REPORT OF THE ACTIVITIES OF THE NATIONAL
ECONOMIC INTELLIGENCE COMMITTEE (NEIC)
1994-1999
NEIC
The Presidency
7th Floor
New Federal Secretariat Complex
PMB 298
Garki-Abuja May 1999
---------------------------------------------------------------------
CHAPTER 1
---------
INTRODUCTION
Establishment of NEIC
---------------------
1. NEIC was established by Decree 17 of February, 1994. Membership
consists of a Chairman, 12 other members, and a Member-Secretary. All
members are appointed by the Head of State and Commander-in-Chief of the
Armed Forces. They hold office for such period as is specified in their
letters of appointment. No period of appointment is, however, specified
with respect to the present and first set of members. However, a member
may resign his membership with notice, in writing, addressed to the Head
of State and C-in-C, or be removed from office by the head of state and
C-in-C.
2. On 15th February, 1994, the following persons were sworn in as
members
of the Committee:
S/No Name Professional State of Status
Background Origin
1. Prof. Sam Aluko Economist Ekiti Chairman
2. Brig-Gen. G.A. Mohammed Quantity Surveyor/ Borno Member/
Soldier Secretary
3. Dr. Haroun Adamu Political Scientist/ Bauchi Member
Journalist
4. Dr. Dalhatu Araf Medical Doctor Nassarawa Member
5. Alhaji Umaru Audi Administrator Niger Member
6. Alhaji Musa Bello OFR Administrator/ Adamawa Member
Industrialist
7. Alhaji U.K. Bello Administrator/ Kebbi Member
Farmer
8. Mr. Walter Ekwensi Banker Imo Member
9. Barrister Eugene Madu Lawyer Anambra Member
10. Princess (Mrs.) A.O. Oguneye Chartered Ekiti Member
Accountant
11. Dr. Ode Ojowu Economist Benue Member
12. Mr. Babatunde Sangokunle Educationist Ogun Member
13. Alhaji Nasiru Maitama Sule Businessman Kano Member
14. Comrade Godwin Uluocha Trade Unionist Abia Member
In November 1995, Mr. Walter Ekwensi died and was replaced by Mr. Donald
Duke, a Barrister, from Cross-River State.
3. In December 1997, our Member/Secretary, Major-General Garba Ali
Mohammed was appointed the Federal Minister of Works and Housing and in
August 1998, Princess (Mrs.) A.O. Oguneye was appointed the Minister of
State for Federal Capital Territory, Abuja. In March 199, Dr. Haroun
Adamu was appointed Member/Secretary of the Presidential Policy Advisory
Committee (PPAC) by the President-Elect, General Olusegun Obasanjo.
Barrister Donald Duke was elected Governor of Cross River State in
January, 1999. Both Barrister Donald Duke and Dr. Haroun Adamu resigned
their appointments from NEIC as a result of their new positions.
4. The Committee is supported by a Secretariat which is headed by the
Member/Secretary. The Secretariat has five departments, namely, Finance
and Administration, Research, Field Operations, Expenditure, and
Revenue.
Each Department is headed by a Director. The current list of Directors
is
provided in Appendix I.
Functions of NEIC
=================
5. The functions of the Committee are to:
(a) analyse the annual budget of the Federal Government and extract
all measures requiring enforcement;
(b) work out details on the method of enforcing the implementation
of the annual budget;
(c) analyse the monetary guidelines issued by the Central Bank of
Nigeria (CBN) and monitor the implementation of the measures
enumerated therein;
(d) monitor and identify factors inhibiting the realisation of set
revenue targets;
(e) enforce the implementation of existing tax legislations;
(f) assess the report on any project being carried out by the
Federal Government and confirm that funds released for such
projects are judiciously utilised;
(g) monitor and report to the Federal Government on quarterly
basis, the inflation rate, the consumer price index, and such
other growth indices on output, liquidity and cost of funds,
transportation cost, fuel prices and other related tariffs;
(h) recommend any increase or decrease of price of manufactured
goods;
(i) monitor the supply of and demand for foreign exchange, the
gap and factors affecting the market, sales and indicated
rates, use of forex and operation of the market;
(j) consider any issue appropriate and relevant to the subject
of revenue collection;
(k) give a quarterly situation report on all its activities to the
Federal Government;
(l) ensure that any defaulter of any of the issues mentioned above
or any other sector related thereto is brought before the
Special Tribunal established under the Special Tribunal
(Miscellaneous Offences) Decree 1984, and
(m) consider such other matters as may be referred to it from time
to time by the Head of State, Commander-in-Chief.
Powers of the Committee
=======================
6. The Committee has powers to:
(a) invite any person, group of persons or body corporate to appear
before it and to call for memoranda from such persons or
bodies;
(b) ask for copies of reports, audited accounts, and such other
information as it deems fit from such persons or bodies whether
in the public or in the private sector of the economy;
(c) enforce foreign exchange regulations and cause offenders to be
prosecuted, and
(d) enter and inspect premises, project sites, and such other
places
as may be necessary for the purpose of carrying out the
functions
of the Committee.
Directives by the Head of State and/or the Provisional Ruling
Council(PRC)
==========================================================================
7. The Head of State, C-in-C and/or the PRC may give to the Committee
such directives which are proper for the effective discharge of the
functions of the Committee and teh Committe is obliged to comply with
such
directives. This provision in the NEIC decree and the nature of
directives which were given by the C-in-C expanded the scope of the
activities of NEIC to include the monitoring of projects at both the
State
and Local Government levels and to conduct investigations into the
specific operations of certain Government Agencies and Parastatals.
CHAPTER 2
---------
ACTIVITIES OF NEIC
Major Activities
================
8. The Members of the NEIC held regular meetings bi-weekly almost
throughout the period between February 1994 and May 1999. The minutes
of
the meetings are in bound volumes in the Office and in the Library of
teh
Committee.
9. In order to perform its main function of monitoring the annual
budget
of the Federal Government, one major focus of NEIC's activities is in
assessing, assisting and reporting on revenue and expenditure profiles
of
the Federal Government.
(a) Revenue
-------
NEIC closely monitored and assisted in the revenue performances of
the following agencies:
* Federal Inland Revenue Service (FIRS)
* Nigeria Customs Service (NCS)
* Nigeria National Petroleum Corporation (NNPC)
* The Central Bank (CBN)
* Other Ministries and Departments of Government
* Other Statutory Corporations
10. NEIC in this regard, ensured that the set revenue targets were met
through regular spot checks, visits, assistance to collecting agents,
plugging of revenue leakages, insistence on the provision of improved
facilities as well as incentives for revenue collectors.
11. NEIC succeeded in drawing attention to the adverse economic effects
of unrestrained deficit financing through internal and external
borrowing,
and the issuance of Ways and Means by the CBN.
