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National Assembly can scrap federating states, says Balogun

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Kemi Balogun (SAN)

Kemi Balogun (SAN)

Do you know that under the 1999 Constitution (as amended), the 36 states of the Federation are under obligation to cooperate with the Centre, (Federal Government). Where such cooperation is lacking, the National Assembly by a two-third vote can scrap an obstinate State out of existence, since the Parliament is the creation of the nation’s Constitution.
This is the view of a renowned commercial lawyer and a senior advocate of Nigeria (SAN), Kemi Balogun, who also reviews the recent visit of President Muhammadu Buhari to China where he went for bilateral engagements. Part of the activities of that journey was the signing of a currency swap deal. He also signed other bilateral agreements with the Chinese government in addition to a loan deal. In this interview with JOSEPH ONYEKWERE, he examines the import of such deals. He also comments on the legality of the letter by Ekiti State Governor, Ayo Fayose, urging the Chinese government not to offer loan to Nigeria. He expresses views on the IMF loan, debt profile, the TSA as well as other topical national issues. Excerpts:

Legally speaking, is it right for Governor Ayo Fayose of Ekiti State to write a letter to Chinese government advising against the loan the Federal Government wants to borrow?

What is his focus, if I may ask? Nigeria is a sovereign state and not Ekiti State. What we practice here is cooperative federalism, meaning that all the states in the country must cooperate with the centre. They have no option because they are the creation of the centre. A lot of people get it wrong by trying to equate us with America. America has those States, who chose on their own volition to unite with the centre. Here, the centre created the States.  So what we have here is cooperative federalism. The state must cooperate. The centre that created them can swallow up the states here. The states are the creation of the law. An act of the National Assembly can scrap them. Majority of them were created by decrees. We do not have decrees again. What we have now is the national assembly. If 2/3 of the national assembly elects to scrap a state, it is scrapped.

What do you think about the corruption charges against senior advocates?

I don’t think it is good to label any senior advocate or any lawyer for that matter as corrupting judges. I believe it is uncharitable. I also believe that there should be some level of discipline at the bar and bench. I also believe that there should be some level of cooperation also. Judges first and foremost are lawyers and they remain so all through their lives. Some of them will retire and set up consultancy firms. I think that all should play by the guiding code. You cannot corrupt a public officer by offering gift or bribe whether you are in the inner bar or the outer bar. You are expected to carry yourself with a measure of integrity required to maintain the integrity of the profession. I am not oblivious of one or two cases where some of our colleagues have been charged with making some infractions. But it won’t be fair to comment on those now because it would be subjudice. I can only say that all of us should try and play by the rules.

How can we minimize the constant litigation arising from fiduciary relationship between customers and banks?

Nigerians don’t like fulfilling their obligations. You voluntarily go cap in hand to the bank for facilities and public deposits are availed to you as loan. In some cases you charge your assets- either all assets debenture or a deed of legal mortgage. You agree that if you default, a receiver manager should be appointed for you. Then you default and a receiver manager is appointed, then you start challenging the receiver manager. In other climes, the managers call everybody and announce to them that in fact a receiver manager has been appointed and walk away. They don’t need to go to court. But here they go to court, get an order, just because we don’t like fulfilling obligations. It is not just part of us to fulfill obligations. May that day never come when the banks will stop lending to companies.

What is the import of the currency swap achievement with China?   

