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There is reason to believe that Nigeria is broke.
The Minister of State for Finance, Remi Babalola made the confession
last week, at the meeting of the Federation Allocation Accounts
Committee, the government body charged with sharing monies between the
three tiers of government – Federal, State and Local.

The three tiers of government ought to have shared
500 billion naira monthly between January and March 2010, making a
total of about 1.5 trillion naira. However, only half of that amount
was shared. The balance of that money (737 billion naira) is what is
now the bone of contention between the Federal and State Governments.
The country doesn’t have the money at hand. The only alternative is to
dip into our “savings account”, designated as the Excess Crude Account
(ECA), funded from our oil earnings in times of boom. The 737 billion
naira that should augment the monies already shared out is far in
excess of the 212 billion in our Domestic Excess Crude Account.

The import of this is that after emptying our
Domestic Excess Crude Account, we still have to turn to the Foreign
Excess Crude Account for more money to share. Doing that would deplete
the FECA significantly, and there would still be no guarantees that
future monthly allocations would be possible.

Because of this the FAAC is holding back on the
disbursement of the balance of the January – March funds. Mr. Babalola
said: “So, there is a problem, so we need to sit down with the
President and others to again look at the assumptions and estimates of
the 2010 budget, otherwise if we pay the entire money now, we may not
actually have any money to pay in the next one or two months. We are
not saying that there no money to be shared. But, we are saying that
before one can touch money in the Excess Crude Account, one must have
the approval of the President. Besides, if we continue to use the 2009
budget estimate to share allocations, we are going to run into the
cloud in the next one or two months.”

The state governments on their own part will have
none of this, and are insisting on getting their money. “Having signed
the appropriation into an Act, its full implementation should begin
immediately from January till date. Therefore, those areas that were
left out as a result of the absence of an Act should be smoothened out
by clearing the differential between what was paid before the Act and
what should be paid after,” a state Commissioner of Finance argued.

The disagreement led to a stalemate during the
FAAC meeting, so that newspapers widely reported that it was the
shortest meeting in the history of the Committee. It was even reported
that representatives of the state governments walked out of the meeting
in frustration.

As a way out of the impasse Mr. Babalola was
quoted as saying: “We may thus be constrained to amongst others
consider amending the revenue profile of the 2010 budget or
re-negotiate with all relevant stakeholders the monthly distributable
amount pending improvements in the budgeted revenue profile.”

It is curious that even in this critical state the
managers of our nation’s finances are sounding tentative, clueless
even. The Minister of State for Finance is still talking as though
“amending the revenue profile of the 2010 budget or [re-negotiating]
with all relevant stakeholders the monthly distributable amount” is
merely an option, not an urgent necessity.

This government that is speaking of an Excess
Crude Account is the same one that only weeks ago told us that it is
determined to urgently replace the Account – a creation peculiar to
Nigeria – with a Sovereign Wealth Fund, in line with global best
practices. The Minister of Finance, Segun Aganga, described the
sovereign wealth fund as a “very robust institutional framework for
managing excess revenue which today we do have in the excess crude
account.” He also said that the government had set up a committee to
make the fund a reality.

From the foregoing, one thing is obvious:
Nigeria’s finances are deeply mired in confusion. The management of our
country’s wealth is characterized a painful lack of direction, and in
cases where there is direction, lack of the political will to see plans
through to completion. There are also the myriad policy somersaults, in
part attributable to the frequent changes in personnel that occur at
the highest levels of government. In the last four years the country
has had not less than four Ministers of Finance, with little effort to
ensure consistency in policy formulation. We have drifted away from the
transparent accounting pattern that characterized the Ngozi
Okonjo-Iweala era. The National Economic Empowerment and Development
Strategy (NEEDS) to which the Obasanjo administration devoted much
effort and funding, is now a relic, abandoned by the new
powers-that-be. Plans to reduce our dependence on oil exports and
diversify the economy also appear to have fallen off the priority list.

Our economy is adrift, the confusion pervading it a microcosm of the
larger confusion in which our country as a whole is mired. In the
build-up to the 2011 elections, it is important that our policy makers
and technocrats do not allow themselves to get mired in the politicking
that is sure to take center stage, but move from their tentative
speeches, into the arena of drastic action. Anything less,and we are
doomed.