12. NEIC consistenly advocated that the budgets of the Parastatals and
in
particular, those of the NNPC and the CBN, be reflected as part of the
national budget because the budget of thse two parastatals equals about
60% of the Federal Government budget. For as long as the national
budget
does not take full account of the budget of the parastatals, monetary
policy and foreign exchange measures will remain ineffective. This is
one
area of great importance in which NEIC did not succeed due to resistance
from the parastatals and lack of clear-cut directive or reaction from
the
Federal Government.
13. NEIC encouraged the State Governments to comply with the Statutory
provisions requiring State Governments to remit 10% of their Internally
Generated Revenue (IGR) to Local Governments in their States. A good
number of States are complying while others are still foot-dragging on
the
issue.
14. The Value-Added Tax (VAT) was introduced in 1994. However, in the
first three months of its introduction, no revenue was recorded.
Investigation by NEIC in March 1994 revealed that revenue (cheques)
collected in the first three months were dumped in empty tanks in some
border and Tin-Can Island. Following intervention by NEIC, the cheques
in the tanks were retrieved and reflected in the Federation Account.
NEIC
also provided assistance to the FIRS to ensure effective collection and
retrieval of relevant information on VAT.
15. The formula for sharing the VAT revenue has remained controversial.
Initially, the percentage share of the Federal Government was small
(20%)
because it was felt at the time that VAT was essentially a State revenue
source replacing the sales tax and registration of business premises
levy.
The share of the Federal Government was merely a fee charged for the
administration of the tax. Following the success of VAT with actually
revenue collection exceeding set target by a multiple, the Federal
Government unilaterally altered the sharing formula in 1995 to 50% in
its
favour. However, NEIC successfully pressurised Government to reverse
the
VAT formula in favour of the States and Local Governments. On the
recommendation by the Committee therefore, the share of the Federal
Government was reduced to 35 per cent in 1996 and 1997, and to 15 per
cent
in 1999.
16. The formulae which have been applied for the allocation of revenue
from VAT since inception in 1994 are presented below:
Allocation Formulae for the VAT Revenue
1999 1998 1997 1996 1995 1994
Federal 15 25 35 35 50 20
State 50 45 40 40 25 80
LGA 35 30 25 25 25 --
The three tiers of GOvernment were also encouraged to use a large
proportion of VAT revenue for capital development, but with varying
success.
17. In order to reduce the friction and avoid social disorder arising
from the imposition of multiplicity of taxes, NEIC dialogues on the
matter
with Government and assisted the Joint Tax Board in persuading
Government
to publish the approved list of taxes and levies that each tier of
Government could impose. The Board equally re-defined the roles and
functions of Tax consultants. There is now a decree supporting the
approved list of taxes and the role of Tax Consultants.
18. On the issue of financial accountability and transparency, NEIC
held
dialogues with the Accountant-General (Federation), Auditor-General
(Federation), Auditors-General (States) and gathered information on the
position of the audited Accounts of the three tiers of Government
including their parastatals. These dialogues revealed that:
* The Public Accounts Committee has not been re-constituted.
* The Federal Government had audited Financial Statements up to
1993 and had its Accounts cleared with the Public Accounts
Committee up to 1992. Thus, the auditing of Federal Government
Accounts has been in arrears since 1994.
* Most of the appointed External Auditors of Federal Parastatals
had served between 7-10 years as against three years allowed
by law.
* Most Federal Parastatals have audited Accounts up to 1996, but
there has been no Public Accounts Committee to clear the audited
Accounts.
* Only two State Governments (Ekiti and Kaduna) had audited their
Accounts up to 1996. Other States were in arrears with their
Audited Accounts between 4-7 years.
* Most State Parastatals and Tertiary Institutions were in arrears
with the preparation and auditing of their Accounts.
* Only 497 Local Government Councils out of the 774 Local
Government
Councils in Nigeria responded to NEIC enquiries about the state
of their audited accounts. Of teh 497 Local Government Councils,
only 123 had their published audited accounts up to 1996. NEIC
drew attention of Government to these lapses which have serious
consequences for financial accountability and transparency.
NEIC therefore urged the Federal and the State Governments to
re-constitute their respective Public Accounts Committees.
(b) Expenditure
-----------
The National Intelligence Committee (NEIC) tried to ensure that:
(i) the expenditure provisions in the annual budget were strictly
adhered to.
(ii) releases made by the Federal MInistry of Finance were
cash-backed
as and when due.
(iii) there was authenticity, especially of capital expenditures
through monitoring visits to project sites.
19. NEIC registered little success especially on the timely release of
Capital Funds. In 1996 and 1997, for example, the bulk of the capital
funds for the fiscal years was released in December of the respective
years. The delayed releases with the inappropriate timing undermined
the
budget performance as well as the effectiveness of the monitoring
exercise
of the NEIC.
20. Little success was also achieved by NEIC in monitoring the
expenditure of individual Federal Ministries and Parastatals. The
uncooperative attitudes of these Agencies made it difficult to establish
with certainty the actual expenditure of Ministries and Parastatals at
any
point in time.
21. All dedicated accounts were closed in fiscal year 1995 on the
advice
of NEIC and projects funded from the dedicated accounts were brought
into
the budget stream. It is, therefore, a matter of major regret that the
Central Bank of Nigeria (CBN) announced in 1999 that one or two of the
dedicated accounts were opened and used for "security" purposes that led
to massive financial scandal on the administration of the late Head of
State and C-in-C.
22. NEIC continued to monitor closely the utilization of foreign
exchange
by both the Public and Private Sectors. The abuses that existed were
brought to the notice of Government from time to time. However, some of
the abuses still exist.
23. On the utilization of foreign exchange, NEIC observed that the
expenditure on non-productive activities, such as on Public and Private
Sector travels, pilgrimages, alleged security services, donations/gifts
to
individuals and other countries and institutions took relative
precedence
over its allocation to the productive sectors. These abuses of foreign
exchange took place irrespective of the market determined exchange rate
value of the naira which the marker reformers advocate. There is need
for
some form of direct control over the use of foreign exchange.
24 On the directives of the Head of State, NEIC monitored the
expenditures of States and, to some extent, Local Governments with
particular reference to Special Grants, and VAT revenues.
25. In 1998, NEIC advised the Federal Government to allocate a special
grant of N1.0 billion to each State and the Federal Capital Territory,
Abuja, out of AFEM funds. To date, only N750 million has been released
to
each of the States. The grant prompted more regular visits to the
states
by the NEIC. The NEIC advised that the balance of N250 milllion be
released to each State and the FCT after the swearing in ceremony of the
new civilian administration in May 1999.
