The Ex-Governor James Ibori Case Reveals a Structural Weakness in the State System of Governmental Checks and Balances in Nigeria.

Ex-Delta State Governor James Ibori

According to a BBC Africa News report, James Ibori, a former governor of one of Nigeria's oil-producing states, has pleaded guilty in a UK court to 10 counts of money-laundering and conspiracy to defraud. The British police accuse him of stealing $250m (£160m) over eight years.[1] The prosecutor called him a “thief in government house".

Weak State Unicameral Legislatures with Inadequate Checks and Balances in Place.

Ex-Delta State Governor James Ibori is not the first nor will he be the last to be accused of theft of huge public funds meant to be used to pay for services and expenses related to state government operations in Nigeria. But why is this situation so prevalent in Nigeria?

The answer to this question can be partially found in the structure of the state system of government, with a very powerful Executive and a weak Legislative and Judicial arm.  The Legislature is especially weak at the State and Local Government level in Nigeria. This may be in part due to the fact that it is unicameral as opposed to bicameral in nature.  In a bicameral legislature there are two houses in place -- the House of Representatives (or Assembly) and the Senate. In a unicameral Legislature there is only one House of Representative.  The unicameral legislature has a tendency to be weak especially when it is dominated by one party and the Executive (Governor) is also from the same party. In this circumstance, most legislation and resolutions introduced by the Executive simply sail through without much opposition. The inherent and difficult challenges that an Executive would typically face, for example,  in trying to pass a state budget or get legislation approved is lacking in the unicameral legislature. This is because in a state unicameral legislature, there are insufficient checks and balances from the opposition. Under these circumstances, an Executive could seek and obtain approval for a dubious budget without stringent budgetary scrutiny and legislative spending oversight.

Legislative Power of the Purse

The point this author wants to call attention to is that in any democratically run constitutional order, the “power of the purse” should lie with the Legislature not the Executive. In a democratic constitutional order which Nigeria purports to operate, no money can be drawn from the state treasury without proper funding appropriations, that is, spending authorizations from the Legislature. This fundamental empowerment of the Legislature with the power of the purse is at the foundation of any real effective constitutional order.

As a scholar, the James Ibori case reveals a great weakness in Nigeria’s state government organizational structure. There is a significant lack or weakness in the state governments system of checks and balances between the three arms of government -- Executive, Legislature and Judiciary. The James Ibori situation could never happen in the Unites States or most western countries because the Governor (Executive) would never be able to lay hands on such huge amount of State monies (funds) without proper accountability to a bicameral legislature. The Governor or Executive only spends what is approved for him/her in the state budget as enacted by the legislature. Any discretionary spending (Add ons) must also be authorized by the legislature.

The Ibori saga of theft of public funds indicates that Nigerian State Legislatures are weak in performing their budgetary and legislative oversight function. How does one explain and account for the huge amount of the people’s money that many Nigerian state governors get from their legislature and spend and give away freely as if it is their own money without budgetary oversight from the legislature and completely in many instances outside the confines of their approved state budgets?

Conclusion

In conclusion, Nigerian state legislatures must do more to assert their authority as it relates to the “power of the purse” vis a vis the Executive. Also Nigerian State Legislatures must also insist on exerting their legislative oversight function and prerogative over Executive spending of state funds. State Governors can only spend what is enacted in their state approved budgets and any unspent budgetary funds must be accounted for and reauthorized annually by reappropriations from the state legislature. The lesson in the Ibori case is simple, it shows that one man was able, by default or neglect of the legislative arm of state government to effectively perform its oversight function, to lay hands on huge amounts of unmonitored public funds. Having control over the state purse, he unilaterally was able to freely spend and siphon state budgetary resources into his personal accounts overseas for his personal use and self-enrichment.

