Abstract
Few issues surrounding public wealth management in Nigeria enjoy broad geo-political agreement and support. The most vexed question is that of which level of government ought to have control over extractive resources. Behind the resource control debates is the question of the appropriate resource revenue sharing formula the country ought to adopt. Under current arrangements, states receive 13% of the revenues generated from natural resources located within their territory, leaving the federal government with control of 87% of the country’s resource wealth. Agitations by oil-producing states for state resource ownership and control have been raging for decades but have not resulted in any change in resource ownership and control. Although the federal legislature has the constitutional authority to change the current sharing formula to give states more share than they currently have, it has not yet exercised that authority. In order to ensure that extractive companies pay adequate revenue to the state, the government imposes an assortment of fiscal instruments, including: royalties, petroleum profits tax, capital gains tax and value-added tax. In order to ensure that revenues generated from the resources benefit both present and future generations, the country operates a sovereign wealth fund. The operation of this fund has been riddled in managerial controversy, even its constitutionality has boggled the minds of Nigerian legal pundits. This chapter analyses these issues, proffering views on how they may be better understood and approached.
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Notes
- 1.
Oil was officially discovered in commercial quantities in 1956 while commercial mining of tin ore began as far back as 1904, and coal was discovered in commercial quantities in 1909. By 1919, the Nigerian Geological Survey was already established.
- 2.
The 1999 Constitution recognises the distinct standing of the federal capital territory in the distribution of resource revenue.
- 3.
1999 Constitution, section 162(2).
- 4.
1999 Constitution, section 162(5)–(8).
- 5.
1999 Constitution, section 162(5)–(8).
- 6.
Shell v Federal Board of Inland Revenue, (1996) NWLR (Pt 466) 285.
- 7.
Niger Delta Development Commission (Establishment) Act, 2000, section 14(2)(b).
- 8.
The index assessed how 81 resource-rich countries governed their extractive resources (oil, gas and minerals).
- 9.
The others were Ecuador and Iraq. Most observers believe that Nigeria joined the league of countries with SWFs only with the enactment of the NSIA Act. This belief, however, ignores the fact that the ECA was in itself a type of SWF, and despite its legal problems and management deficiencies it continued to exist de facto as such.
- 10.
NSIA Act, s 4(2).
- 11.
NSIA Act, s 7.
- 12.
NSIA Act, s 31.
- 13.
NSIA Act, s 39(2).
- 14.
NSIA Act, s 41(1).
- 15.
NSIA Act, s 35.
- 16.
NSIA Act, s 48.
- 17.
Whether money from the Federation Account is first paid into the Consolidated Revenue Fund of the state before a portion of it is transferred by the state to the agreed SWF, or that portion of the money is transferred directly from the Federation Account to the SWF, makes no difference provided that the transfer is backed by a law of the state legislature.
- 18.
Section 162 of the 1999 Constitution.
- 19.
Section 318(1) pf the 1999 Constitution.
- 20.
It must be pointed out that outside the definition of “Federation” provided in the Constitution, the multiple contexts in which the Constitutional draftsperson uses the term that makes it unclear whether it is referring to the federal government or to the Federal Republic of Nigeria.
- 21.
NSIA Act, s 47(2).
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Nwapi, C. (2021). Public Wealth Management and Distribution in the Extractive Industry in Nigeria. In: Pereira, E.G., Spencer, R., Moses, J.W. (eds) Sovereign Wealth Funds, Local Content Policies and CSR. CSR, Sustainability, Ethics & Governance. Springer, Cham. https://doi.org/10.1007/978-3-030-56092-8_2
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