26. As a result of regular visits to the States, NEIC observed that:-
(a) The expenditure pattern of most States and the Federal Capital
Territory, especially as it related to project costs and actual
infrastructure provided, was satisfactor. The STates were ranked
according to their performance. Details are available in the
States' reports on each State and in the general reports on the
States as a whole.
(b) Some States did not utilize the N750 million Federal Government
Grants, Ecological Fund Grants and VAT Revenue judiciously
enough for real Capital formation. A number of States not only
embarked on projects outside the scope for which the grants were
made but also on projects which could not be completed within the
required time frames.
(c) Each subsequent administration tended to abandon projects which
were started by its predecessor.
(d) In some states and Local Governments, the contract sums of
projects were generally on the high side.
(e) NEIC drew the attention of the States to the need to set up
Project Monitoring Committees that would outlive existing
Administration. Also, the need to put grants into Special
Accounts that would be operated with some level of integrity
for ease of accountability, was stressed to the State
Governments.
27. In general, the Special Grant provided to the States had a
beneficial
effect on capital projects especially in Education, Health, and Water
Supply. Some states performed extraordinarily well. Details of these
performances and the criteria used for assessing performance were made
available to the Federal and State Governments and are available in the
NEIC's States Reports.
28. In order to ensure accountability and transparency in public
expenditure, NEIC drew the attention of the Federal and the State
Governments to the need to setu up the Public Accounts Committees,
strengthen the capacities of the officers of the Accountant-Generals and
Auditors-General at all levels of government and the need for regular
auditing of public expenditures.
29. The NEIC advised that the Federal Ministry of Finance did not need
to
obtain the approval from the Commander-in-Chief for items already
contained in the approved annual budgets before releases were made to
respective Ministries, Parastatals and agencies. The cumbersome process
to obtain such approvals, NEIC discovered, was partly responsible for
the
delay in budget implementation and wrong timing in budgetary releases.
It
is also subject to much abuse.
30 NEIC advised that once the budget has been approved, no further
approvals from the Head of State on items directly appropriated ought to
be required. Each Agency automatically receive its allocations to
enhance
the implementation of the budget.
31. NEIC also noted with serious concern the undue influence of the
Ministry of Finance in dtermining national priorities in the budgetary
process. This influence was due largely to the horse-trading nature of
the budgetary process and the malpractices associated with the process.
NEIC continued to advocate a more scientific approach e.g. percentage
allocatioin to Ministries and Parastatals to allow each unit determine
its
priority and to defend such priorities at the Federal Executive Council
for harmonisation and approval.
32. NEIC discovered that part of the dismal performance of many
Parastatals and Government Agencies was aggravated by the reluctance of
Parent Ministries to promptly release all funds allocated to the
Agencies.
Parent Ministries, NEIC found out, tended to utilize such funds for
sponsoring frivolous overseas travels and projects, without due regard
to
the approved capital budgets of the Parastatals. NEIC's advice that
each
Parastatal should receive its allocation directly from the Federal
Ministry of Finance was successfully resisted and rejected by all
Ministries.
33. NEIC discovered that recurrent remittances to Ministries by the
Federal Ministry of Finance were based not on the actual number of
people
in post, but on the budgetary establishments provided. This is a
practice
that ought to be discontinued to enable government determine its actual
Personnel in post. Wastages on overhead expenditures in Ministries and
other Public Agencies at all levels of government are still phenomenal.
In the 1999 budget, for example, the approved budget for overhead
expenses
of the Federal Government of N65 billion is larger than the total budget
for overhead expenses of the 36 States of the Federation.
Specific Activities
===================
(a) Visits
------
34. NEIC made several visits to most of the Federal Government
projects,
wrote reports and made recommendations on:
(i) the Kaduna, Port Harcourt and Warri refineries;
(ii) the Steel Complexes at Ajaokuta and Aladja (Warri);
(iii) the Steel Rolling Mills at Osogbo, Katsina and Jos;
(iv) Machine Tools at Osogbo;
(v) the paper mills at Jebba, Oku-Iboku and Iwopin;
(vi) Petrochemical Complex at Onne;
(vii) Aluminium Smelting COmpany at Ikot-Abasi;
(viii) Bonny Export Terminal in Port-Harcourt;
(ix) Airports in Lagos, Kaduna, Kano, Port Harcourt, Calabar and
Minna;
(xi) All the twelve (12) River Basin Development Authorities;
(xii) Nigerian Civil Aviation Technology (NCAT), Zaria;
(xiii) Federal Airports Authority of NIgeria (FAAN);
(xiv) Nigerian Ports Authority (NPA);
(xv) National Shipping Line/Unity Line;
(xvi) Niger Dock;
(xvii) Nigeria Airways;
(xviii)Fertilizer Complexes - NAFCON, Port Harcourt, and FSFC, Kaduna,
and their private sector blending affiliates at Minna, Kaduna
and Kano.
35. The reports in respect to all of the visits to the above projects
were made available to the federal Government and to the Head of State.
They are available in the NEIC Library.
(b[1]) Enquiries
---------
On the directive of the C-in-C, NEIC conducted enquiries into
the
following:
(i) Central Bank of Nigeria and its relationship with the
distressed banks, 1996;
(ii) The National Fertilizer Company of Nigeria (NAFCON) and the
Federal Superphosphate Fertilizer Company (FSFC), Kaduna,
1996;
(iii) Verification of debts owed to local Contractors, 1996;
(iv) Review of all reports of Panels of Enquiry into Statutory
Corporations, 1996;
(v) The foreign accounts of the NNPC in England and
Switzerland;
the accounts in London were transferred to Paris before
the investigation was concluded, 1996-1997;
(vii) the sale of Amaraku Power Station by the Imo State
Government, 1997;
(viii) Fire outbreak at Ajaokuta Steel Complex, 1997;
(ix) Production vis-a-vis importantion of petroleum products,
1997-1999;
(x) Petroleum (Special) Trust Fund (PTF), 1997-1999;
(xii) Kaduna Refinery and Bitumen, 1998-1999.
(b[2]) On the initiative of NEIC, enquiries were conducted into a
number of projects, including:
(i) Specialized Banks - BOard of Community Banks, Urban
Development Bank and Education Bank, 1996-1998;
(ii) Oil Mineral Producing Areas Development Commission
(OMPADEC).
The investigation influenced the re-organization of OMPADEC
and the on-going settlement of debts owed to OMPADEC
contractors and as verified by NEIC, 1998-1999.
(iii) COmmissioned a study by the Nigerian Society of Engineers
on the State of the Nation's Refineries in 1996. The
recommendations were not implemented, early enough with a
costly consequence to the Nigerian people.
CHAPTER 3
=========
REPORTS FROM THE STATES
=======================
Appointment and Duties of Liaison Officers
==========================================
36. In 1995, NEIC appointed a liaison officer for each State of the
Federation due to the expanding nature of its assignments. Each Liaison
Officer submitted monthly report to NEIC on activities in his/her State.
