For The Record
Jonathan’s Budget Of Fiscal Consolidation
Being a text of the 2012 Budget Proposal presented to the National Assembly by President Goodluck Jonathan on Tuesday, December 13, 2011.
PROTOCOL
I am delighted to present the 2012 Federal Budget Proposal before this esteemed Joint Session of the National Assembly. This Proposal comes at the end of a long consultative process with key stakeholders and it translates the development plans of government unveiled in the Transformation Agenda into concrete actions.
2. This budget is a stepping-stone to the transformation of our economy and country in our walk to economic freedom. This esteemed Assembly would agree that this path would neither be easy nor uncontested; but with a sharp focus, hard work, determination and making careful choices we will overcome.
GLOBAL ECONOMIC DEVELOPMENTS
3. In the past year, the global economic recovery slowed down significantly and downside risks are on the increase as many countries, particularly in the Organization for Economic Cooperation and Development (OECD), have faced serious challenges leading to fiscal retrenchment and austerity measures in the face of high and rising levels of sovereign debt.
4. The Euro Zone crisis in particular has time and again thrown financial markets into turmoil as several countries in this economic and monetary union continue to face difficulty in servicing their debts. On the other hand, although many emerging and developing countries, like India and China are experiencing relatively robust growth, downside risks remain as well. In fact, global growth projection has continuously been revised downward and is now 4% for 2012-2013.
5. These developments have implications for our economy as, aside from the impact on the inflow of Foreign Direct Investments, they could also lead to lower demand for our primary export commodity. We are living witnesses to the extent of volatility that can afflict the international oil market with prices plummeting from US$147/barrel in July 2008 to about US$38/barrel four months later. Thus, although the oil price is currently over US$100/barrel, there is no guarantee what it would be in the future.
6. We cannot subject the well-being of Nigerians to such large fluctuations and must therefore protect ourselves by managing our finances prudently including by adopting a conservative benchmark oil price for our budgets.
7. There are also uncertainties in the area of international food prices which make it imperative that we take steps to safeguard our position through policies that would promote food security. So far, the Nigerian economy has weathered these storms well but efforts need to be reinforced to ensure macroeconomic stability and sustained economic growth.
DEVELOPMENTS IN THE DOMESTIC ENVIRONMENT
8. This year marked another milestone in our democratic experience, with the successful elections and peaceful transition. We now need to build on the mandate that Nigerians have entrusted to us to deliver the dividends of democracy through stronger economic reforms to deliver growth and create jobs. I have created an Economic Management Team (EMT) that I chair, and an Economic Management Implementation Team (EMIT) chaired by the Coordinating Minister for the Economy and Minister of Finance, to help us deliver on this economic agenda.
9. The robust growth recorded in the first half of 2011 underscores the resilience of the Nigerian economy and the prudence of our economic policies. Our growth in the 2010-2011 period has been broad-based.
10. The economy recorded impressive growth of 7.85 percent in 2010 and 7.72 percent as of the second quarter of 2011 compared to 5.2% forecast for sub-Sahara Africa. Medium-term prospects are also bright, with real GDP growth projected to remain strong over the period. Furthermore, we intend to pursue a programme of greater fiscal discipline complemented with appropriate monetary policy in order to help stabilize our declining foreign reserve.
11. The non-oil sector continues to be the main driver of growth with increased crop production, growth in wholesale and retail trade and increased financial sector activities backed by the banking sector reforms. Contributions by the oil sector continue to improve as average daily oil production rose to 2.45 million barrels per day in the second quarter of 2011 compared to 2.35 million barrels per day in the corresponding period in 2010.
12. At the same time, food inflation has been on a downward trend from 14.1% in October 2010 to 9.7% in October 2011, but it is still a matter of concern as our objective is to move to low or mid-single digit inflation.
REVIEW OF IMPLEMENTATION OF THE 2011 BUDGET SO FAR
13. We are approaching the end of a peculiar fiscal year for our nation. The 2011 Elections, the subsequent inauguration of a new Administration last May and the passage of the 2011 Amendment Budget in May 2011 all affected the implementation of the budget in 2011. Provisional data on the implementation of the 2011 Budget as at October 2011 indicate that revenue performance improved during the year over the situation in 2010.
14. Oil revenue receipts achieved the targeted levels as a result of relatively higher oil prices and production levels than benchmarked while non-oil receipts, though short of the projection for the period, are tending towards the set targets for 2011. As of mid-November, about 67% of the released funds had been utilized and we expect it to reach 70% by the end of December which is fairly good considering the circumstances. You will agree with me that 2010 and 2011 Budgets were relatively expansionary, and we must now inject a dose of caution.
15. With the support of the National Assembly, the Government is determined to pursue a programme of far-reaching fiscal consolidation so as to reduce our deficit and domestic borrowing to more manageable levels.
16. We have introduced measures to actualize this programme in the 2012 fiscal year both in the areas of improved revenue collection, recurrent expenditure reduction and increasing the share of capital expenditure in aggregate spending, in contrast with the trend of recent years.
PRIORITIES OF THE 2012 BUDGET
17. At a time when rating agencies are downgrading countries globally, the Outlook on Nigeria was recently upgraded from negative to stable by Fitch Ratings; this was largely a reflection of two things: a) the new economic programme, including the Medium-Term Fiscal Framework that government has put in place with important reforms and a clear programme of fiscal consolidation; b) the successful political transition following the 2011 elections.
18. In furtherance of its efforts, the government has significantly scaled up the flow of resources to key areas of priority including Security, Infrastructure renewal and development (including power and roads), human capital development and food security to give a more inclusive growth and attention to job creation. Yet, there is much that still needs to be done. The Transformation Agenda spells out the strategic direction of my Administration.
