Sovereign Wealth Fund

source:nsia.com.ng

On the 18^th of September, the Nigerian Sovereign Investment Authority invested $200 million  of the $ 1 billion allocated to it in US bonds. NSIA is the organization that is responsible for Nigeria’s Sovereign Wealth Fund (SWF). Most SWFS are investments by countries and are funded by budget and/ or balance of payment surpluses. They have their origins in commodities (additional profits from natural resources. An example is Nigeria and the commodity is oil) or non-commodities (such as transfer of assets from foreign reserves). 

The  main purpose of a SWF is to act as a rainy day fund for countries.It can be likened to  University endowment funds. The difference is the source of funds. For University endowments it is donations but for countries, it is out of pocket. The objectives of the Nigerian SWF are to: receive, manage and invest in a diversified portfolio, save oil revenues, develop infrastructure that would aid growth, provide stabilization in times of economic stress and be a last resort for budget deficits. SWF was established by an act of the National Assembly in 2011. 

The fund is divided into: Stabilization fund, future generation fund and infrastructure fund. SWF is a good policy because it creates rules and structure around the additional revenue the government gets from oil. Presently, all excess revenues derived from oil go into the Excess Crude Account (ECA)  set up in 2004 by President Obasanjo. Usually, for a financial year, the government sets a benchmark price for oil. For instance, in 2013 oil would sell for $70 per barrel. If oil sells above that, e.g $200, the extra $130 goes into the ECA. In 2004, ECA had about  $5billion and grew to about $20 billion in 2006. That account now has approximately $3.6 billion. Earlier this year, the minister of Finance stated that about N606 billion from ECA was used to supplement the shortfall in the Federation account (account where all the tiers of government share revenues). 

There are 2 issues with ECA. The president set up the fund  without the consent of governors and the president exercised (still exercises) discretion on how the money is spent. i.e there is no transparency around the funds. The lack of transparency on how the ECA funds have been spent means that Nigerians cannot  pinpoint the benefits from the profits of crude oil in the past 9 years.  Therefore, SWF is a step in the right direction. 

SWF is also a good idea because it offers an avenue to use oil wealth to develop the nation before it no longer generates revenue. If funds are properly invested, are profitable and used for stated purposes,Nigeria may in for good times

However, the problem with NSIA is the nature of the investments made. If the country incurs losses on her portfolio, she is the poorer for it. For instance, Nigeria has invested $200 million in US bonds, if US had defaulted on its debts on the 17^th October, Nigeria would have lost some money though the country would not have been impacted like China and Japan. Thus, the structure around NSIA should focus on the type of investments to be made and the country’s risk appetite. Other countries use their funds to create State Owned Enterprises but we have tried that before and it failed (remember Nigerian Airways and Virgin Nigeria).

For the fund to function properly, the Federal government needs to get the consent of State governors. Some State governors have kicked against the fund and are in court over it. The additional profits from oil belongs to all tiers of government. It is against the principles of federalism if States are “forced to save” and SWF may not get beyond the $1 billion initial allocation given to it if  the court agrees with the state governors.

The impacts and successes of NSIA/ SWF remains to be seen and hopefully it would be an agency that truly benefits Nigerians

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On National Development

Expenditure of the Federal Government of Nigeria, 1961-2012.
Source: CBN Statistical Bulletin: Special Anniversary Edition& CBN Annual Reports 2009, 2010, 2011, 2012

I have pondered when our development issues as a country began to degenerate and our public expenditure has given me an answer. Previously, I had thought that the excessive spending on overhead and administrative public expenditure was a recent development but history proved me wrong. Since 1961, the chunk of our annual budget has gone into administrative costs (wages, salaries for elected and civil servants maintenance, contingencies and subventions) i.e recurrent expenditure. 

The only periods capital expenditure (defense,education, agricultural and social sectors e.g roads, housing, education infrastructure etc) exceeded over heads was between 1975-1983 and 1996-1999. Apart from the FESTAC 1977 quarters, I cannot remember any other tangible projects associated with those periods.

Chinua Achebe in his "There was a Country" noted an Igbo proverb that "A man who does not know where the rain began to beat him cannot say where he dried his body". In the light of the constant strikes in the health and education sectors, our government needs to identify where the rain of under development began to beat us so we can begin the process of drying our body or changing our clothes.

 Deuces

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Misplaced Priorities

credit:en.paperblog.com

I am yet to understand why Nollywood seeks and demands financial government intervention in its affairs- I don't even think the government should regulate it. If government wants to help, it should address issues that inhibit profit-making- piracy! 

Acting and related industries are private businesses meant for entertainment and profit purposes. I do not see the government doling out intervention funds to doctors, teachers, bankers, bakers, caterers, tailors, artisans... you get the drift. Nollywood teaches us little or no morals, as we tend to reject "preachy" films and pick up bad mannerisms. Otherwise Mount Zion Faith Ministry movies, Mainframe movies Oyin Adejobi films would be block busters. I think Nollywood should approach financial institutions to fund movies and survival of the fittest should take its course. Producers like Mainframe and Kunle Afolayan do not produce their high quality movies on government funds.