The list of Liaison Officers is attached to this report as Appendix II.
37. The Liaison Officers assisted the Committee in gathering data that
enabled NEIC to assess the progress of projects being carried out by the
Federal Government and to confirm that funds released for such projects
were judiciously utilized. They also acted as intelligence officers of
the Committee in the field and collected information in the following
areas:
(a) status of Projects for all levels of Government including their
parastatals. Information supplied included, description of
projects, location of projects, estimated cost of projects,
expenditure to date, planned completion period/time, percentage
of work done and remarks incorporating problems if any;
(b) revenue collection for all levels of Government, including the
Customs, the Federal Inland Revenue Service (FIRS), States
Board of Internal Revenue (BIR), the NNPC and some other
Government Parastatals. It is important to note that most
Government agencies and departments were reluctant to supply
information about their revenue and expenditure. This hampered
the up-to-date compilation of data on this aspect of the liaison
officers' assignments;
(c) price movement. This was obtained twice in a month, at the
beginning and at end of the month. Price movement was indicated
in respect of the following items:
[i] food
[ii] consumer goods (industrial/manufactured)
[iii] essential drugs
[iv] building materials
[v] accomodation
[vi] transportation
[vii] any other commodity considered necessary;
(d) education at all levels with emphasis on regularity of payment
salaries to teachers, condition of institutions, effectiveness
of teaching, etc;
(e) economic management of the State/Local Governments, indicating
areas of waste, fraud, and area with outstanding performance;
(f) potential sources of unrest covering such matters as ethnic
and communal clashes, armed conflict, boundary disputes, armed
robberies, etc.;
(g) other matters were reported upon if such matters had significant
bearing on the economy of the State and the Local Government
areas e.g. appointment of Chiefs, ecological disasters,
elections,
deaths, etc.;
(h) employment, indicating new appointments, or retrenchment; labour
relations: strikes, disputes, and regularity in paying salaries
and allowances; and others (mismanagement, conflicts, etc.);
(i) utilities - the performances of major utility agencies such as
NEPA, Water Board, NITEL, etc. where information and comments
were invited on charges/billing as well as regularity of supply.
Information was also supplied on the conditions of existing
roads,
new constructions and rehabilation works, indicating dates of
completion and problems being encountered.
(j) On fuel, the regularity of supply, conditions of depots and
pipelines including cost of fuel was reported upon.
38. The liaison officers' reports generally indicated that the economic
situation was characterised by low production, unemployment and poor
wages
which reduced the purchasing power of the population. Food is
generally
cheap in areas of production, but relatively very expensive in the urban
centres. The high cost of transportation, occasioned by bad roads and
the
persistent fuel scarcity, was the major reason for the high price of
food
items in the urban areas. Fuel scarcity since 1994 has disrupted
economic
activities generally.
39. The Liaison Officers also participated in monitoring the projects
of
the Federal and the State Governments along with the members of the
Committee. They presented the Commitee in their States of assignment to
monitor the payment of local debts owed to contractors and participated
in
ad hoc subcommittees set up by NEIC to verify/certify debts owed by
Government agencies.
40. The Department of Field Operations at NEIC Headquarters analysed
the
State reports and summarized them into memoranda for the Committee.
Monthly reports were summarized consistently from March 1997 to date.
These reports are available in NEIC's library.
41. Critical issues raised in some of the reports which need
highlighting
here include:
[i] Problems at the Nigerian College of Aviation Technology (NCAT),
Zaria:
-----
It was alleged that the Commandant of the College bought
inappropriate training aircraft and at inflated prices. NEIC
paid a visit to the School in an attempt to find out the true
position of the problem, but the Commandant refused to avail
NEIC of information and data on NCAT. NEIC's subsequent move
to take the Commandant to the Tribunal in accordance with
its Decree was tactically frustrated by the Federal Ministry
of Justice.
[ii] The takeover of ADAPALM Industry by the Government House, Imo
State
NEIC was informed that Imo State multi-million dollar palm oil
and kernel industry ADAPALM (Nig.) Ltd. was being administered
from the Government House, Owerri, by the Special Assistant to
the
State Military Administrator, Mr. Ugochukwu Unachukwu. As a
consequence of this take-over, it was alleged that the company
failed to remit about N1.2 million balance of PAYE tax deductions
to Government; failed to remit to the Workers Union the sum of
N228,633.00; did not pay to government VAT deductions of
N670,822.00 from contractors and could not account for the sum of
N83 million it deducted for sales of produce between 1994 and
1996,
NEIC sought explanations from the General Manager of the company
and the Military Administrator of the State, but the attempt to
verify these allegations from the State Government through visits
and correspondence did not receive a positive response from the
State administration and management of the company. NEIC's
report
to the Federal Government on the matter was not acted upon.
[iii] Unusual deductions of Federal Government Revenue by Commercial
Banks in Abia State
NEIC received a report that the Commercial Banks to which Federal
Government revenue was remitted in Abia State were not paying all
the sums to the Central Bank. The banks concerned were Union
Bank
of Nigeria, Afribank, United Bank for Africa, First Bank and
Universal Trust Bank. Some of the banks, e.g. Afribank, was
keeping almost 50% of the money paid through it. This matter
could
not be handled conclusively as NEIC could not establish the
arrangement the CBN had with the collecting banks.
[iv] Ijaw versus Itsekiri crisis in Delta State: The crisis first
erupted as a follow-up to the creation of local government
councils
in 1996. The relocation of the Headquarters of Warri South Local
Government from Ogbe-Ijaw to Ogidigben sparked the crisis. Since
then, the crisis has assumed wider dimensions, spreading also to
Ondo State between the Arogbo Ijaws and the Ilajes. The Federal
Government is fully aware of the situation and has taken steps
to arrest it. Nevertheless, tension remains high between the
Communities. The Federal Government should be fully determined
to resolve the issues to ensure that permanent peace returns to
the
area.
Appointment of Consultants
--------------------------
42. NEIC appointed 41 occasional consultants at various times and for
specific assignments in order to enhance the performance of its numerous
assignments. The list of the consultants is contained in Apppendix III.
CHAPTER 4
---------
SPECIAL ISSUES
==============
Economic Recovery Programme of NEIC
-----------------------------------
43. In September 1996, NEIC prepared a 241-page document on an Economic
Recovery Programme of Nigeria, 1996-1999, as an Alternative to the
Medium-Term Programme of the World Bank/IMF. The document which was
widely circulated and copies of which are available in the NEIC Library,
made far reaching recommendations on:
- Fiscal and Monetary Policies
- Investment Policy
- Employment and Incomes Policies
- Social Infrastructure
- Physical Infrastructure
- Energy
- Construction
- Agriculture
- Industry
- Mineral Resources
- Commerce and Tourism
- Technology
- Security
- Programme Implementation and Control
- Financing the Economic Recovery Programme
- Perspective Plan (Vision 2010)
44. The NEIC was ably assisted in the preparation of the document by
prominent professionals who served as resource persons/consultants. The
document provides great insight into a wide range of critical issues
while
making profound recommendations on them. Some of these issues include
the
utilization of foreign exchange, privatization/deregulation and external
loans/debts. The document was submitted to the Federal Government but
no
action had been taken on it as at the time of writing this report.