19. In this respect, being the first budget under this Agenda, the 2012 Budget has been designed with the theme: fiscal consolidation, inclusive growth and job creation.
20. To achieve the above objectives, we have established four main pillars, namely,
(a) Macroeconomic stability;
(b) Structural reforms;
(c) Governance and institutions; and
(d) Investing in priority sectors.
Macroeconomic Stability
21. Government is determined to pursue policies that will ensure a stable macroeconomic environment through a strong and prudent fiscal policy, manageable deficits, sustainable debt-GDP ratio of no more than 30%, and single digit inflation, thereby promoting real growth. We believe that these measures would engender a stable and competitive exchange rate and help to reverse the declining trend of our international reserves.
22. Our domestic debt profile has risen sharply in recent years, currently standing at about 16.4% of GDP. This cannot be allowed to continue and become a new burden on our children. So in addition to looking at the expenditure side of our national balance sheet, we are also paying strong attention to the revenue side.
23. In this regard, we have initiated steps to increase revenues by blocking leakages from various sources, improve corporate tax collection, and boost internally generated revenue. We also believe that we should be able to earn a lot more revenue from the maritime sector. As part of the on-going port reforms, government will work vigorously to increase our revenue from maritime and related activities.
24. Starting in 2012 for the medium term, we shall focus on cutting recurrent expenditure to sustainable levels through reducing waste, inefficiency, corruption and duplication in government. Recent reviews of public expenditures provide a basis for taking such measures. In order to make capital spending more effective, government is introducing a new template for analyzing the financial and other factors including the economic rates of return, job creation, and environmental sustainability.
25. Similarly, Government will continue to prioritize its expenditures while focus will be on the completion of viable on-going capital projects. It is our intention to fund and bring the large portfolio of on-going projects to completion in the next few years while also taking on flagship projects already identified in the Transformation Agenda.
26. From 2012, there will also be a robust programme to strengthen our oil reserves base, and increase oil exploration activities in identified inland sedimentary basins, outside the Niger Delta, with the requisite potential for the production of oil and gas, particularly the Chad Basin.
Structural Reforms
27. My Administration is pressing forward with key structural reforms. We are implementing the privatization of the power sector based on the Power Roadmap which I unveiled last year. We believe that the power sector can benefit from liberalization and privatization by attracting investors in the same manner as the telecommunications sector has done. In the same vein, government will come up with policies to encourage investment in the downstream sector through liberalization so as to create jobs for our people.
28. We have also embarked on reforming our ports and customs and we intend to continue vigorously on this path so as to reduce the cost of doing business for our private sector actors. No longer are we going to be contented for clearance of goods in our ports to take 3-4 weeks with attendant demurrage and costs while it takes 48 hours elsewhere.
29. In this regard, I have set up a Committee chaired by the Coordinating Minister for the Economy and Minister of Finance with a mandate to remove the bottlenecks at our ports and another Committee made up of private sector users of the ports to monitor implementation. We also intend to work hard to improve the infrastructure at the ports. Other impediments such as those arising from bureaucratic and costly paperwork will also be removed.
30. With regard to the petroleum sector, the Federal Government is conscious of the need to bring the Petroleum Industry Bill debate to conclusion so as to give investors the comfort and policy certainty that they require. My Administration is determined to bring this matter to closure by engaging with all stakeholders and I therefore call on the National Assembly to work with us in this regard.
Governance and Building Institutions
31. Our reforms can only endure if they are founded on strong systems and institutions that promote transparency and we are taking steps to strengthen ours. As you are aware, we have already resumed the publication of revenues allocated to the three tiers of Government as this will promote transparency and accountability in the management of public funds.
32. Similarly, the recent passage of the Freedom of Information Act has further strengthened the hands of citizens in monitoring the activities of government and I acknowledge the role of the National Assembly and civil society, in making this a reality. The fight against corruption is a collective responsibility and my Administration will strengthen our anti-corruption agencies such as the EFCC and ICPC to enable them discharge their mandate. Finally, we recognize that we can only succeed in our effort to transform the economy if we have a vibrant civil service and we fully intend to embark on reforming the public service for optimal service delivery.
Investing in priority sectors: Creating Jobs
33. Against the background of the above reforms, this Administration will promote job creation and inclusive growth by investing in critical infrastructure, human capital development and security including more support for the police, defence and counter-terrorism operations. We shall also give priority attention to Information and Communications Technology, Solid Minerals development, Manufacturing, Aviation and Creative industries in order to further develop these sectors that are known to be sources of growth and job creation.
34. Let me now comment on a few sectors. The Agricultural sector is being totally transformed to enable us move from traditional farming to modern agriculture as a business both for our small and large-scale farmers. Our objective is to ensure food security whilst also promoting exports in agriculture value chains where we have a comparative advantage. We intend to process and add value to different crops such as rice, cassava, sorghum, oil palm, cocoa, cotton etc.
35. This approach is central to our transformation strategy. Accordingly, this Administration has adopted enabling measures to support the development of private sector-driven marketing institutions, and push for policies that would promote our agriculture to create jobs.
36. To unleash the potential of this sector, the Federal Ministry of Finance has put in place a mechanism to share risks with the banking sector by guaranteeing 70% of the principal of all loans made for supply of seeds and fertilizer by the private sector this season. In addition, to get the inputs to farmers at an affordable cost, we are subsidizing the interest rate on these loans to bring it down from 15% to 7% per annum. The Minister of Agriculture and the Central Bank are collaborating to extend these services for credit availability for the medium term.
37. We are introducing further fiscal policy measures to support the development of the agricultural sector. In this respect, the duty on machinery and certain specified equipment for the sector will, effective January 31st 2012, attract zero duty. We will further look at supportive fiscal policies for the rice and wheat sectors to stimulate domestic production.