This is why I was surprised when I read that there is a 3 billion Naira grant for Nollywood "capacity building". First, what capacity is being built? Capacity to act, direct or produce? Second surprise is that the fund has caused a ruckus in Nollywood.  Our art practitioners are fighting over who has access to the fund! This fund shows how misplaced our priorities are. In 2010, there was a $200 million dollar grant to Nollywood. The only visible outcome of that grant is unsuccessful "Dr Bello". Yet the government has in its wisdom deemed it fit to add another 3 billion Naira ($18, 520, 800) 

As much as we love Nollywood movies, this 3 billion can be used to renovate 60 barracks (at 50 million naira each), build 300 block of four flats housing units (at 10,000 million naira each), declare an intervention in Accidents and Emergency units in Government hospitals across the nation or fix the roads leading to the East. 
Misplaced priorities. 

I rest my case

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On Prince George

The Royal baby has been born, named and the euphoria surrounding the pregnancy and birth has subsided. The lesson of this birth is the human need and craving for good news- any good news and, surprisingly, the voluntary subjection to Monarchy inspite of the rise of other forms of government. Who would have thought that after the Glorious revolution of 1688 through the 20th century scandals and derision, Britain's royal family would still command the reverence given to it? Indeed, the royal house of Windsor has come back new and improved. First was the royal wedding  in 2011, the Queen's golden jubilee and now the birth of Prince George.
The fanfare that greeted birth reminded one of the reverence given to Yoruba traditional rulers of yore . Unlike, Yoruba kings that were unquestionable, Brits expect to and do have a say in the lives of the Royals. For Britain's royal family, it takes a village.
People are quick to judge and mock them as they are to idolize and ascribe virtuous, faultless attributes to them (this also applies to celebrities and public officials). We put them on a pedestal and quickly pull the rug under their feet when they falter. We should realize that these people are human and imperfect.
I wish Prince George well and hopes he settles into the path Providence has bestowed him without the troubles that followed those before him. On the part of we the subjects, Hilary Mantel's advice is apt in how we should treat those we admire (in the light of Kate's pregnancy, Princess Diana's death and the treatment of the Royal family) she wrote, "the pen is in our hands, a happy ending is ours to write". Here's to happy endings.

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A "Problem" shared

I visited the Children Development Centre (CDC) and the Modupe Cole Memorial Child Care Centre (MDCMC) recently. At the CDC, I discovered great cookies, meat pies and affordable scented candles; at MDCMC I met a lady who painted with her legs.Teenagers and adults that suffer different stages of autism, mental retardation and learning disabilities made the cookies, pies and candles.

I left both centres impressed because in spite of their mental disabilities these students have found a purpose and are useful. However, that visit exposed me to an issue I did not know existed. As a people we hide under the everything-is-fine-banner. The Yoruba adage that “all lizards lie flat on their belly, you don’t know which one has an ache” is true. I learned that parents hid their children who suffered from these conditions from others because they are ashamed they birthed these children. At the center, I met a 38-year old who stepped outside her house for first time when she started at the Center. She was not the only one. That’s the story of most of the kids. At MDCMC, some of the kids have been abandoned there by their parents or guardians. Consequently, these kids are deprived of education and interactions outside their immediate family- who view them as a burden- or  emasculate them thereby increasing their dependency.

 The challenge with keeping up appearances is that it is emotionally, socially and financially draining. Conditions that may be ameliorated if parents and guardians spoke up and sought help are worsened. If therapy begins early, some children are able to catch up and live semi- normal lives. For instance, there is much hope for the year old baby at the center who has begun treatment. Even the 38 year old has been able to develop the mental abilities of a 4 year old.

 Coming out on these issues helps parents and guardians know that they are not alone and provides support from others who share the same conditions. Speaking up also helps  some of the kids with less severe cases while children that suffer more serious cases learn to become useful.

Parents and guardians should realize that they would not always be there for these kids and the kids may not get the kind of care they (parents) would give. Thus, it is in their best interests to plan for the financial and social future of these kids.  Exposing their kids would make others feel comfortable with them and would let the kids know that they are wanted and special.

There is no shame in having a child that has a developmental disability. You did not choose it, wish it or pray for it but like life's other challenges, rather than run or hide it is better to face it.

Kids who suffer disabilities may not live normal lives, nevertheless, they do not deserve to be hid. My visit to the two centers opened my eyes to the possibilities these children have. I am assured that when they close and go home at the end of the day, they go home with a sense of fulfillment. We all deserve to feel that way. 