CHAPTER 5
=========
OBSERVATIONS/FINDINGS
======================
45. Against the background of its various activities over the five (5)
years of its existence, the NEIC made a number of detailed observations
and recommendations on critical issues of social and economic policy.
46. Some of the observations/findings are that:
CBN/FMF
-------
(i) Both the CBN and the Federal Ministry of Finance appeared
to be laws unto themselves. Unfortunately for the country,
both were for most of our period, headed by accountants
who paid little or no regard to the economic consequences
of their policies and activities. Also, both were World
Bank/IMF enthusiasts. They were more concerned with
balancing
the books than with the dynamics of economic development
and growth. Policy implementation and fund management
were undertaken by both with little depth and dynamism;
(ii) the kind of naive liberalisation policy which is encouraged
in Nigeria and which allows individuals unlimited access
to foreign exchange for frivolous uses, does not exist even
the industrialised countries of North America and Europe;
(iii) a relatively strong naira to stimulate production and
employment is actively discouraged by the CBN and the FMF.
It should be noted that because of a grossly undervalued
naira combined with the high interest rate, both of which
are actively encouraged by the CBN and the FMF, not many new
industries have been set up in industries have been suffering
from reduced capacity utilisation from about 75 per cent
in 1986 to about 30 per cent today, yet, the demand for
foreign exchange escalates, leading to the conclusion
that the demand for foreign exchange by manufacturers is
largely speculative and forms part of capital flight;
(iv) eighteen (18) projects for which huge foreign loans were
raised could not be located i.e. do not exist. The
unilateral cancellation of such loans was responsible, in
part, for the supposed decline in Nigeria's foreign
indebtedness from U.S. $32.5 billion to U.S. $28 billion
in 1997.
(v) the use of consultants by the Federal Ministry of Finance
to authenticate Nigeria's foreign debt has been very helpful.
It was discovered that by using this approach, some of the
trade debts were authentic and were cancelled and continued
payment of interest on them stopped. This may have helped
to further reduce the debts stock.
(vi) The liberalisation of BTA and PTa has constituted a drain-pipe
and the CBN and the government are not interested in imposing
controls or sanctions to curtail the misuse.
(vii) The country borrowed a total of $28.025 billion over the
period 1979 to 1995. However, even though the country had
paid back $36.845 billion in principal and interest, the
outstanding debt as at December 31, 1997, was $27.088 billion!
The Financial/Monetary Sector
----------------------------
47. CBN's supervison of the banks and other financial institutions was
less than adequate in spite of its prudential guidelines.
46.[sic] Extrabudgetary expenditures had, since 1995, been stopped by
Government. However, the diversion of capital votes to recurrent
expenditures has become rampant and was discovered by NEIC during its
local debt verifications.
Failed Bank Decree
------------------
48. The NEIC pressurised Government to promulgate the Failed Banks
Decree, follwing a request by the CBN Governor for N17 billion bailout
scheme for the distressed banks in 1995. However, the NEIC expressed
concern about the long delay in the prosecution of suspects because
justice delayed is justice denied. The Federal Government is in the
process of amending the Decree in order to provide remedy against its
abuse.
Export-Import Bank
------------------
49. The Nigeria Export-Import Bank is bankrupt. Those who borrowed
from
the bank have not been able to repay, largely because the CBN had not
insisted on the repatriation of the proceeds from exports financed by
the
Bank and from which repayment would havebeen made, and partly because of
inefficiency and corruption in the Bank.
State Governments and Taxation
------------------------------
50. The use of tax consultants/contractors by the State Governments was
against the tax law. Particularly as the Consultants/Contractors
virtually took over the statutory functions of the staff of the States
Revenue Boards. So, Government themselves were breaking their own laws.
The tax consultants were allegedly sponsored by the Presidency and it
took
the NEIC and the FMF enormous efforts to persuade the Presidency and the
STates against the continuous employment of the consultants. The
Consultants were provided with State facilities and apparatus and
received
between 20 - 25% of the revenue collected, as Commission. This
so-called
Commisson could have been more judiciously applied to improve the
effectiveness of the STate Internal Revenue Boards as in the case of
VAT.
NEIC observed that due to pressure from it (NEIC) new laws on tax
administration to curb the use and excesses of the tax
consultants/consultants were promulgated.
Local Governmnts and Primary Education
--------------------------------------
51. Expenditures at the Local Government level were rather frivolous.
Local Government revenu was generally spent on conferences and workshops
dictaed in part by the Federal and the State Governments, while the
balance was often misappropriated. There is need to revist the
structure/system of Local Government with a view of reducing the
administrative cost and allowing greater Community participation in the
administration of the local governments.
52. The States and Local Governments are underfunded in view of their
number, responsibilities and expected roles in national development.
53. The problem with the National Primary Education Commission is that
it
is inherently wrong for the Federal Governemt to be responsible for the
running of primary schools. The responsibility rightly belongs to the
States/Local Governments. As long as this system continues with its
attendant failure to enlist the involvement of people at the grass root,
primary school education would remain plagued by a myriad of problems.
Subsidy to Farmers
------------------
54. Subsidy to farmers is very important. In 1995, Japan spent over
Y190
billion as subsidy to its farmers while in the United States farmers are
even paid not to produce. The problem of subsidy in Nigeria is that it
does not fully reach the farmer. This problem persisted because
GOvernment did not make example of any of those involved in denying
farmers this benefit. NEIC did not agree with Government that the
subsidy
to farmers even of fertilizer should be removed. However, the whole
issue
of subsidy to farmers should be carefully studied before it is
re-introduced. This will help to minimise abuses of the subsidy when
re-introduced.
Iron and Steel Projects
-----------------------
Completion of Projects
----------------------
55. Failure to complete the alleged outstanding 2 per cent of the Iron
and Steel Complex at Ajaokuta since about 1994 is due to a number of
reasons. First is the fact that even though huge sums of money were
voted
for the complex, much of the money never reached the project. Second, is
the sustained pressure by the WOrld Bank/IMF that the project be
abandoned. Yet, no country can develop unless it produces its own iron
and steel. The lack of commitment to the completion of the Complex is
buttressed by the fact that no relase was made for the project in the
1998
fiscal year. The other Iron and Steel Complexes in the country are
suffering from similar under-funding and non-commitment. However,
Government has set up an Inter-Ministerial Committee on the completion
and
funding of the Iron and Steel projects.
