Nigeria’s army wants a bigger budget despite $1bn oil-coffer handout

By Eromo Egbejule, in Lagos
Posted on Monday, 8 April 2019 14:02

Army bigwigs say they need more money to tackle security crises around the country. REUTERS/Afolabi Sotunde

Nigeria's army chief, Tukur Buarati, has called for the cap on military spending to be removed to face up to the country's security crisis.

The military is stretched by a range of security issues nationwide, from the insurgency in the north-east to cross-border banditry in the north-west.

  • “The National Assembly should prevail on the Ministry of Budget and National Planning to exempt the Nigerian Army from the existing budget ceiling or  the envelope allocation system in view of the ongoing structural changes, volatile security environment and massive engagement of troops in the 36 states,” Buarati said while defending the army’s budget proposal in parliament last week.

This comes despite President Muhammadu Buhari’s approval of the release of $1bn in security funds last April, specifically for upgrading military equipment and ammunition. As at December 2018, the money had not yet been released.

Insufficient funds?

Strangely enough, the Excess Crude Account (ECA), the source of the proposed funds, has been depleting rapidly.

  • Last December, the Federation Accounts Allocation Committee (FAAC) revealed that the ECA balance was $631m, 73% less than it had been just three weeks before at $2.31bn.
  • As of March 2019, it was $183m, triggering warnings from observers and analysts including the Nigeria Natural Resource Charter (NNRC), which warned that, given the state of the ECA, the country was on the precipice of another recession barely two years after exiting the last one, if oil prices fall again.
  • According to a 2017 report by extractive industry watchdogs, the Natural Resource Governance Institute, Africa’s largest oil producer, is one of the worst savers among 33 oil-producing nations with a sovereign wealth fund, sitting below Libya, Algeria and even the American states of Alaska and Texas.

Finance minister Zainab Shamsuna Ahmed justified the spending as being used for Paris Club debt repayments but history show that this is just one more notch in the trend of the ECA being misued as the go-to slush fund for government.

A cheerful giver

The ECA was set up in 2004 under the Olusegun Obasanjo administration to save for a rainy day and protect the national budget in times of oil-price fluctuation. When the prices exceed the benchmark set in the budget for that year, the excess is saved in the account and then disbursed by approval of the three tiers of government and the federal executive council. By regulation, withdrawals can only be made after a shortfall in oil prices for three consecutive months, but Obasanjo’s successors have since dipped their hands into the purse with increasing regularity.

  • By November 2008, the balance stood at over $20bn. Conditioned by the global recession that year and declining oil prices, it had fallen below $4bn by June 2010 when late president Umaru Yar’adua died in office.
  • Security budgets increased from $3.2bn in 2009 to $4.8bn four years later. A considerable amount of this went into the vaguely named ‘security votes’, which are not backed by law and are spent at the discretion of the president and the governors, without any tracking. Unquestionably, some of these monies go into funding election campaigns. In January 2019, a former junior defence minister under the Goodluck Jonathan administration testified to releasing $5m in cash from security funds to fund an election campaign.
  • Jonathan himself claimed that the governors regularly pressured him to release money from the ECA to complement their monthly allocations. In 2012, the governors’ forum chaired by current transport minister Rotimi Amaechi sued the federal government for its use of the ECA in offsetting fuel subsidies, pushing instead to share the oil savings among the states.

President Buhari toed the same path when he approved the release of $1bn to boost the army’s efforts in the ongoing counter-insurgency battle against Boko Haram a year ago. Oil prices were in fact steadily climbing until a dramatic fall in the last quarter of 2018. He also increased the monthly security allocations to the states between 2016 and 2018.

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