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The Road not taken

Hi all, 
Enjoy. Have a blessed week

Heroes
We are all fascinated with heroes and heroines. I fantasize about becoming superhuman and saving the world. I guess that is why the Marvel movies (Dark Knight, Iron man, Avengers, and now Superhuman) resonate with us. I find it interesting that people would believe in Spider-man types  than believe  that Jesus is the Saviour. We even call miracles- Providence! I watch these movies and see similarities in the characters and the faith i profess. The only difference is that Jesus would not destroy property to save 2 people. Some scenes and quotes in Superman have stuck with me so here we go. 

-  Jor el's ( Russel Crowe) speech on freedom of choice

- After Clark was bullied, his dad asked how he was doing and he says "Dad I wanted to hurt him, I wanted to hurt him bad and his dad replied then what and said  "You’re not just anyone.  One day, you’re going to have to make a choice.  You have to decide what kind of man you want to grow up to be.Whoever that man is, good character or bad, it’s going to change the world"

" Sometimes you have to take a leap of faith first, the trust part comes later"

"People are afraid of what they don't understand"

The road less travelled
There are two routes that link the highway home. I noticed that there is always traffic on the straight and smooth road home whilst the bumpy-three-potholes- route has no traffic. I have ruminated on why people wait in that traffic for the green light when the other route is faster. I have attributed drivers' behaviour to 2 things. First, the road is smoother and second is the i-am-already-here- let's-just- wait mentality and its sister what-if-the-other-side-is blocked. I believe people adopt the same attitude towards life. We fear changes, we are content in our comfort zone and would avoid the uncertainty of trying a new path. Like Robert Frost wrote in the Road not Taken, Two roads diverged in a wood, and I took the one less travelled by, and that has made all the difference. For me, the difference is that I get home in good time.

Answers anyone

Why do we start requests with "Sorry to bother you" "Apologies for disturbing you" and still go ahead with the request?
Why does the brazenness of "First Lady's" office  increase as a new first lady emerges? We thought there was no one like Mariam Abacha, there was respite with Fati Abubakar and since then, successive first ladies have surprised us with the powers they commandeer. 

See you next week.

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Civility

  "We actually tried free will before. After taking you from hunting and gathering to the height of the Roman Empire, we stepped back to see how you'd do on your own. You gave us the dark ages for five centuries until finally we decided we should come back in. The Chairman thought that maybe we just needed to do a better job with teaching you how to ride a bike before taking the training wheels off again. So we gave you raised hopes, enlightment, scientific revolution. For six hundred years we taught you to control your impulses with reason. Then in nineteen ten, we stepped back. Within fifty years you'd brought us world war one, the depression, fascism, the holocaust and capped it off by bringing the entire planet to the brink of destruction in the Cuba missile crisis. At that point the decision was taken to step back in again before you did something that even we couldn't fix".(from the movie the Adjustment Bureau) 

Just an observation I thought to share. It either we are not a civil people and our bad manners was exposed and amplified by social media or that the anonymity of social media has made us lose our manners. Comments on Internet forums, sites and new media both Nigerian and non-Nigerian show disregard for others. The level of incivility displayed is appalling.  The going attitude is my-way-or-the-highway and I-am-always-right-so-therefore…. (fill in the gap). I wonder the consequences of these new values we appear to imbibe.

Everyone is the final authority on everything and is right. The accessibility of the Internet and the ability to do things at the click of a button should come with a sense of responsibility and not recklessness. We can agree to disagree but we should remember to respect one another the same way we would if we are strangers meeting one another for the first time. I wonder why people behave the way they do and I think it is because of:

- The anonymity the Internet affords: I can open multiple accounts with different names and troll sites because most sites do not require identification. If one had to use real names, the case would be different. Recently, a troll in the US was outed. This user was very disrespectful to other users. However, when he was outed, he claimed to be the opposite of his virtual life

- Frustration: A lot of us are idle and frustrated and related to above we easily pick on others. Again related to the above, the Internet affords people an outlet to vent and transfer aggression on others. For instance, someone tweets that my opinion is A, rather than ignore you insult the person.

- Morbidity:  Bad behavior exists on the Internet exists because people are just so morbid that they get thrills from hurting others.

- The herd mentality (follow- follow) also promotes bad behavior on the Internet. Nigerian Internet forums especially Twitter is a case in point. Lola that is my twitter overlord disagrees with Seyi on some issue. Therefore, as a voltron of Lola it is my duty to attack Seyi. Unfortunately for Seyi, Lola has 100,000 followers. Just imagine the censure/ bashing that is sent Seyi’s way.

Anyways, that quote is up there because unlike Thompson and the chairman tried to do, humans are not robots, we have freewill BUT it is up to us to determine what we do with that freewill. Do we want to live and let live whilst still being our brothers keeper? Or do we continue to put down one another?

 Wars have been started, lives have been lost and relationships destroyed because of the wrong word. Incivility is an ill wind that bears no good.

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