56. The issue of the Steel sector will remain controversial for
sometime
to come. NEIC visited and reported on all steel projects in Nigeria.
Below is a paraphrase for the records, of NEIC position on the steel
sector as communicated to the C-in-C:
Excessive Cost of Projects
--------------------------
To date, about $10 billion of foreign loan and about N30 billion of
domestic funds had been invested in the Steel Sector. Thus, the
steel sector has constituted a massive financial drain pipe on the
Federal Government since 1979 and it is responsible for a large
part of the external debt of the country. Unless care is taken and
concrete action plan is mapped out, the steel sector will continue
to gulp funds without much to show for such funds. Therefore,
there is an urgent need for government to craft a new action plan
for the reactivation, rehabilitation and completion of the Ajaokuta
and Delta Steel Mills, the 3 Rolling Mills in Jos, Katsina and
Oshogbo, the Oshogbo Machine Tools Industry, the Itakpe Iron Ore
Mining Project, the Metallourgical Development Centre in Jos, and
the Metallurgical Training Institute in Onitsha. The raw materials
and other products and factors that are complementary to the
attainment of an effective steel industry would have to be identified,
costed and planned for, in addition to the transportation
requirements of the sector, that is, the completion of:
(i) Ajaokuta-Warri Rail Line;
(ii) Ajaokuta-Itakpe Rail Line;
(iii) Ajaokuta-Oturkpo Rail Line;
(iv) Port Harcourt - Onne Port Rail Line;
(v) The widening of Oturkpo-Port Harcourt Rail Line to the standard
gauge;
(vi) Dredging of River Niger from Baro Rail Line to Ajaokuta;
(vii) Dredging of River Niger from Ajaokuta to Warri;
(viii) Dredging of Onne Port to take larger ships, and
(ix) the conversion of one of the berths at Port Harcourt to
handle steel raw materials and steel products.
57. Unless a coordinated package is prepared for the sector, Ajaokuta
complex, for instance, will remain 985 completed as it had been since
1994, in spite of the funds annually provided for it ever since. The
Consultants of NEIC informed us that the investment in our Steel Sector
since 1979 is enough to complete at least twice the number of all steel
projects embarked upon by the Government.
World Bank/IMF and Steel Projects
---------------------------------
58. NEIC is aware that the World Bank and the IMF have persistently
called for the abandonment of Ajaokuta and Aladja Steel complex and the
Rolling Mills and that, instead, Nigeria should import Iron and Steel
more
cheaply from abroad. The Federal MInistry of Finance and the CBN agreed
with the IMF/World Bank, which was one of the reasons for the
under-funding of the sector and the non-release of funds voted for the
sector. NEIC, however, agrees with the Federal Ministry of Power and
Steel on the indispensability of a viable Iron and Steel Industry to the
agricultural, industrial, commercial and transportation development of
our
economy. NEIC stated this categorically in its "Economic Recovery
programme, 1996 - 1998, document (241 pages) which is an alternative to
the Medium-Term Programme of the World Bank/IMF", which NEIC presented
to
the Head of State and C-in-C. While no nation can produce or has
produced
all its steel requirements locally, no nation has succeeded appreciably
in
its industrialization without first establishing loacl steel
manufacturing
facilities and stable power (electricity/nuclear, solar) supply.
Workers and Steel Projects
--------------------------
59. The unusually heavy amount of N742.90 million arrears of salary to
workers in the steel sector showed some irresponsibility in the
management
in the steel industry. If workers are owed as much as 18 months salary
arrears (Delta Steel) in an enterprise, it shows that no work was done
for
much of that period, and that the workers were engaged in other
activities
for survival during that period. Yet, Government was obliged to pay the
workers for work not done or not fully done, since the workers were not
retrenched. NEIC regularly reported to Government, to no avail, that
the
management of the Steel Sector need to be re-invigorated and sanctions
imposed on non-functioning management functionaries.
Management of Specialised Banks
-------------------------------
60. Though the specialised banks such as NEXIM should, by the amended
CBN
decree, be taken over by the CBN, the apex bank has been dragging its
feet.
61. The NEIC conducted inquiries into a number of these specialised
banks, namely the Urban Development Bank, the Board of Community Banks
and
the Education Bank, these banks are yet to be fully re-structured beyond
their proposed re-capitalization.
THE PETROLEUM SECTOR
--------------------
62. Intermediate products in the nation's refineries, especially
Naphtah,
was being allocated to individuals for export. Even bitument which was
produced by the Kaduna refinery was bought by individuals at a
ridiculously low price and sold to road construction companies at the
current higher world price. This practice persisted until the
Government
revised the price upward at the instance of the NEIC. Aviation fuel
was,
however, being sold to airline operators at a price which was higher
than
the stipulated price of N9.0 per litre, while fuel oil which is the main
source of energy in the industrial sector was being exported, thus
giving
rise to acute shortages at home and consequent black marketeering.
63. The NEIC also talked to the oil companies on the need to help
reduce
the huge disparity in the standard of living of the staff of the oil
companies vis-a-vis those of the dwellers in the oil producing areas.
This they could do by providing more social and physical infrastructures
in the oil producing communities and by encouraging greater community
participation in these projects in order to ensure their sustainability.
64. Even though there is the belief in certain quarters that the NNPC
subsidiaries are inefficient, it is the view of the NEIC that they are
no
less efficient than some private companies and therefore, should not be
excluded from the contract to import or export petroleum products.
65. The major marketers appear favoured over independent marketers.
The
major marketers who are mainly expatriate companies buy petroleum
products
from NNPC on credit while the independent marketers who are entirely
Nigerian companies pay cash in advance of purchase. NEIC did not
support
this discriminatory policy of the NNPC but it has continued unabated.
66. One of the major problems of OMPADEC was that it awarded too many
contracts whose value far exceeeded its revenue. In consequence, quite
a
number of contractors were not paid. Following NEIC reports, the OMPADE
was not only reformd, but part of OMPADEC debts verified by NEIC were
paid
beginning from March, 1999. The balance of N3.70 billion was to be made
available by the Federal Government in order to settly fully the debt to
the contractors. However, NEIC recommended that the sum of N1.60
billion
should be recovered from OMPADEC contractors who obtained mobilisation
but
did not perform at all.
Crude Oil Allocation to Refineries
----------------------------------
67. On the increase in the allocation of crude oil to the refineries
from
250,000 bpd to 300,000 bpd, the Commiteee noted that even when 250,000
bpd
were allocated for domestic refining, only 182,000 bpd could be
processed
while the balance was swapped by the NNPC without Government's approval.
