Sovereign Wealth Fund Unconstitutional -Fashola

Posted by African Examiner Ayo Balogun, Featured, Lagos, Latest Headlines, News Monday, October 28th, 2013

By Ayo Balogun, Lagos

Lagos State Governor, Mr. Babatunde Fashola (SAN on Monday denounced the Sovereign Wealth initiative of the Federal Government, describing it as unconstitutional.

Lagos state governor, Babatunde Fashola

Fashola said he would receive the Shareholders Certificate of the Fund presented to him by the management of the fund only as an acknowledgement that the State’s fund was being held somewhere.

In his remarks while welcoming officials of the Nigeria Sovereign Wealth Authority, led by their Chairman, Mr. Mahey Rasheed, Fashola said although he would accept the Certificate as an acknowledgement that the State’s money was somewhere, it was necessary to put on record that he never supported the initiative.

“I don’t think it accurately sets the record to say that I supported it. Some of my colleagues supported it and for reasons best known to them but I do not support it and I made this very clearly well known when the discussions were on the way.

“I must be clear, I do not support it not because I am against savings; I disagree because for me there are fundamental and constitutional issues,” he said, adding that the countries given as examples to support the initiative did not match the Nigerian situation, explaining that while those countries were either monarchies or emirates, Nigeria is a democracy.

The governor, who said he made this position known to the Minister of Finance when she made a presentation of the initiative to the Governors’ Forum, added, however, that because the Minister had just returned from a trip, she acknowledged the point but said she needed time to come back and respond to the issues.

On the unconstitutionality of the initiative, Fashola argued, “How do we save money by an Act of the National Assembly when the Constitution that created the National Assembly itself says that every monies that come into the accounts of the country must go to the Federation Account and that any monies standing in credit in that Account must be distributed between the states, local government and the Federal Government.

“It might be comfortable for some of my other colleagues but, for me, I feel uncomfortable with this kind of arrangement and, as I said, not because I disagree about savings but I think that questions will be asked in the future that lawyers were there sitting among you when you did this kind of thing.”

Raising other fundamental issues beyond the Constitution, he said after crossing the “Constitutional hurdle,” the next questions would be what part of the money should be saved and why should be saved and why should the Federal Government save for the states when the same Federal Government is getting 52 percent of the revenue that accrues to the country while the 36 states are sharing 26 percent.

“If we must have a Sovereign Wealth Fund and the Federal Government is persuaded, why can’t the Federal Government save its own share of 52 percent,” Fashola asked, adding that there was no point in saving money when all the nation’s infrastructure were already outdated.

“For me, Infrastructure Fund does not arise. Why do we save money when our entire infrastructure is over 40 years old? This country is running on an infrastructure that was built after the civil war. But the population we had then has multiplied in many folds,” he stated.

He argued that the countries of the Organization for Economic Cooperation and Development (OECD) were borrowing money all over the world to develop their countries, are not saving money, adding those countries used the money to cater for the welfare of their people.

“America (one of the OECD countries) is borrowing more money. Three hundred million people are owing the world almost $17 trillion and we say they have the best airports, technologies, best schools, cars, assembly plants, power doesn’t fail there”, the Governor said adding, “They are probably smarter than us because we do not want to borrow and use it for good things.”

“Ultimately we go there to pay in those schools which they borrowed everybody’s money to build. That is why the standard of life there is high,” he said.

Fashola insisted that the idea of saving money for the next generation of Nigerians was not the solution to the nation’s problems, as the life of the next generation of Nigerians would be made better by the investments made today by the present generation.

He advised that before adopting such concepts like the Sovereign Wealth, some fundamental questions must be answered first such as whether the nation really needed it and that if yes, whether the need was expedient and that if yes, “whether the law allows it and whether the nation’s laws are similar to the laws of the countries from which the concept is borrowed.”

Chairman of the Nigeria Sovereign Wealth Authority, Mr. Mahey Rasheed, had said the purpose of the delegation in paying the courtesy visit was to hand over the Shareholders’ Certificate of the Fund to the Governor, adding, “You have supported this Nigerian Sovereign Wealth, which is why we are here.”

According to him, having been passed by the National Assembly and accented to by the President, the Nigerian Sovereign Wealth has taken off and the Authority has begun work in earnest, adding that the authority “has employed the best brains that our country can offer.”