38. Government is also introducing policies to encourage the substitution of high quality cassava flour for wheat flour in bread-baking. Bakeries will have 18 months in which to make the transition, and will enjoy a corporate tax incentive of 12% rebate if they attain 40% blending. With effect from March 31st 2012, importation of cassava flour will be prohibited so as to further support this programme.
39. All equipment for processing of high quality cassava flour and composite flour blending will enjoy a duty free regime as incentive to bakers for composite flour utilization. Consultations with the sector to ensure a smooth transition are on-going.
40. It is common wisdom that the best way we can grow our economy and create jobs for our people is for us to patronize Nigerian-made goods. This is why we are introducing enabling policies to drive this process. In this regard, we are introducing fiscal policy measures that will encourage the purchase and utilization of locally produced commodities.
41. From July 1st 2012, wheat flour will attract a levy of 65% to bring the effective duty to 100%, while wheat grain will attract a 15% levy which will bring the effective duty to 20%.
42. Similarly, there will be a levy of 25% on brown rice to bring it to 30%. In addition, to encourage domestic rice production, a levy of 40% will be placed on imported polished rice leading to an effective duty rate of 50%. Effective December 31st 2012, all rice millers should move towards domestic production and milling of rice, as the levy of 50% will be further raised to 100%. Let me add here that no waivers or concessions will be entertained for rice and wheat importation.
43. We have also commenced implementation of the Power Roadmap which aims to create a robust power sector through the privatization of the generation and distribution of power as well as create an enabling environment for investment. Institutional arrangements have been made for a Bulk Trader company to intermediate between power producers and distributors in a market setting, thereby giving Independent Power Producers (IPPs) the confidence to invest in generation capacity.
44. Government, in collaboration with our development partners has created a credit risk management initiative to provide Partial Risk Guarantees (PRG) to give comfort to gas producers in respect of payment. Similarly, effective January 31st 2012, equipment and machinery in the power sector will attract zero duty.
45. The Government recognizes the provision of affordable housing as a social need and, also, a veritable source of socio-economic development and job creation. Owning one’s own home is a basic aspiration of every human being, and our people are no different.
46. To this end, based on a new housing policy, Government is working with our development partners to create an effective mortgage finance system in the country and to develop value chains in the building materials segment. This will give the necessary stimulant to the sector to accelerate its development and also help to reduce the cost of construction, thereby energizing the construction industry.
47. It is a well-known fact that government alone cannot solve the infrastructure problem, which is why we have invited the private sector and international investors to partner with us through the Public Private Partnership (PPP) arrangements.
48. As estimated in the First National Implementation Plan of the Nigeria Vision 20:2020, we need N32 trillion for the execution of capital projects over a four year-period, of which the private sector is to contribute N13 trillion. In this respect, we are creating the enabling environment to attract private investments by having a clear regulatory framework.
49. Government will, in addition to ongoing critical infrastructure projects, execute new flagship projects with positive multiplier effects across the country through PPP arrangements in the next three years.
50. In our continuing effort to improve on our human development index, we are conscious of the need to avoid the trap of focusing on economic growth as an end in itself, but rather, a means to improved human development through ensuring better health care, education and wealth creation.
51. To this end, my Administration will continue to invest in these sectors to improve on the quality of education for our children especially young graduates from our educational institutions, support Public-Private Partnership arrangements for skills development and improve the quality of our health service delivery.
52. Fellow Compatriots, we recognize that we can only achieve the developmental goals in a secure and peaceful environment. Accordingly, safeguarding the sovereignty, independence and territorial integrity of the country is at the heart of ongoing reforms in the security sector. As you are aware, we have since commenced strategic programmes to upgrade the skills of officers in the security agencies while modernizing security infrastructure across the country.
THE 2012 BUDGET
53. The 2012 budget is based on a set of assumptions reflecting Government’s determination to maintain prudence in the face of continued uncertainties in the external environment. Accordingly, the budget is based on the following:
Oil production of 2.48 million barrels per day (mbpd) up from 2.3mbpd for 2011;
·Benchmark oil price of US$70/barrel, a cautious revision from the US$75/barrel approved in the 2011 Amended Budget;
· Exchange rate of NGN155/US$;
· Projected GDP growth rate of 7.2%; and
· Projected inflation rate of 9.5%.
2012 Revenue and Expenditure Profile
54. Based on the above assumptions, the Gross federally collectible revenue is projected at N9.406trillion, of which the total revenue available for the Federal Government’s Budget is forecast at N3.644 trillion, representing an increase of 9% over the estimate for 2011. Non-oil revenue is projected to grow significantly in 2012 as recent efforts to reform revenue collecting agencies and the implementation of initiatives to further develop non-oil sectors are expected to yield results.
55. The aggregate expenditure proposed for the 2012 fiscal year is N4.749 trillion, which is a modest increase of 6% over the N4.484 trillion appropriated for 2011. I am pleased to note, however, that the declining share of capital is being reversed so it will account for about 28% of total expenditure in 2012 compared to 26% in 2011. We intend to continue on this path so that by 2015, it will have risen to almost 33%.
56. This underscores the need to intensify our efforts to curtail recurrent expenditure, which we have already embarked upon under the policy of fiscal consolidation as evident from the Medium-Term Fiscal Framework. The share of recurrent expenditure in the 2012 Budget proposal is 72%, down from 74.4% in 2011, and we intend to continue on this downward trend up to 2015.
57. The aggregate expenditure comprises N398 billion for Statutory Transfers, N560 billion for Debt Service underscoring the real need to address the rising domestic debt profile, and N2.472 trillion for Recurrent (Non-Debt) Expenditure. We are conscious of the need to control the cost of governance. Government will streamline agencies with overlapping mandates as a way to realign public expenditure.