Regulation of Public Enterprises
--------------------------------
68. The Public Enterprises Regulatory Commission Decree was drafted by
the NEIC in 1995 and was signed into law in 1996. The Decree was
designed
to sanitise the operations of the parastatals and to improve their
performance and accountability. Though the Decree was duly signed, it
has
not been implemented for reasons not clear to the NEIC.
Revenue Generation
------------------
69. Besides NNPC, FIRS, NCS, enough attention has not been paid by
other
revenue generating Ministries and Departments to account rendering.
Annual subventions to them rarely took cognisance of the revenue which
such Ministries/departments were expected to generate.
Cabinet Meetings
----------------
70. The infrequent meetings of the Federal Executive Council often led
to
conflicts among Ministers and to delays in and poor implementation of
Government budgets. NEIC pointed this to the late Head of State. The
position improved since the current Head of State assumed office in June
1998.
NEIC HANDICAP
-------------
71. One of the handicaps of the NEIC was that some officers of
Government
were victimised for providing information to the COmmittee or were
debarred from supplying such information. NEIC did not bother to
utilize
its power of recourse to assistance from the Miscellaneous Offences
Tribunal because NEIC was aware of the futility of such an action as was
borne out by NEIC attempt to take the Commandant of the Nigerian Civil
Aviation Technology (NCAT) to the Tribunal, an attempt that was
frustrated
by the Federal Ministry of Justice which refused to grant the statutory
permission to NEIC.
CBN/FMF and World Bank/IMF
-------------------------
72. The hold of the World Bank and the International Monetary Fund
(IMF)
on the CBN, Federal Ministry of Finance and the National Planning
Commission has been unduly pervasive to the detriment of the National
economy. It was a counter-measure to this that NEIC in 1996 produced a
241-page document on "Economic Recovery Programme 1996-1998: An
Alternative to the Medium Term Programme of the World Bank/IMF" whic was
presented to the Head of State, C-in-C. The effort of the Committee in
this respect has not been productive as the Federal Government has up to
date failed to consider the document. In the process, Government finds
itself in a quandry as it neither implements the recommendations of NEIC
nor those of the IMF/World Bank. The result is that the degradation of
the productive capacity of the Nigerian economy which the NEIC Recovery
Programme sought to reverse continues to deepen.
73. The NEIC is aware of the complaints of industries against the
failure
to implement certain government policies. For example, WAPCO has
switched
to the use of gas for the production of cement. However, even though
WAPCO applied to the Federal Ministry of Finance for the credit to which
it was entitled, the FMF has not obliged it. The NEIC observed that
there
is a need to subsidize vital industries in order to help them become
competitive. In Germany, for example, the cheapest petroleum product is
diesel. It is not so in Nigeria. Also, in our own airline industry,
importation of aircraft is duty free but not the spare parts for
aircrafts
until NEIC intervened to make the Federal Government correct the fiscal
inconsistency.
The Organisation of FEAP
-----------------------
74. The organisation and funding of FEAP varied from State to State.
In
some States, the FEAP management was headed by the Commissioner for
Women
Affairs, or the Commissioner for Finance. In other States, it was
headed
by Officers outside of the Public Service, all of whom reported to
either
the Military Administrator or to his wife. NEIC recommended that a
uniform mode of management of FEAP should be established. The Federal
Government is in the process of doing so. This is important as the
administrative expenses of FEAP are expected to be financed at the State
and Local Government levels by the respective Governments, whereas some
State and Local Governments were financially too weak to take on this
responsibility. Therefore, the programme in such states and local
governments became ineffective.
CHAPTER 6
---------
RECOMMENDATIONS
===============
75. Arising from its monitoring activities, contacts and observations,
the Committee recommends the following:
(i) Boards of COrporation and Parastatals
-------------------------------------
All Corporations and Parastatals, including the CBN, which have
no Boards should have their Boards reconstituted as soon as
possible.
(ii) Exchange Rate Value of the Naira
--------------------------------
All efforts should be made to prevent further deterioration in
the exchange rate value of the Naira. The exchange rate of the
Naira should be supported by Government. Such support will
require that:
(a) the abuse which is prevalent under the policy of
liberalization is stopeped through greater and improved
surveillance;
(b) judicious utilisation of foreign exchange by Government
is ensured through more transparent budgetting;
(c) the amount of Estacode spent on public servants should be
drastically reduced and more use should be made of
officials in the Foreign Missions while also reducing
the sizes of most delegations that travel abroad.
(d) importation of frivolous items are discouraged;
(e) NEIC's economic recovery programme which emphasizes
production
instead of financial manipulation be implemented;
(f) The autonomous exchange rate should not be anchored to the
black market rate as is currently done by the CBN and the
FMF.
The current rate of N90 to a dollar in the autonomous
foreign exchange market is unacceptable to NEIC. The naira
should be made to appreciate through macro-economic
policies;
(g) TO further strenghthen the Naira exchanbe rate and to ensure
judicious and productive use of foreign exchange, all
purchasers of forex at AFEM should be made to provide at
least
75% of the Naira cover for such purchases from their own
resources. Under no circumstances, therefore, should banks
be
permitted to extend credit in excess of 25% of the required
Naira cover for businesses wishing to purchase foreign
exchange;
(h) The ceiling on business and personal travel allowances
should
be re-imposed at $5000 and $1000 per annum respectively. At
present, no limit is proposed;
(i) There should be foreign exchange budget for each
Ministry/Department/Parastatal of Government for both
revenue
and expenditure which should be strictly monitored and
adhered
to; in this respect, the foreign exchange revenue and
expenditure, especially of the CBN, the FMF and the
Parastatals should come under the same scrutiny and approval
by Government as is applied to the other ministries and
agencies of government.
(iii) External Loans/Debts
(a) Government should continue its laudable policy of not raising
any further external loans in the immediate future and until
the existing external debts are fully liquidated. The
review,
use and authenticatioin of the subsisting loans should
continue. NEIC disagrees with the Government position in
fiscal 1999 that the ban on external borrowing be lifted.
(b) Repayment of external debts should be bank-focused or
country-focused rather than Club-focused imposed on Nigeria
by the foreign creditors. NEIC made this clear to the
present
Head of State and his Service Chiefs in June 1998.
(iv) Revenue Generation
------------------
The institution/agencies for revenue collection, control and
audition should be strengthened through incentives, training
and the provision of modern facilities;
(v) Focus On Physical Economy
-------------------------
Government should take a closer look at the recommendations
contained in the NEIC's "Economic Recovery Programme" for the
purposes of stimulating production, generating employment,
increasing incomes, and enhancing public and private sectors'
performance in order to moderate the current wholesale focus
on financial manipulation, especially foreign exchange
speculation.
