Nigeria’s Future N19.9tr Liabilities Raises Eyebrows
By Patience Ikpeme
Nigeria faces a potential liability of N19.9 trillion between 2024 and 2026 if it breaches contractual agreements with Joint Venture partners.
This looming financial burden requires immediate action to prevent substantial revenue loss and the squandering of public resources.
To stem this impending crisis, the National Assembly has pledged to initiate revisions to the 2007 Fiscal Responsibility Act.
This move by the National Assembly aims to fortify financial accountability, curb wastage, and align with established financial reporting standards.
This was highlighted by a statement from a coalition of Civil Society Organizations affiliated with the GIFT cluster.
The existing Joint Venture Agreements in Nigeria, notably within the oil, gas, and power sectors, expose the nation to substantial financial risks and potential international legal battles. These agreements, entailing a hefty monthly commitment of $40 million with a “Take or Pay” clause, demand payment irrespective of product or service utilization, heightening the country’s vulnerability.
Non-compliance with these agreements could escalate to international arbitration, leading to severe penalties or compensatory payments for Nigeria. Oke Epia of OrderPaper and Faith Nwadishi of the Centre for Transparency Advocacy emphasized the alignment of the legislature’s recent actions with the urgent need for policy reforms in public finance management.
They stressed that the proposed amendments to the FRA should tackle issues of accountability, transparency, and fiscal prudence. This initiative also aims to empower the Fiscal Responsibility Commission to enforce compliance within Federal Government Ministries, Departments, and Agencies (MDAs).
Highlighting efforts through the GIFT Nigeria project, aimed at catalyzing Transparency, Accountability, and Good Governance (TAGG) in Public Finance Management (PFM), supported by USAID under the SCALE project by Palladium, the CSOs urged the 10th National Assembly to transcend verbal commitment and enact substantive amendments. They cited previous unsuccessful attempts by stakeholders to pass similar bills, urging the present assembly to execute meaningful legislative changes.
The call to action remains imperative—swift and resolute amendments to the Fiscal Responsibility Act are crucial to address the mounting fiscal challenges threatening Nigeria’s financial stability and accountability.