58. In this respect, I have received the preliminary Report of the task force which I set up for this purpose and we shall implement relevant recommendations. We are also pursuing the biometric verification of workers and pensioners as part of our effort to control cost.
59. Capital expenditure has an allocation of N1.32 trillion representing a 15% increase over the amount approved in the 2011 Budget. The emphasis is on the completion of critical infrastructure projects.
60. Based on the above, the fiscal deficit is projected at about 2.77% of GDP in the 2012 Budget compared to 2.96% in 2011. This is within the threshold stipulated in the Fiscal Responsibility Act, 2007 and clearly highlights our commitment to fiscal prudence as a way to create more space for the private sector.
61. This will also have a salutary effect on our domestic debt profile, which has risen significantly in recent years. We are determined to rein in domestic borrowing, and through this, ensure that our debt is at a sustainable level.
62. As I mentioned earlier, government has made significant progress in putting the finances of the nation on a sound footing and laying the foundation for rapid and sustainable economic growth.
63. Allocations to some critical sectors of the economy are as follows: Security – N921.91 billion; Power [including Bulk Trader, Nelmco, and Multi-Year Tariff Order (MYTO)] -N161.42 billion; Works – N180.8 billion; Education [excluding Universal Basic Education Commission, Petroleum Technology Development Trust Fund (PTDF) & Education Trust Fund] – N400.15 billion; Health – N282.77 billion; and Agriculture & Rural Development – N78.98 billion. Others are: Water Resources – N39 billion; Petroleum Resources – N59.66 billion; Aviation – N49.23 billion; Transport – N54.83 billion; Lands & Housing – N26.49 billion; Science & Technology – N30.84 billion; Niger Delta – N59.72 billion; Federal Capital Territory Administration (FCTA) – N45.57 billion and Communications Technology – N18.31 billion.
Fiscal Policy
64. Fellow compatriots, you will agree that the budget is not an end in itself but rather, an instrument for the promotion of economic growth, wealth creation, poverty reduction and service delivery to the citizenry. Government desires that we should begin to experience a commensurate increase in gainful employment and social well-being of Nigerians with the rate of economic growth.
65. This Budget seeks to act, not only to create jobs, but to also lay a solid foundation for sustainable economic growth which would deliver the dividends of democracy to our people. In this respect as you may recall, I hosted a retreat in October this year with the organized private Sector (OPS) at which a number of issues including fiscal policy were extensively discussed.
66. I wish to reiterate here that the principal objective of my Administration’s fiscal policy in the area of tariffs and trade is to promote industrialization and the growth of the manufacturing and agricultural sectors of the economy and above all to generate employment for Nigerians.
67. As part of the process to realize this objective, we have commenced the review of the 2008-2012 Customs and Excise Tariffs to correct identified anomalies and introduce policies that will help in the promotion of industrialization in the country when the review is concluded. In addition, to ensure a level-playing field for businesses, this Administration, beginning from the 2012 fiscal year, will where necessary, only grant concessions or waivers on a sectoral basis. The focus of any concessions will be on expanding domestic production for local consumption and boosting exports, development of value chains, and boosting employment.
68. The Export Expansion Grant (EEG) scheme has, over the years, contributed significantly in the diversification of the economy through the promotion of non-oil exports. Efforts have therefore reached an advanced stage to review and streamline the Scheme to make it more effective as an instrument for the promotion of non-oil exports. We shall also aggressively pursue economic diplomacy within the framework of ECOWAS to ensure that the ECOWAS Trade Liberalization Scheme (ETLS) achieves its objective of promoting intra- ECOWAS trade and that it is not used as a vehicle for dumping goods in the region. In particular, we shall review the application of the ECOWAS Trade Liberalization Scheme (ETLS) to the oil palm and other sectors.
69. For some time now, especially with the advent of the consolidated salary structure, there has been agitation over the lopsided nature of the Personal Income Tax Act and the fact that the tax free allowances were inadequate. I am pleased to announce that I have signed the Personal Income Tax Amendment Act 2011 into law which amongst others has the benefit of reducing, on the average, taxes paid by low income earners and providing a more equitable tax structure for individuals. This law also provides for Tax Appeal Tribunals to listen to, and address concerns of individual taxpayers as a cost-effective administrative intervention prior to recourse to the courts.
70. Other fiscal changes to be gazetted shortly, include tax waivers on all bonds and related instruments issued by corporate and other tiers of Government, tax rebates as incentive to companies that create jobs, regulations to support taxpayers’ self- assessment, and regulations to support the growing quest of those involved in social and community development to get tax incentives for those donating to their causes.
71. As you may recall, Government initiated a new multifaceted National Job Creation Scheme with the provision of seed funding of N50 billion in the 2011 Budget. Implementation of this programme has commenced in earnest.
72. This Administration believes that it is time to give Nigerian youths an opportunity to enjoy the dignity of a job, the support for innovation, the confidence to be an entrepreneur and, the sheer optimism to be an employer of labour along with the security of an income that can contribute to our economic development. We are conscious of the fact that we have the task of transforming the huge potential of our youths into real, tangible outcomes which all of our people can experience and call their own.
73. In this respect, Government is focused on stimulating entrepreneurial activity and setting a framework for young people with creative tendencies to showcase their business acumen, build capacity and create jobs. In this spirit, and to move beyond the conventional paradigm of job creation, the Government, partnering with the organized private sector and our development partners, took bold steps to initiate the Youth Enterprise With Innovation in Nigeria (YouWin) programme which I launched in Abuja in October and has since been launched also across the six geopolitical zones.
74. This programme is targeted to, not only create a new generation of innovative real sector entrepreneurs in Nigeria, but, in the medium term, also generate jobs for youths across the country.
75. I believe that this move will drive the future technological and socio-economic development of our country. YouWin will lead to the creation of about 100,000 jobs through support to our young entrepreneurs.
