PERSPECTIVE 2 FOR MONDAY
Samuel T Adakole writes that several solid legislative initiatives on the economy underscore the commitment of the Saraki-led 8th Senate to supporting the Executive and achieving a strong economy despite the challenges of recession
The 8th Senate is fast proving itself to be a proactive, strategic and development focused institution. Despite a rocky start and serious legal and political distractions, the Senate under the leadership of Dr. Bukola Saraki has focused on progressing key laws designed to open up the economy to new investments and support the Executive in its effort to find lasting solutions to the ongoing economic crisis. While some of the Senate’s efforts have led to the passage of important legislations, other proposed laws are advancing steadily through the legislative process.
Even Saraki’s most ardent critics cannot deny the evidence in the growing number of signature initiatives of this Senate: the unprecedented and accelerated treatment of the Petroleum Industry Bill to re-set the oil and gas industry; a historic amendment of the old procurement law to compel government to patronize Nigerian businesses; the remarkable repeal of the 1995 railway bill to get private sector involved in the provision of rail services; strategic focus on fixing a set of old laws to improve the ease of doing business in Nigeria as well as the disability bill to end discrimination against to the those living with disabilities amongst several others.
These legislations which are at different stages are not only historic, they represent fundamental legal milestones that will help lay a solid foundation for sustainable economic growth. They provide necessary legislative framework on key issues that when resolved will help to increase national revenues, diversify the economy, build a stronger middle class, catalyze inclusive growth while creating jobs and dealing with poverty.
A good example is the Petroleum Industry Bill (PIB), which is aimed at tackling the myriad of problems in managing the nation’s oil wealth. The bill passed its second reading this month. This is the first major progress on the bill since it was announced ten years ago. The vital legislation had been gathering dust in parliament as a result of high-level regional and executive-legislative politicking. And this has cost the country heavily. The Minister of State for Petroleum, Dr. Emmanuel Ibe Kachikwu Resources puts the cost of the delay per annum in terms of investments that should have come to the oil and gas industry at a whopping N3trillion! This gives an idea of what the country has lost as a result of the delay in passing the PIB.
This is why the priority attention that the Saraki-led Senate now accords the PIB is highly commendable. “Work on the passage of the two key bills will be nearing completion stage before the end of the year” the Senate President Dr. Bukola Saraki said recently after the 2nd reading of the bill passed.
PIB will define the overall framework for regulating all activities in the Nigeria oil and gas industry in a way that opens up the industry to massive investments and gives the country good value for its resources. When passed into law, it will repeal the existing laws which govern the industry particularly the Petroleum Act of 1969, as amended, the Petroleum Profit Tax Act of 1990, as amended and the Nigerian National Petroleum Corporation Act of 1977.
When it is signed into law, the implementation of PIB will lead to many benefits for the country. These include potential boost in the country’s share of the revenue accruable to the FGN from crude oil production and increase in the participation of Nigerians in the industry through the enforcement of the Nigerian Content provisions and the realignment and integration of the various functions and departments in the NNPC, DPR and Ministry of Petroleum Resources. The PIB will also lead to the enforcement of international best practices in the Nigerian oil and gas industry, amongst others.
At a time that the country is facing serious economic crisis as a result of overdependence on oil, the strengthening of transparency and best practice in tandem with the ongoing diversification of the economy are obvious imperatives. These will boost local production and give local businesses a greater stake in government’s multi-trillion naira annual procurement budget.
Against this background, the amendment of the procurement act of 2007 to reflect these urgent realities is another piece of good news from the Senate. The Procurement Act reduces period of award of contract, makes procurement process more transparent & increases mobilization fee up to 25%.
The updated Procurement law tilts the balance in government procurement from imported goods to locally produced goods. With the assurance of patronage from the biggest spender – the government – it will energize existing businesses, encourage new entrepreneurs in local production, encourage foreign businesses to set up shop in Nigeria which will help to create jobs and strengthen our local economy.
Speaking after the passage of the bill, the Senate President put the context and rationale for the new procurement law in perspective: “We all have a role to play to ensure that the Executive comply especially in the area of giving first priority to locally produced goods. This has helped many countries to develop when they had issues of downturn in their economy. Besides it streamlines the procurement also addresses the longstanding institutional problem of delays in existing procurement processes that makes it difficult to complete important government projects on time.”
With proper implementation, this new amendment as passed by the 8th Senate would significantly help to conserve the nation’s foreign reserve by boosting local production, creating jobs and improving the overall macro-economic environment.
Another signature initiative of the Saraki-led Senate is the move to reform the budget process to bring more transparency to the budgeting process, ensure Nigerians get value for money budgeted for, reduce legislature and executive controversies and above all break the jinx of late budget passage by the national assembly.
To achieve this, the Senate is at an advanced stage of amending the 58-year-old Fiscal Responsibility Act with the recent submission of the report by the budget reform committee. The report recommends that the government present the budget to the national assembly in the first week of September; the national assembly uses two months to consider the budget so that it is passed not later than 30th November each year.
To end the culture of delays including like the one witnessed in the last budgeting process from repeating itself, part of the report also includes enlarging the list of stakeholders to be consulted during the budget preparation process, as well as pre-budget consultation between the National Assembly, the executive and the public. The aim of the reform is to improve budget formulation, enactment, implementation, and monitoring evaluation with a view to improving budget performance. With the report in place now, the next step is for the Senate to sponsor a bill seeking to amend the Act in line with the recommendations in the report.
Furthermore, to catalyze growth in the railway sector where government has maintained a non-progressive monopoly, the Saraki-led Senate has successfully opened it up for private sector participation by repealing the Nigerian Railway Corporation Act of 1955. The significance of the move is that for the first time in over 61 years of the railway system in Nigeria, private sector can move into the sector to build rail lines and operate them as businesses. This will promote competition as witnessed in the telecommunications sector.
From moving aggressively on straightening out critical issues the oil and gas sector, speedy legislations to institutionalize internal reforms in the procurement and budgeting to opening up the rail sector, leading the Made In Nigeria campaign is the 8th Senate under the leadership of Dr. Bukola Saraki is indeed proving the potency of legislation as a tool for development and macro-economic stability.
It is yet early days and it will take some time for presidential assent and implementation for the results of these strategic economic legislations to kick in. However, what is clear is that good work is being done by the 8th Senate. Key sectors with massive potential to create jobs, ignite inclusive growth, diversify the economy away from dependence on oil, attract huge private sector capital into priority areas are being enabled with modern, realistic and pro-active legislation by the Senate. The strategic leadership provided by the Senate President Dr. Bukola Saraki as reflected in the legislative agenda of the 8th Senate with focus on economic development is timely, strategic and deserving of commendation.
- Samuel T. Adakole is a public analyst based in Lagos