The Fiscal Responsibility Act and the Nigerian Constitution make it mandatory for government agencies to remit into the Consolidated Revenue Fund (CRF), their operating surplus after every fiscal year.
However, in the last 6 years, Nigerians have witnessed a disturbing trend whereby almost all government agencies fail to comply with this financial obligation and continue to mismanage public funds. At the last count over N3trillion is said to be unaccounted for by over 60 MDAs. We condemn this brazen affront on the constitution and advise President Muhammadu Buhari to ensure that strict disciplinary measures are taken against the affected MDAs.
It is sheer irresponsibility by the management of the affected agencies to withhold with impunity funds meant for the federation account at a time the government is shopping for money to fund its budget.
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In the last one year, the federal government has increased the Value Added Tax (VAT) from 5% to 7.5%, increased electricity tariff, fuel price and other utility services in a bid to raise the needed funds. High inflationary pressures have pushed up cost of food in the market, while terrorism, kidnapping and other forms of insecurity have worsened the investment climate and denied children education.
How then can we explain a situation whereby a government that has asked Nigerians to endure increased taxes and tariffs in the midst of harsh economic realities brought about by COVID-19, drop in oil prices and other incidents cannot play its part by ensuring that public funds are well-managed and accounted for?.
Recently, the Senate Committee on Finance revealed that 60 government-owned enterprises failed to remit a total of N3trillion in six years, contrary to provisions of the constitution and Fiscal Responsibility Act. Chairman of the committee, Solomon Adeola, who made the revelation, said the breach was uncovered during the committee’s investigation of remittances by Ministries, Departments and Agencies (MDAs).
In view of the huge deficits accompanying our yearly budgets and the resort to huge borrowing to finance these deficits, it is imperative to probe revenue remittances by agencies of government
The failure of key revenue-generating agencies to pay what they generated into the Consolidated Revenue Fund (CRF) has been a source of financial bankruptcy of the Federal Government and a cause of huge borrowing to date.
With the approval of fresh foreign loans this year by the National Assembly, Nigeria’s total debt stock now stands at about N36.3 trillion. It was N32.915trillion as of December 31, 2020.
In the current 2021 national budget of N13.588 trillion, the sum of N5.196 trillion was approved as deficit while another N3.324 trillion was voted for debt servicing.
The budget is based on projected aggregate revenue of N7.886 trillion, including N3.502 trillion from the Federal Government’s share of the federation revenue and another N1.348 trillion from government-owned enterprises.
It is amazing how many of the government agencies commit all manner of illegalities relating to the spending of government funds that should be paid into the Consolidated Revenue Fund.
According to the committee chairman, most of the agencies abused the concept of operating surpluses to short-change government, by relying on ministerial circulars instead of the nation’s constitution and the Fiscal Responsibility Act, 2007.
In view of the huge deficits accompanying our yearly budgets and the resort to huge borrowing to finance these deficits, it is imperative to probe revenue remittances by agencies of government as the nation cannot continue to borrow yearly while the revenue from agencies that the government is financing with the borrowings are spent contrary to the laws of the land.
The only way the FG has continually met its expenditure has been through the escalation of debts and unfunded deficits provided by the Central Bank of Nigeria.
According to the Budget Office, the federal government’s actual deficits in the last six years stood at N1.52tn for 2015, N2.19tn (2016), N3.80tn (2017), N3.64tn (2018) and N4.17tn (2019).
The consequence of this is the rising cost of debt servicing which has grown from N624bn in 2014 to N2.45tn as of 2019 while debt service to revenue ratio has grown to 94%.
This is a gross anomaly in the public finance analysis of a sustainable entity. And the true story is that Nigeria has failed to gather revenues and its leaders do not want to take drastic measures required to significantly rationalise expenditure
If these revenues are paid to the federation account for proper appropriation by the parliament during budget considerations, the government would have used them to dramatically reduce the size of our deficit and hopefully minimize our borrowings. Unfortunately, that has not been the case.
Therefore, to serve as deterrent to others, the 60 Government Owned Enterprises (GOEs) that have about N3trillion of government revenue still unremitted in their coffers or already spent on frivolous things contrary to the constitution and FRA, 2007 should be made to face the music.
Furthermore, the government should improve accountability in the public sector and boost revenue by strengthening fiscal laws and enforcing existing ones. Section 85 (2) of the 1999 Constitution which states that public accounts of the federation shall be audited and reported on by the Auditor-General who shall submit his reports to the National Assembly, defangs the Auditor-General in Section 85(3) by disempowering him from auditing the accounts of government statutory corporations, commissions, authorities, agencies, including all persons and bodies established by an Act of the National Assembly. This should be reviewed. The AG should also be given powers to sanction any defaulting agency of government.
Lastly, the government must ensure that the Treasury Single Account is fully implemented with no exception, while all revenue generating agencies must be added to the Integrated Payroll and Personnel Information System (IPPIS).