CONCLUSION
76. Mr. Senate President, Mr. Speaker, Distinguished Senators, Honourable Members of this esteemed Assembly, the Proposal I lay before you this day seeks to sustain sound macroeconomic growth that will translate to achieving socio-economic transformation, and gainful employment for our people. But, we can only progress in this course and turn our possibilities into reality when we diligently adhere to the implementation of well thought-out and articulated developmental policies.
77. The 2012 Budget, as our collaborative effort, has taken the welfare of Nigerians as top priority. In an environment of global uncertainties and domestic challenges, the strong support of the National Assembly is invaluable for us to achieve our set developmental goals.
78. As we collectively resolve to create a brighter and enduring future for all Nigerians – a future of hope and prosperity not lack, fear or hatred, we must prepare to overcome any adversity that may arise. Accordingly, we must all be determined and committed to follow through with the difficult but balanced choices that we make in piloting the affairs of this great nation.
79. Finally, I wish to appreciate the enduring partnership between the Executive and the Legislature in discharging our shared responsibility for nation-building and I note, with thanks, the patriotism, commitment and support that Distinguished and Honourable Members of this esteemed Assembly have consistently demonstrated.
80. Once again, I encourage us to dialogue openly, frankly and in good faith over the challenges that face us as a nation. It is my hope that the National Assembly will consider and pass the 2012 Budget Proposal expeditiously; and I foresee even more productive collaboration to the benefit of all our people.
81. I am indeed grateful for your kind attention.
82. May God bless you all, and bless the Federal Republic of Nigeria.
For The Record
BROADCAST BY HIS EXCELLENCY, SIR SIMINALAVI FUBARA, GSSRS ON TUESDAY, 18TH JUNE, 2024
For The Record
An Open Letter To President Bola Ahmed Tinubu On The Imperative Of Revisiting The Eight-Point Resolution Brokered As Truce For The Rivers Political Crisis
Your Excellency, as belated as it may come, please, do accept my congratulations on your victory in the last Presidential election, and the seamless swearing-in ceremony that ushered you in as the sixth democratically elected President and Commander-in-Chief of the Armed Forces of the Federal Republic of Nigeria.
Of course, your victory did not come as a surprise to many, given your antecedents as a democrat, astute administrator and, a go-getter. Whereas your track record as a political activist, especially in the wake of the annulled June 12, 1993 presidential election is self-evident; your exceptional performance as Governor of Lagos State is a clincher any day.
It is my prayer therefore, that the good Lord, who has brought you this far, guide and direct your ways to steer the ship of state aright.
That being said, Your Excellency, please permit me to commence this correspondence with an allegory drawn from our recent past. A few years ago, Chief Olusegun Obasanjo was elected Nigeria’s President on the platform of the Peoples Democratic Party (PDP). You were equally elected Governor of Lagos State on the platform of the Alliance for Democracy (AD). This electoral upshot inevitably placed you in opposition to the government at the centre.
The dust raised in the wake of the elections was yet to settle before you disagreed with then President Obasanjo. The bone of contention transcended personal vendetta, or so it seemed. Again, it happened at a time when our democracy could rightly be described as nascent. You had approached the court to seek judicial interpretation on some grey areas of our constitution, as provided for, in the concurrent list.
Much as Obasanjo would have loved to have things go his own his way, he was apparently restrained by the grundnorm. And he recognized it was within your right to seek judicial interpretation as to whether he wasn’t exercising his powers as president ultra vires. That was the rule of law at play; a classic specimen of what we fondly refer to as the beauty of democracy in our political parlance.Above all, it underscored the centrality of the constitution in resolving state matter.
Nigerians gave you thumbs up for engaging Obasanjo and the federal government all the way up to the Supreme Court. Moreover, happening at a time when the fear of President Obasanjo and the unwritten federal might were considered the beginning of political wisdom in our polity. Of course, the constitution came handy as a leveler between your good self and former President Obasanjo.
In light of the above, Nigerians naturally expect a clear departure from what the Obasanjo era and the immediate past regime offered them as constitutional democracy. Whereas it is still early in the day to rate your performance in this regard, one cannot but acknowledge that you have so far shown that you have some listening ear. Your intervention in what could have degenerated into a total breakdown of law and order in Rivers State late last year comes as a reference point. For me, stepping in to halt the ship of state from completederailment is an eloquent attestation to the fact that you place the security of lives and property, peace and harmony, and national cohesion over and above partisan interest.
You could equally have looked the other way and allow the crisis fester, since Rivers State is a PDP state. But you hearkened to the voice of reason, and that of well-meaning Nigerians, particularly, Chief Edwin Kiagbodo Clark, the leader of the Ijaw nation, and, the Ijaw National Congress (INC) to halt the drift. Notwithstanding your tight schedule, you took out time to summon the governor of Rivers State, Sir Siminalayi Joseph Fubara, his predecessor, now FCT minister, Barr. Ezebunwo Nyesom Wike and Hon. Martins Amaewhule who were the principal actors in the crisis to the Villa, and have them subscribed to a peace deal.
Although I had my reservations over the eight-point resolution ab initio, I refrained myself from joining the bandwagon in pointing out some of the obvious limitations in the document at the time. My position was informed by the following reasons. First, I didn’t see it as the wisest thing to do at a time when the crisis was raging like a wildfire. For me, nothing could have been more paramount than bringing the situation under control, which the armistice effectively accomplished. Second, I trusted your judgment, and honestly believed that you brokered the deal in good faith. I was therefore willing to give the truce the deserved benefit of the doubt by putting it to test. Finally, and most importantly, the governor who was in the eye of the storm was unwavering in restating his commitment to the terms of the truce.