Let us look at the multi-benefit aspect of the presidential visit, not only in China but in all his visits so far. Efforts are being made to galvanise community of friendship by Nations. If you look at where Nigeria is coming from, you will agree that it is necessary, particularly at this point in time when we have global terrorism and sectarian crisis in virtually all regions of Nigeria. So, you need to have Nations to leverage on, you need to have an international support to leverage on. That is what the president is doing. Don’t forget that before now, Nigeria lost all respect that is expected of her. If you look at the combined effect of the loss, the combined effect of the discovery of Shale Oil in America, the glut in crude oil, which has crashed prices beyond even the forecast; all those resultant effect are what you see today, coupled with the fact that all those who were in charge virtually emptied the treasury and took our money to other countries. You need a buffer. Should you allow the currency to continue on its monumental slide, the government and the people would have their fingers burnt. So, we need a succour in terms of some level of international currency that can still compete at the international market and the only currency that can easily do that is the Chinese Yuan. That is so because China is the world global supermarket, factory and the world global highway for so many other countries. It is the factory of factories. The Chinese economy is arguably the second after that of America. America has almost 2/3 of its production plant in China. Then who are you as underdeveloped country not to seek assistance from such a Nation? So having the Yuan exchange with Naira will lessen the pressure on Dollars. Invariably, what happens before now is that a lot of people buy the Dollars and exchange it with Yuan when they go to buy from China. Majority of the traders actually go to China. Only very few serious traders go to America or the West. What you are having now is Yuan directly. You will see the multiplier effect in the next couple of months. There will be less dependency on the US Dollars.

Does the bilateral agreement between heads of governments bind the citizens of those nations?

Nothing happens between nations without bilateral agreements. It is not possible that you will have a Chinese manufacturing company saying it needs Dollars instead of Yuan. It is only in this part of the world that we don’t value our currency. If you go to China, they want their money in Chinese Yuan. These are very proud countries. Are you aware that it is only in Nigeria that we teach in English? Go to Germany and China, they will take English as a subject, but the mode of communicating it will be in German or Chinese. We have a lot of structural issues.

We don’t have pride in our nationhood.

Is there any government policy so far to address the anomaly from the present government?

It is too early in the day for anyone to criticize, assess or make critical analysis of the policy thrust of this present government. For a government that still doesn’t have a budget, what are you talking about? I think it is probably because it is the first time in Nigeria that an opposition seized power. So, I want to believe that they fought tooth and nail and never believed they could win. But now they have won. So a lot of things slipped off their fingers and that is why you see crisis even in the national assembly. It is not healthy. It does not allow for focus or articulation of policy thrust. I call it teething problem because they will surmount it in no time. You cannot do anything without money. In a situation where you still don’t have budget even as we speak. All that this government has left is goodwill.

What is your view about the International Monetary Fund (IMF) loan?

IMF is a club. It is like a bank lending to customers. But IMF lends to nations. IMF over the years and over the decades has been known to be Shylocks. They want to have particularly developing nations inside their pockets and manage their assets. No nation is bound to accept facility granted by IMF. It is not compulsory that we must accept the loans. Sometimes, you walk away, some other time you put your house in order and other times you look for cheaper alternative. One of those cheaper alternatives is the loan from China. It is by far a cheaper alternative. So, not a few have advised government that the loan from IMF should not be accepted.

Should Nigeria at this time continue to increase her debt profile, since she had consented to the Chinese loan?

If you increase your debt profile for developmental projects, it is all well and good. It is only when you increase your debt profile for recurrent expenditure that it is wrong. This is the first time that we have serious developmental projects in the budget that would serve as catalysts towards the industrialization of Nigeria. And that is why I am fully in support of the deficit, because it is to finance developmental activities. I have no reservation in supporting it. We must have power, good network of roads, social welfare and security. Those are keys to our development!

The government said it has raked in over N3trillion in the Treasury Single Account (TSA). Why not make use of it to finance the budget?

The budget is double that amount. We still need to get the balance. The only reason we can say we have N3trillion is because we raked it into a single account. There are many bills that are unattended to because you have created one single pot, unlike before when this or that agency would be settling its obligations. There are so many obligations to be settled. The only reason we have that is because we have one single pot. If we had allowed agencies to settle their obligations, we would never have that. We can’t say with precision that we have N3trillion unencumbered, it is not possible. There are so many bills that have been submitted for approval. All government want to do is to sieve the list and choose those that are of priority. The whole essence of the TSA is to plug leakages. That does not mean that the N3trillion is there for spending and unencumbered.  Assuming we have all that for spending without conceding, how do you now get the balance since the budget is about N6trillion? You can only finance deficit through borrowing. There is no other way to finance it. If you want to kill your economy, you say let me borrow from within whereas there are cheaper funds out there. We need an inflow from outside to reinvigorate the economy within. Many people do not know that the president has done fantastically well by that single move of currency swap.


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