(vi) Control on Recurrent Expenditure
--------------------------------
Budget provision for staff emoluments should reflect actual
staff on ground rather than "establishments" which includes
vacancies and provision for additional staff. A high amount
of wastage of public revenue exists in this respect as ghost
workers were usually paid. The same control should be
extended
to the State and the Local Governments.
(vii) Employment
----------
Embargo on employment in the Public Service should be lifted
in view of the high rate of unemployment, need to revitalise
physical and social infrastructures and to alleviate poverty.
In this respect, increased productivity in the public sector
should be stimulated. Therefore, the move towards mass
retrenchment in the Public Services should be abandoned.
The NEIC consistently opposed such retrenchment when it was
mooted in 1997 and succeeded in getting it suspended. The
current retrenchment exercise in fiscal 1999 is a matter
of great concern to NEIC as it clearly reflects misguided
compliance with the prescriptions of the IMF/World Bank.
(vii) Public Sector Enterprises
-------------------------
Public sector enterprises should be adequately funded,
managed and supervised for eventual sefl-sustaining operations
and be made to compete with, rather than be appropriated by,
the private sector under the guise of privatisation. Their
management should be subjected to the Public Enterprises
Regulatory Commission Decree No. 35 of 1996 for greater
transparency and accountability.
(ix) Petroleum (Special) Trust Fund (PTF)
-----------------------------------
Activities of the PTF, while laudable, should be restricted
to revamping and rehabilitation of physical infrastructures,
such as roads, rail, buildings and water supply and should
exclude purchase of drugs, books, stationery and production
of food. In any case, its future should be decided by the
incoming civilian administration.
(x) River Basins
------------
The River Basin Development Authorities should be completed
for irrigation and where appropriate also for electricity
generation. Government is advised to study the NEIC
report on the River Basins.
(xi) Specialised Banks
-----------------
Based on the studies by NEIC, it is advised that the Urban
Development Bank, the Board of Community Banks, the Education
Bank and the Peoples Bank should be restructured and the CBN
should supervise them effectively. The adequate funding and
supervision of the Peoples Bank need to be specially addressed
particularly because of its possible positive economic effects
on the masses of our people.
(xii) Public Enterprise Regulatory Commission Decree
----------------------------------------------
Government should give effect to the Public Enterprises
Regulatory Commission Decree No. 35 of 1996, by setting up
the relevant structures such as the COmmission and the
Tribunal. The operation of the Decree will provide the
legal framework for the management of public enterprises
to ensure their greater transparency, accountability
and sustainability.
(xiii) Misuse of Capital Votes
-----------------------
The diversion of Capital Votes to recurrent expenditure needs
to be addressed and stopped.
(xiv) Development of the Steel Sector
-------------------------------
Prior to the release of any significant amount of money to the
Steel Sector, Government should make up its mind whether it
wants
a viable Steel Sector and whether it is ready to fund and
complete it without undue dealy. NEIC recommends that
Government
should make the commitment and provide the fund for the
completion
of the steel projects with all the ancillary services within the
next 24 months.
(a) Government should provide money for the payment of salary
arrears owed to the workers in the Steel Sector. The
actual
amount of such arrears should be verified by an audit panel
of Government. N742.90 million being requested for such
arrears and gratuity seems to NEIC unduly high.
(b) The management and staffing of the Steel Industries should
be more properly looked into to ensure that the kind of
professionals to manage and head the respective projects
are qualified, motivated and reliable to achieve the
objectives of Government. New and fresh minds, Nigerians
and Expatriates, are needed to give the projects a new
focus, planning and execution with particular reference
to resolving the (i) Infrastructural problems; (ii)
problems
of raw material whether locally available and imported
(iii) problems of transportation of raw materials and
finished products (iv) financial problems and (v) labour
and
technical problems.
(xv) NEIC suggests that the Head of State should set up an
InterMinisterial/National Committee on the completion of the
Iron and Steel Projects with a mandate to advise Government on
the financial and other requirments needed to complete the
Steel
Projects within the next 24 months. The Committee should make
suggestions on the mode of raising and expending the funds and
the time sequences for the completion of the projects. For
example, it is obvious that the three Rolling Mills in
Katsina,
Jos and Oshogbo cannot function properly unless and until
Ajaokuta and Aladja Steel Projects are completed and are
producing maximally.
(xvi) NNPC and Import/Export of Petroleum product and Stabilisation
of Supplies
Two of NNPC Subsidiaries, Duke Oil and Hyson, should be given
the opportunity to import and export petroleum products. The
independent marketers, the State Governments and the NNPC
should establish depots in order to build up reserves
throughout
the country. However, Government should take measures to stop
the importation of refined petroleum products, particularly
petrol, kerosene and diesel and instead promote their export
through Bonny Export Terminal which is built for the export
of refined and other petroleum products. There is the need
(xvii) There is the need to have more refineries and to develop the
capacity for the export of refined petroleum products. The
policy of establishing offshore refining, which has been in
the books for lonf, should also be explored and implemented.
(xviii) Administration of FEAP
---------------------
NEIC recommends the need to have a uniform administrative
structure for Family Economic Advancement Programme (FEAP)
in the States and to fund the administration of the programme
from the Federal Government FEAP budget. NEIC further reminds
the government to implement its decision to harmonise the
activities of FEAP with those of the Peoples Bank and the
Community Banks for greater effectiveness. The future of FEAP,
its funding and its mode of operation should be more
rigorously examined by the incoming civilian administration
which will become more federally oriented.
(xix) Local Debts
-----------
Debts which were owed to local Contractors and which had been
verified by NEIC should be settled by the FMF. However, the
Government should in the future limit the domestic debt to
only
those involving capital expenditures as against the current
practice where recurrent expenditurs on such items as
stationery, furnishing, maintenance and office equipment
for which provisions are regularly made in the annual budgets
of Ministries and other Government agencies are included as
part of the national debt. It should be made a policy of
government that contracts should not be awarded for projects
for which no funds are available. The practice of government
departments owing contractors for years without payment should
ceases. Nigerian government should not remain heavily
indebted to local contractors as they are to foreign
creditors.
APPRECIATION
============
76. Members of the National Economic Intelligence Committee (NEIC) wish
to express their appreciation to the Government and in particular the
Head
of State, the members of the Provisional Ruling Council and the Federal
Executive Council, the State and the Local Governments as well as the
Private Sector Operators for the support and cooperation which they gave
to the COmmittee and for the confidence which they reposed in it since
its
establishment in February 1994.
APPENDIX I
Current List of Directors in NEIC
No. Name Department
1. Dr. Akinola A. Owosekun Research
2. Mr. P.E. Odili Finance & Administration
3. Mr. P.H. Iwara Expenditure
4. Mr. Andrew Saleh Idakwo Field Operations
5. Mr. Francis A. Adeniyi Revenue
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