However, three months after the deal was struck, I dare say, Your Excellency; that it has failed in attaining the ultimate goal of reconciling the warring factions.Instead, it had become the template for the palpable tension the state has since been grappling with. This outcome is by no means surprising to any discerning mind. And the reasons are not far-fetched. First, as I mentioned earlier, it would appear that in a bid to halt to the looming anarchy, the constitution which is the grundnorm was not properly consulted in forging the eight-point resolution. Also, a reexamination of the document reveals a certain degree of political fiat in its construct.
That the eight-point resolution has since triggered a plethora of litigations is only natural. That it has induced a near state of anomie clearly points to the inherent flaws in the document. That it has thrown up desperadoesand warmongers like Chief Tony Okocha and Engr. Samuel Nwanosike who now disparage, distract and outrightly abuse a sitting governor with reckless abandon is equally expected. As for Wike, the man believes the governor is his lackey, therefore, tongue-lashing, and outrightly threatening to give the governor sleepless nights are privileges he believes are within his right. But most worrisome, is the fact that Wike doesn’t make empty threats. In other words, backtracking on getting the governor out of office, either by hook or crook isn’t just an option.
The truth is, some of the articles in the eight-point resolution stealthily stripped the governor of the powers and aura of his office;thus exposing him to the ridicule we see today. For instance, article three directed the governor to reinstate former members of the state executive council,who had earlier resigned their appointments from the state cabinet. Truth be told, such directive to a sitting governor, in the very least, leaves a sour taste in the mouth. Perhaps, it would have been a different kettle of fish had the governor whimsically sacked the commissioners because he suspected their allegiance lay with the FCT minister. But here, these supposed honourable men and women resigned their appointments on their own volition, citing “personal grounds”.
One would have expected Your Excellency toresolve the issue a little differently given your groundedness in public and private administration; knowing that trust and mutual respect took flight the moment those commissioners handed in their resignation letters. In other words, people with obvious reservations against each other cannot truly work as a team.
The constitution expressly confers the powers to appoint commissioners on the governor of a state. It follows therefore that commissioners owe their loyalty to the governor who appoints them. While in the saddle, Wike was unequivocal in demanding a hundred percent loyalty from his commissioners. And that was what he got during his eight-year reign. Granted that the commissioners in question were all nominated by the FCT minister as we now know; the question is, was it also within his right to direct their resignation at will, and then re-direct their reinstatement because the plot to remove the governor failed?
If you ask me, requesting Wike, the nominator, to nominate fresh persons in their stead would have created more semblance of statecraft, seriousness in governance and, more importantly, saved the governor’s face. It also would have gone a long way to demonstrate that some things are beyond trifles. Put differently, the notion that a crisis of that magnitude could be resolved absent collateral damage rest on a faulty premise.
Again, article six of the eight-point resolution apparently puts the governor in a catch 22 situation. Directing the governor to re-present the state Appropriation Bill that has already been passed and signed into law to Hon. Martins Amaewhule and his co-travelers, in my humble opinion, was another sore point in the document. I doubt it was a fitting consideration for a failed impeachment that shouldn’t have happened in the first place; not after the courts have already made pronouncements on the issues.
Your Excellency, I honestly believe you didn’t intend the current stalemate between the executive and the legislative arms of government in Rivers State. Nevertheless, that is the reality on ground, as the governor, on one hand, governs the state with an infiltrated state civil service; and Martins Amaehule with his ‘Assembly’ members, working at cross-purposes with the governor, dish out all the anti-executive bills they can imagine. A case in point is the latest piece of legislation coming from the ‘Assembly’. Again, one wonders,what Assembly worth its salt, wouldseekto elongate the tenure of the current local government chairmen and councilors; knowing they were elected and sworn into office for a three-year term that expires in June? The question is, do we now enact our laws retroactively?
Now, to the crux of the matter, Wike is a man with a history of political violence. His politics thrives in an atmosphere of strife and rancour. It cannot be over emphasized that he presently seeks to overheat the Rivers polity, and possibly make the state ungovernable. He is hell bent on accomplishing the intendment of a failed impeachment. His penchant for violence explains why Rivers State under his reign wore the appalling badge of a conquered territory. The state hasn’t exploded yet, given its current tenuous peace of the graveyard,is because, Gov. Siminalaye Fubara has refused to swallow Wike’s bait. In fact, his refusal to join issues with the man he calls master, and probably heat up the polity explains why restive Wike wants 2027 switch place with 2024 in the Nigeria political calendar.
Already, his vicious supporters are on the prowl, momentarily rehearsing vandalism and arson of public and private properties, with no qualms, even in broad day light. Sadly, the license to take laws into their hands springs from standing on Wike’s mandate. This much is evident in a video that has gone viral on the cyberspace. One would have dismissedthe ongoing rampageas the man’s political trademark, except that wily Wike claims to be standing on your mandate, even though he has been most cautious in defecting to his supposedly ‘cancerous’ APC.
Your Excellency, is it not curious that Wike and his supporters are the only band daily chanting “On your mandate we shall stand, Jagaban”, one year after you had contested and won the February 25, 2023 presidential election?
Of utmost concern is the disturbing silence of the Police, the DSS and other security agencies in the face of Wike’s supporters running amok. Rather, than live up to their constitutional billing, they seem to unwittingly nudge the people to resort to self-help. And while they continue in their ostrichism, the fire is being steadily stoked by the man who thinks Rivers State is his sole enterprise, and to balm his bruised ego could unleash the unimaginable.
It is however reassuring that Your Excellency is no stranger to Rivers politics and its combustive nature. As Dr. Peter Odili’s contemporary as governors, you were well abreast of what transpired in the state from 1999-2007. You were also a major player in the Amaechi-Wike debacle while the former was the occupant of Brick House. In fact, you were purported to have saved Amaechi’s skin from the Jonathans, when, in cahoots with Wike, they unleashed the federal might.
