s infrastructural challenges, provide stabilisation fund against the volatile in oil prices or revenue and ensure generational equity.”

She said that the country “can no longer afford to continue living from hand to mouth”, adding that public sector savings had become the norms for resource-rich and resource depended economy.

She said that countries such as Norway, Russia, Qatar, Iran, Kuwait, UAE, Botswana, Angola and Libya had used SWF to guard against negative effects of instability in commodity prices.

According to her, it will also ensure to cater for future generations.

The acting governor also identified imbalance in intergovernmental fiscal relationship, budgetary process, power of states and local government to borrow as some of the challenges to public finance management in Nigeria.

According to her, other challenges include over dependence on oil revenue, limited levels of economic activities, poor tax awareness, and prevalence of expenditure mind-set as well as neglect of revenue generation authorities.

Speaking on the joint accounts of the local governments managed by the states, she proposed that the management of the accounts should reside with an Accountant-General created for that purpose.

She explained that the membership should be drawn from local governments and relevant ministries.

“The constitution should make it an impeachable offence if any state government fails to remit the stated amount from the internal revenue of the state into the joint accounts,” she said.

She urged the committee to entrench the Fiscal Responsibility Act (FRA) to cover all tiers of government.

“Although, an Act has been established at the federal level, it does not explicitly apply to the sub-national governments.

“The state governments have in the past remained nonchalant to the provisions of the FRA.

“Entrenching fiscal transparency and accountability at the federal level without states and local governments is simply scratching the issues of transparency and accountability,” she said.

The acting governor said the bank was very much interested in public finance and management because of its implications to the macroeconomics management.