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[1] For details see BBC Africa News report dated 27 February 2012  titled “Nigeria ex-Delta state governor James Ibori guilty plea"  http://www.bbc.co.uk/news/world-africa-17181056 

Small Businesses and the Impact of Rising Oil Prices

As oil prices rise sharply, so are the prices of everything that we consume and depend on including the price of basic food products in grocery stores, the price of gasoline to fuel our automobiles, the price of travel tickets for airlines and bus fares, the price of eating out in restaurants etc. The price of crude oil has increased more than 20 percent since the beginning of 2011, rising from about $90 per barrel of Brent crude, the benchmark for the industry to over $110. We have not witnessed such a significant increase in crude oil prices since the fall of 2008 when steep oil prices coupled with the collapse of the stock market resulted in the world economic recession that we are yet to recover from.

There is genuine fear today that the civil unrest we are witnessing in the Middle East may persist and we could witness a sustained disruption in the world's oil supply. Every slight price increase in the cost of fuel at the gas station, translates into a reduction of billions of consumer spending power in the economy which in turn reduces the ability of consumers to spend money in their favorite community’s places such as restaurants, grocery stores, liquor stores, craft shops etc. Monies siphoned away from consumers at the gas pump end up instead with large transnational oil companies and their oil producing host country partners, thereby reducing economic activity in our local communities.

Given that roughly two-thirds of economic activity in our communities is triggered by consumer spending, the recent spike in the price of crude oil is becoming a major concern to small business owners. Consumer surveys suggest a direct correlation between consumer low confidence and reluctance to spend and the sharp increase in fuel/oil prices. Many small business owners are becoming increasingly concerned as the price of crude oil goes up because it is affecting their businesses adversely by reducing their purchasing power for their inputs for production and their financial bottom line. Small businesses, which the government says are the engine of growth in the economy because the generate over 70 percent of the nation's jobs, have been especially affected adversely because each penny in rising oil prices translates into higher transportation fuel surcharge costs for their businesses.

Small business owners have no choice but to absorb the rising cost of oil through sharp increases in fuel surcharges from transportation companies they depend on to deliver their products. Utility companies are also adding fuel surcharges to their electric bills. Small service businesses like taxi companies, plumbing and electrical companies, carpet-cleaning companies etc has witnessed their cost of fueling their cars and service trucks go up sharply since the civil protests in the Middle East began. The cost of doing business is going up for these small businesses as gasoline powers the trucks and cars the utilize daily to service customer transportation needs, customer plumbing needs, carpets and upholstery cleaning needs, fast food deliver needs etc. In many small businesses, the largest expense after payroll is typically transportation related costs.

Many business owners are trying not to pass the higher fuel cost onto customers, but not doing so is cutting sharply into their business profits and bottom line. Even businesses such as restaurants, fast food outlets, sports bars that don't utilize their personal transportation are feeling the pinch of higher oil prices. Their business owners are seeing the prices of all the goods the obtain from their vendors rise sharply with the rising price of oil. The vicious cycle of manufacturers and wholesalers trying to make their money back some way means that they pass their rising cost to the small business owner who in turn either absorbs the cost or passes it on to the ultimate consumer.

Small businesses and retailers of electronics goods derived from factories in East Asia may also witness a slow down in demand and an increase in their inventories if oil becomes more expensive as the cost of transporting consumer electronics from factories in Asia and the cost of the raw materials employed in producing the electronic gadgets rise. As the cost of shipping electronic goods from the Far East to the United State rise, retailers of electronic products are likely to raise prices on cell phones, laptops, television sets etc, discouraging consumers, already feeling the impact of the ongoing recession, from purchasing or upgrading their electronic gadgets.

Consumers protest higher prices of goods they consume simply by not parting with their money and cutting back on consumption. When consumers cut back on consuming various products sold by small businesses, economic activity slows down in our communities. Rising fuel prices are impacting on the way small business owners are doing business. Those small business owners who are able to successfully devise strategies to cut other costs to compensate for rising fuel and transportation costs will survive with reduced sales and profits and seeing their operating costs rise. Others may be forced to cut back on expansion plans or delay hiring new employees or may even be forced to close down their operations if the price of oil continues to rise and the upheaval in the Middle East is not resolved in the near future.

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