You saw Rivers State went upin flame from 2013-2019, all for Wike to succeed his Ikwerre brother as governor in a multi-ethnic state. You were also witnessto how thepolitically induced inferno incredibly extinguished itself as soon as Wike’s vaulting ambition was achieved. But while the carnage last, Rivers people lost their lives in their hundreds.
As governor, and for eight years, Wike ruled like a demigod, and the state, his footstool. He literally vetoed the constitution on Citizens’ Rights, Freedom of Speech, Freedom of Association, Procurement, and Social Justice. In fact, one of the lion-hearted among us aptly tagged the Wike-era as the years of the Rivers of Blood.
Your Excellency, there is no better way to say Rivers State is presently sitting on a keg of gunpowder, while drifting daily towards the precipice. And if something is not done urgently to avert a repetition of its recent ugly past, tomorrow may be too late.
I have personally bemoaned the lot of the Rivers man since the dawn of the fourth republic in my book: The Rivers Season of Insanity. I would spare you the details therein. However, it may interest Your Excellency to know that as a Rivers man; I have tremendous respect for you, just as I envy what you have made of Lagos State. I’m therefore genuinely bothered that Rivers State may just be the odd state out as you are set to replicate the Lagos wonder across the federation. Rivers State can only andtruly share in the Renewed Hope, if Wike is restrained from plunging it into another round of bloodletting.
Much as it is the truth, I hate to reiterate, that in all her abundance, Rivers State can only boast of the loudest and most vaulting chief executives ever, since 1999. The allure to graduate from Brick House to Aso Villa has become an elixir, which those we elect to govern have not been able to extricate themselves from. And to make a bad situation worse, it remains the only state in Nigeria that flaunts an obnoxious injunction that insulates her past and serving governors from the ethics of good governance, such as transparency, accountability and probity.
I have no doubt in my mind that you already saw through Wike and his antics. And it is only a matter of time before you reined him in. My concern however, is that it shouldn’t happen only after he must have thrust the state into another round of massacre. Need I say, that going by his claim, what Wike delivered in last year’s election were Rivers votes, not his votes.
Ask the Jonathans if their alliance with Wike was worth the trouble, given the benefit of hindsight, and your guess will be as good as mine.
In a nutshell,Your Excellency, Rivers State has had more than her fair share of bloodletting since 1999. It is against this backdrop that I most fervently pray that the blood of Dr. Marshall Harry, Chief A. K Dikkibo, Hon. Monday Ndor, Hon. Charles Nsiegbe, Amb. Ignatius Ajuru, Hon. Monday Eleanya, Barr. Ken Aswuete and several other victims of assassination be allowed to water the peace initiative and advocacy of the incumbent governor.
Finally, Your Excellency, in view of the above, it is my humble submission that the eight-point resolution be revisited with the hope that it guarantees sustainable peace and harmony in the Rivers polity.
“The time is always right to do what is right.”
-Martin Luther King Jr.
Thank you for time and consideration.
Yours Respectfully,
Caleb Emmanuel Fubara
Fubara hails from Opobo Town
Background
On Thursday, February 15, 2024 at its 109th Legislative sitting, the House passed into Law, the Rivers State House of Assembly Service Commission (Amendment) Bill, 2024. The Bill repealed the Rivers State House of Assembly Service Commission (Amendment) Law, No. 3 of 2006 and further amended the Rivers State House of Assembly Service Commission Law of 1999. The Bill was sent to the Governor for his assent and after the statutory 30 days, the House re-passed the Bill into Law on 22nd March, 2024.
The Rivers State House of Assembly Service Commission was established by the Rivers State House of Assembly Service Commission Law of 1999. Section 2 provides:
“The Commission shall comprise a Chairman and four other members who shall in the opinion of the Speaker be persons of unquestionable integrity.
“The Chairman and members of the Commission shall be appointed by the Rivers State House of Assembly acting on the advice and recommendation of the House Committee of Selection and shall in making the appointment be guided by the geographical spread and diversity of the people of Rivers State.”
The above section was repealed by the Rivers State House of Assembly Service Commission (Amendment) Law No 3, 2006. In Sections 2 and 3, the Amendment Law provides that:
S. 2 “Section 2 of the Principal Law is amended by repealing subsection (1) and substituting the following subsection:
“(1) The Commission shall comprise a Chairman and 4 (four) other members.
S. 3 “Section 2(2) of the Principal Law is amended by repealing subsection (2) and substituting the following subsection:
“(2) The Chairman and members of the Commission shall be appointed by the Governor subject to the confirmation by the House of Assembly and shall in making the appointment be guided by the geographical spread and diversity of the people of Rivers State.”
The import of the 2024 Amendment Bill passed into Law by the House is that the Governor will no longer have the power to appoint the Chairman and members of the Rivers State House of Assembly Service Commission and the power of appointment shall be vested in the House of Assembly.
Legal Issues
The first issue to consider is the Constitutional power of the Governor. Section 5(2) of the Constitution of the Federal Republic of Nigeria, 1999 provides that the executive powers of the State shall be vested in the Governor of that State.” Further, Section 176(2) provides that: “The Governor of a State shall be the Chief Executive of that State.”
This follows that the Governor is the Chief Executive Officer of the State Government and by the powers vested on him, is responsible for making appointments into various executive bodies, subject to the provisions of the 1999 Constitution and other statutes. All Commissions and other parastatals are executive bodies under the control of the Governor. The House of Assembly Service Commission is an executive body and as such, the Chairman and members can only be appointed by the Governor. The House of Assembly has no powers to make any appointment into an executive body as no statutory body is under the control of the legislature. The Rivers State House of Assembly should not mistake the presence of the building of the Service Commission in its premises as conferring powers on the House to appoint the Chairman and members of the Commission.
