Oil Revenue Management:
 Soludo Seeks Amendment of Constitution

By Oluyinka Akintunde
 4th DEC 2006

The Governor of the Central Bank of Nigeria, Prof. Charles Soludo, on Saturday, called for the amendment of relevant sections of the 1999 Nigerian Constitution, particularly Section 162, in order to effectively manage the nation’s earnings from oil and ensure macroeconomic stability in the economy.

He faulted the calls by some state governors that the foreign reserves, including the excess crude earnings, be shared among the three tiers of government.

The Director of Foreign Operations Department of CBN, Alhaji Muhammad Nda, also on Saturday confirmed that the external reserves of the country stood at $43bn as at November 27, 2006. This shows an increase of $2bn over the figure of $41bn recorded for end-October 2006.

Both Soludo and Nda made the disclosures at a seminar on “Effective Management of External Reserves”, organised by the apex bank for chief executive officers and other top managers of banks as well as senior CBN officials.

The Managing Director/Chief Executive of Zenith Bank Plc, Mr. Zim Ovia and his counterpart at First Bank of Nigeria Plc, Mr. Jacob Moyo Ajekigbe, were among the participants.

Soludo, who declared open the seminar, said unless the 1999 Constitution was urgently amended, the management of excess crude and the earnings from “a depletable oil resource” would continue to pose a serious challenge to monetary and fiscal authorities.

He said, “The core question and issue we face as a nation is what to do with earnings from a depletable resource like oil? Should we save part of it for future? Does this wealth also belong to future generation of Nigerians?

“What do we spend the money on? Should we spend it on consumption or to build long-term capacity? The current Constitution says earnings from oil must be shared among the three tiers of government. This is not right for the system.

“The relevant sections of the Constitution need to be amended for us to appropriately manage the earnings from oil, which is depletable.”

The CBN governor also argued that an effective and efficient management of the oil revenue and foreign reserves had become imperative to ensure a stable naira exchange regime.

He disclosed that the state governors asking for the sharing of the excess crude had always been spending their share of the Federation Account on consumption rather than investing same on infrastructure as being proposed.

Soludo said, “It is not easy to spend this money wisely. The argument by the governors is that they need this money for infrastructural development and to provide dividends of democracy to the people. If any state government cannot provide dividend of democracy in the last seven and half years, there is little the government can do in the next six months.

“You can not find more than five or six states that do not spend 75 per cent of what they get from the Federation Account on consumption. The argument that once you share the money it will go into infrastructure development has not been proved.”

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