TUNDE AJAJA examines how the refusal of Ministries, Departments and Agencies to remit into the Treasury Single Account the revenues they generate makes a mockery of this regime’s fight against corruption.
The President, Major General Muhammadu Buhari (retd.), alluded to an obvious fact recently when he said the 2022 budget estimate would be the last full budget he would implement. His eight years tenure has about 19 months left.
He spoke at the National Assembly while presenting the budget.
Clearly, the President inherited many lamentable budgeting traditions; from wasteful projections to yearly repetition of items, unrealistic aspirations and incredibly low revenue, necessitating unabashed borrowing and pushing the country’s debt service to revenue ratio to about 73 per cent. Many experts have agreed this is disturbing.
One of the unfavourable traditions the Buhari regime inherited – and might avoidably pass on to its successor – is the mocking manner Ministries, Departments and Agencies of government refuse to remit to the federation account the revenues they collect on behalf of the government.
In fact, the Director, Treasury Single Account, Sylva Abor, said in 2019 that some MDAs still operated illegal accounts outside the TSA. He noted that few MDAs were given exemptions on certain grounds, but many others were flouting the TSA policy.
The National Assembly has warned MDAs to desist from the practice, but the menace, perpetrated brazenly by some MDAs, especially those headed by those considered as ‘powerful’, has yet to abate. Some analysts would term it economic sabotage while some believe it is criminal. These views are understandable, given how it causes a significant shortfall in revenue.
Already, the 2022 budget estimate has over N6.2tn deficit that would have to be borrowed. In previous years, government also borrowed to fund the budget. In the current financial year, about N4.28tn, representing about one-third of the N13.6tn budget, was sourced through debt financing. Yet, the MDAs still hold on to considerably huge revenue.
The country’s debt profile has become worrisome and there is a need to borrow. The Minister of Finance, Zainab Ahmed, highlighted this while giving the breakdown of the budget estimate.
Some persons would argue this could have been mitigated and the debt profile may not have reached over N35tn if the MDAs were remitting what they got.
In May, the Senate said between 2014 and 2020, calculations from the Fiscal Responsibility Commission showed that about 60 MDAs refused to remit about N3tn to the Consolidated Revenue Fund, contrary to the Constitution and the Fiscal Responsibility Act 2007.
Similarly, the Executive Chairman, FRC, Victor Murako, said in May that 32 MDAs, including the Federal Radio Corporation of Nigeria; Bank of Industry; Nigeria Immigration Service and National Drug Law Enforcement Agency refused to remit N1.2tn.
He noted, “Sadly, many MDAs still persist in defaulting and practically keeping money away from the Federal Government’s reach for funding its budgets.”
Earlier in March, the Office of the Auditor-General of the Federation in its 2016 Audit report alleged that the Nigerian National Petroleum Corporation did not remit N4.076tn into the Federation Account from operational proceeds made between 2010 and 2016, a report the NNPC denied, saying the money went into pipeline repairs, domestic fuel supplies and security and management matters.
There were several frightening revelations in the 59 recommendations contained in the report of the Senate Committee on Public Accounts on the annual report of the AuGF on the accounts of the federation for the year ended December 31, 2015.
The extent of corruption and leakages in the system was disquieting, given how billions of government funds end up in private pockets, unchallenged.
The President of the African Development Bank, Dr Akinwumi Adesina, said on Monday at the opening of a two-day mid-term ministerial performance review retreat that “Nigeria’s challenge is revenue concentration.”
Sadly, one could safely conclude that Nigeria is wasteful, accustomed to spending its scarce resources as if there is no future to be concerned about.
It loses revenues in known ways and moves on as if it has excess and its ‘barn’ overflows nonstop.
Otherwise, it could be difficult to explain how the leadership or managers of the economy close their eyes to glaring leakages that shrink government’s revenue – and line the pockets of corrupt individuals, but would rather unashamedly go cap in hand to borrow from disciplined nations and organisations.
Realising the impact of unremitted funds on the current fiscal challenges, the President a few days ago gave his approval that a coalition of anti-graft agencies, which include the Economic and Financial Crimes Commission, the Independent Corrupt Practices and other Related Offences Commission, Nigeria Extractive Industries Transparency Initiative and the Nigerian Financial Intelligence Unit should recover about N2.65tn unremitted funds by 77 oil companies.
If the President could ‘dispatch’ four major anti-graft agencies to go after oil companies to recover unremitted funds, many people would wonder why he has yet to make examples – including sacking and prosecution – of his appointees who defy extant policies by holding on to government revenue.
Politicians are powerful, especially those in any ruling party, and this corrupt act by MDAs didn’t start with the Buhari regime.
But it becomes worrisome that such persistent abuse of office would continue under the President, who promised to fight corruption to a standstill. The MDAs, some of which shun invitations by the National Assembly, seem to be untouchable.