The second issue to consider is the Constitutional alteration of 2023. In that alteration, the Third Schedule was amended to include State Houses of Assembly Service Commissions, which invariably follows that a State House of Assembly Commission is one of State bodies established by section 197 of the 1999 Constitution. Let’s be reminded that Section 198 of the 1999 Constitution gives the Governor the power of appointment into various executive bodies, subject to confirmation by a resolution of the House of Assembly of a State. The job of the Rivers State House of Assembly ends with the confirmation of the appointees.
The alteration to the Third Schedule, paragraph 1A provides that the composition, tenure, structure, finance, functions, powers, and other proceedings of the Commission shall be as prescribed by a law of the House of Assembly of the State. Notice that the appointment of the Chairman and members of the Commission is not listed. Therefore, it can be safely inferred that the power to appoint the Chairman and members of the House of Assembly Service Commission lies with the Governor, as is the case with the other bodies listed under Section 197 of the 1999 Constitution.
There is nothing in the Alteration that, by any stretch of imagination, can be inferred to confer the power of appointing the Chairman and members of the Rivers State House of Assembly Service Commission on the Rivers State House of Assembly, notwithstanding the fact that the law creating the Commission was enacted by the Rivers State House of Assembly.
Thirdly, is the Rivers State House of Assembly Service Commission and its staff under the control of the State Government? To answer this question, we will take our voyage to Section 318 of the 1999 Constitution. That section gives the definition of a Public Service of a State to mean: “the service of the state in any capacity in respect of the government of the state and includes service as: clerk or other staff of the House of Assembly; member of staff of the High Court, the Sharia Court of Appeal, the Customary Court of Appeal or other courts established for a state by the Constitution or by a law of a House of Assembly; member or staff of any Commission or authority established for the state by this Constitution or by a law of a House of Assembly; staff of any Local Government Council; staff of any statutory corporation established by a law of a House of Assembly; staff of any educational institution established or financed principally by a government of a State; and staff of any company or enterprise in which the government of a State or its agency holds controlling shares or interest.
The purport of this section is that the Assembly Service Commission is not an appendage of the legislature but under the control of the State Government. Even at the national level, the members of the National Assembly Service Commission are appointed by the President in collaboration with the National Assembly.
Fourthly, what is the position of the Rivers State House of Assembly Service Commission Law vis-à-vis the National Assembly Service Commission Act? Section 4(5) of the 1999 Constitution provides: “If any Law enacted by the House of Assembly of a State is inconsistent with any law validly made by the National Assembly, the law made by the National Assembly shall prevail, and that other law shall, to the extent of inconsistency, be void.”
Further, in A.G Bendel v AG Federation & 22 Ors (1982) 3 NCLRI, the Supreme Court held per Fatayi Williams CJN (as he then was) “neither a State nor an individual can contract out of the provisions of the Constitution. The reason for this is that a contract to do a thing which cannot be done without a violation of the Law is void.”
The fifth issue is: “can a statute revive a repealed statute?” In the case of Idehen v University of Benin, Suit No FHC/B/CS/120/2001, delivered on 19th December, 2001, the court held that:
“Contrary to the contention of the University, the effect of a repealing statute is to erase the repealed statute from the statute book. When a statute is repealed, it ceases to exist and no longer forms part of the laws of the land. In other words, the effect of the repeal is to render the repealed statute dead and non-existent in law. Like a dead person, it cannot be revived.”
The court also held in Onagoruwa v IGP (1991) 75 N.W.L.R (pt. 193) 593 that in law, a non-existent statute is dead and cannot be saved or salvaged by the court.
In Madumere v Onuoha (1999) 8 NWLR (Pt. 615) Pg 422, the Court of Appeal held that:
“the effect of repealing a statute is to obliterate it completely from the records of the Parliament as if it had never been passed. Such a law is to be regarded legally as a law that never existed…This means in effect that when a statute is repealed, it ceases to be an existing law under the Constitution of the Federal Republic of Nigeria.”
For the purpose of reviving your memory, the provision giving the Governor the power to appoint the Chairman and members of the Rivers State House of Assembly Service Commission under the repealed 2006 Law provides in its opening paragraph:
“3. Section 2(2) of the Principal Law is amended by repealing section 2 and substituting the following section…” (emphasis mine).
Further, Section 6(1)(a) of the Interpretation Act provides:
“(1) The repeal of an enactment shall not revive anything not in force or existing at the time when the repeal takes effect.”
Please note that Section 318(4) of the 1999 Constitution provides that “The Interpretation Act shall apply for the purposes of interpreting the provisions of this Constitution.”
It follows from the above that the House cannot repeal Sections 2 and 3 of the Rivers State House of Assembly Service Commission (Amendment) Law No 3, 2006 to revive the already repealed provisions of the 1999 Law.
Conclusion
In conclusion, the Rivers State House of Assembly lacks the powers, legal or otherwise, to remove the power of appointment of the Chairman and members of the Rivers State House of Assembly Service Commission from the Governor and vest that power on themselves. The provision in the Rivers State House of Assembly Service Commission (Amendment) Law, 2024 seeking to vest that power on the House is in clear contravention of the 1999 Constitution, and therefore, a nullity in the eyes of the Law. See the case of MacFoy v UAC (1961) 3 All ER 1169 where the court held that you cannot put something on nothing and expect it to stand.
In that case, Lord Denning stated: “If an act is void, then it is in law a nullity. It is not only bad, but incurably bad. There is no need for an order of court to set it aside. It is automatically null and void without more ado, though it is sometimes more convenient to have the court declare it to be so. And every proceeding which is founded on it is also bad and incurably bad. You cannot put something on nothing and expect it to stay there. It will collapse.”
Rt Hon Ehie is Chief of Staff, Government House, Port Harcourt.
By: Edison Ehie