Last December, President Muhammadu Buhari signed the Finance Act into law. The Finance Act 2020 allows the government to borrow from unclaimed dividends and bank accounts that have been dormant in the past three years. Specifically, the Act stipulates that dividends of public limited liability companies quoted on the Nigerian Stock Exchange which had remained unclaimed for six years or more shall be transferred to the Unclaimed Trust Fund. It is from this unclaimed fund that the government partly plans to borrow from. We disagree with this plan and urge the Federal Government to drop the idea.
Borrowing from these funds without the consent of the owners is unjustifiable. The Socio-Economic Rights and Accountability Project (SERAP) has criticised government’s plan. According to the organisation, “the right to property is a sacred and fundamental right. Borrowing unclaimed dividends and funds in dormant accounts amounts to an illegal expropriation, and would hurt poor and vulnerable Nigerians who continue to suffer under reduced public services and ultimately lead to unsustainable levels of public debt.”
This is not the first time the Federal Government is making such moves. Similar moves in the past had generated some uproar. Even the recent plan by the government to borrow from pension funds also elicited public outrage. The Nigeria Union of Pensioners kicked against it and insisted that the government had no authority over the money.
No doubt, government is running low on revenue generation. Hence, it is desperately searching for money from all angles. In 2017, the Federal Government borrowed the sum of N5 trillion from the pension funds. It said it was to fix its infrastructure deficits and meet its financial obligations. Then, the pension industry reportedly granted 71 per cent of the pension assets as loans to the Federal Government through bonds and treasury bills to rescue it from illiquidity. As at August last year, the total pension funds stood at N11.34 trillion. Out of this amount, N7.5 trillion has reportedly been invested in the Federal Government securities.
We urge the government to broaden the revenue base without unduly taxing the people. The Federal Government has tried as far as agriculture is concerned, but it needs to do more. Nigeria has many mineral resources that are yet to be fully tapped. Now is the time to explore and tap them.
Government should also reduce the cost of governance, which at present is so high. Despite government’s lean resources, our public office-holders still indulge in profligacy. Some of them enjoy avoidable opulence while the masses are suffering. Systemic corruption in Ministries, Departments and Agencies is yet to abate. The leakages in public expenditure have not stopped. Last year, the National Assembly’s probe of the Niger Delta Development Commission (NDDC) revealed mind-boggling details of how the Interim Management Committee (IMC) spent N81.5 billion between October 29, 2019 and May 31, 2020. In November 2019, the Senate Committee on Public Accounts accused 25 government agencies of funds mismanagement.
There is every need to also review the jumbo salaries and allowances of public office holders and improve transparency and accountability in government. Some states like Zamfara, Imo and Lagos have shown good examples by repealing the life pension for ex-governors and their deputies. By abolishing this law, these state governments will save billions of naira annually. Other state governments should borrow this example.
The government should also review security vote which is another drainpipe on the country’s economy. Transparency International had revealed that the federal and state governments spend N241 billion on security votes annually. This amount is said to be more than the annual budget of the Nigerian Army, Air Force, and the Navy combined.
Above all, tampering with dormant accounts and others infringes on the rights of Nigerians. The measure will also weaken investors’ confidence and lead to panic in the banking sector. Therefore, we advise the government to stay off these accounts and look for other sources of shoring up its finances.