“Fighting corruption is extremely difficult. It’s so difficult, but I will keep on trying,” Buhari said recently in Owerri during his meeting with key stakeholders while on a visit to Imo State.
But, according to a seasoned economist and former Director-General, Lagos Chamber of Commerce and Industry, Dr Muda Yusuf, what is lacking is the political will to compel the MDAs to do the right thing. He said most of the MDAs that are culpable are usually headed by influential persons who could hardly be controlled.
Yusuf, who is also the founder/CEO, Centre for the Promotion of Private Enterprise, said, “It boils down largely to the political will to compel them to remit what they are supposed to remit. Many of them are richer than the ministries that supervise them, and they live large correspondingly.
“Consistently, what we describe as independent revenue, which is supposed to be the revenues from the MDAs, has consistently fallen short of target, and they fall short significantly. I also suspect that because some of those who sit on those parastatals are very influential people, sometimes it makes it difficult to compel them to remit what they should remit.
“What is important in all of these is the political will to make sure they remit it. You would notice that for a long time, the National Assembly has consistently expressed frustration on the issue of oversight over some of these MDAs, particularly the big and influential ones. It has been quite difficult.”
Speaking to whether full compliance by the MDAs in their remittances would reduce government’s borrowing, he said, “I agree that if they all remit their revenues, our fiscal position will not be as bad as this, but all along what we hear year in, year out is the rhetoric that they should remit but at the end of the day, nothing happens. No consequences.”
The ex-DG of LCCI also spoke on the issue of wastage in government.
“If you add the unremitted funds to having addressed the high level of wastage in the system, we could have reduced our debt burden. If the MDAs were spending cost-effectively, if they were managing resources well, I’m sure the level of fiscal deficit will not be as high as this.
“And if the deficit is not high, the need to borrow will be much less. But year in, year out, there is huge recurrent expenditure; maintenance, travels and such things are examples and it is a big issue.”
Also, an economist, Prof Akpan Ekpo, said government borrowing could reduce if the MDAs transparently remitted their revenues.
He said they were supposed to remit the funds, prepare their budget and when approved they could get funds to fund the budget.
“But there are MDAs that generate revenue and they spend a lot before they give the government the balance”, Ekpo, who is also the chairman of the Foundation for Economic Research and Training, said.
“They should remit their revenue to the government and they would be given what they want. That is the way to increase revenue. Otherwise, this borrowing is getting too much,” he added.
Asked if full remittance by the MDAs could reduce government’s borrowing, the don said, “We don’t know but it will help because it is part of domestic resource mobilisation which we are encouraging. So, it will help if they do it genuinely.
He explained, “Some of the agencies are even richer than their parent ministries, and it doesn’t make sense. For example, NIMASA is richer than the Ministry of Transport and you saw in the last administration what we later read about the corruption in NIMASA at that time.
“The MDAs should remit their revenue, prepare their budget and let it fall within the parent ministry. It will go through the normal budget process where they can defend their budget and get what they want when it is passed into law. The MDAs should be monitored. If they need money for capital expenditure, there is a process. The borrowing is getting too much.
“You would find that some of the heads of the agencies are even more powerful than the minister because they control a lot of resources. The MDAs should remit their budget, and maybe it will reduce the borrowing because we are told they are borrowing because they don’t have revenue. Let there be transparency.”
A professor of Political Economy and management expert, Pat Utomi, said the refusal of the MDAs to remit revenue into the designated account was criminal and that people found culpable ought to be prosecuted.
“How can you say you have TSA and some people refuse to remit revenue, running into trillions; it means they have violated your laws. You should send them to jail and not just remove them. They are liable for a criminal offence,” he said.
Utomi, however, suggested the adoption of specific tax uses, in which case tax revenue from a particular sector or activity is used to finance a certain activity that benefits the people.
He stated, “I may not completely agree with the TSA but it exists and it’s a law. I think we lack creativity and innovation in finance. We developed a tax-and-spend culture that doesn’t look at the goal of public expenditure and the sourcing for the expenditure.
“I am a huge fan of what is called specific use taxes, which directs revenue to specific activities and ensures that they maintain that activity. For example, in the United States, the gasoline tax – which you pay anytime you buy petrol in the United States – goes directly to highway maintenance.
“If you have a specific use tax like that in Nigeria, instead of waiting for people to demonstrate that roads are bad, you take representatives of the drivers, Nigerian Society of Engineers, take one or two consultants from the Big Four accounting firms and they become part of the monitoring team for gasoline taxes, which goes directly into maintaining highways.”
Utomi explained that such a model would ensure transparency and cut off people who hoodwink the government into awarding unnecessary contracts for their selfish interest.
He added, “That would bring some discipline into public administration. What we have is just a funny thing; criminally-minded public servants who award useless contracts that become part of our debt profile and we are borrowing from somewhere to pay back somewhere else.”
PUNCH.
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