NEDC...too little

The NEDC...too Little...

The Senate passed last week the North East Development Commission (NEDC) Bill.

The intent is to create an institution, the NEDC to receive and disburse intervention funds to rebuilding the states in the North Central including Borno, Yobo, Adamawa, Bauchi, Taraba and Gombe. The Senate Bill also added the states of Plateau and Kano to benefit from this fund.

So how will the NEDC be funded?

1. 3% share of Federal VAT receipts

2. 15% per cent of allocation to the states

3. 50% per cent deduction of the ecological fund due to the six North Eastern states.

So items (2) and (3) are basically funds already due to the state FAAC accounts that will now be sent to the NEDC…..what caught my attention is the (1) i.e. VAT.

Lets look at figures, the North East Development Commission will get 3% of the FGN VAT share for the next 10 year. Lets drill this out, Value Added Tax (VAT) in August was N72.91 billion, FGN share of VAT is 15% or N10.93b, so the NEDC will get N327m in August 2016.

What about Ecological Funds? Its maximum 2% of federation earnings… so N315 billion was generated as statutory distributable revenue in August 2016, so the ecological fund will get in total N6.3b….lets assume the NEDC gets a full 20% of this (not possible) so give or take the NEDC will get about N1.6B.

The NEDC is thus funded more or less by States, not the Federal Government. The VAT for August at N327m pales in compassion to a projected N1.26b from Ecological Funds.

So why have a Federal Agency funded by States?

If the NEDF was operational today, for the month of August 2016, the fund will get N1.58b give or take or N19.04b a year. If we increase by 100% that is N38.08b a year …to rebuild 6 states plus Plateau and Kano….this clearly is not just insufficient… it’s a joke. To put this in perspective, the National Assembly budget for 2016 is N115b…

This calls into question the seriousness of the NEDC, N19.04b for 8 states with refugees, N115b for the National Assembly?

The FGN really has very limited options. The reality is the NE states generate very little by way of IGR, and the prevailing political realities make it near impossible to deploy oil and gas assets from the Niger Delta States to the NEDC.

Nigeria has never done well with large institutions controlling and spending funds, OMPADEC, NDDC, even PTF had mixed results…. even the Ecological Funds are controversial, I post below excepts of an International Center for Investigate Reporting report…

“In four Northeast states visited by the international Center for investigate Reporting Adamawa, Bauchi, Borno, and Gombe – several projects that were listed by the Ecological Fund as completed and fully paid for were in reality either uncompleted or shoddily done while some could not be located, meaning that they probably do not exist.”

Yet we are going to give another massive federal entity N19bb to spend on “development”?

Is there a better model?

Probably not, but there are better systems and process to make every Naira allocated to the NDDC be impactful.

First off, make the composition of the board non-governmental, appoint people from faith based organizations and the private sector who live in the areas. This should be a bottom up, organization deploying resources to eradicate extreme poverty based on the requests of the communities themselves.

The problems of the NE, are the most basic of needs, water, food, healthcare and shelter, the solutions should also be low cost to directly address these needs, nothing more. The NEDC must not become a bureaucracy, trying out new spending ideas or hosting conferences, its core mission must be to enrich lives of people living in the NE.

We should also make sure donations to the NEDC tax completely tax exempt, This means the NEDC can receive corporate donations which can be written off operating profits.

Its our problem, we can fix it

@TheRepublican