Chairman, House Committee on Finance, Hon. Abdulmumin Jibrin
Obinna Chima examines the recent findings by the House of Representatives Committee on Finance, which showed that a lot of ministries, departments and agencies (MDAs) have over the years failed to remit part of their revenue to the Consolidated Revenue Fund (CRF) of the Federal Government in line with the Fiscal Responsibility Act 2007
Globally, improved government balance sheet and revenue help economies to remain resilient during periods of economic slowdown and depression.
A strong revenue base provides a more stable source of income to finance the much-needed public investment, especially for a country with pallid infrastructure.
That is why the recent revelation that a total of 52 federal government agencies generated and failed to remit about N9trillion Independent Generated Revenue (IGR) to the government between 2009 and 2012 has been greeted with angst.
This unfortunate development, according to commentators, portends danger for the economy as most of the agencies indicted are very important.
This development is even worrisome considering that the country has been running a deficit budget and had resorted to borrowing from both the domestic and external debt market.
The report of an investigation conducted by the House of Representatives Committee on Finance showed that the agencies either spent the money on their operations or simply failed to remit it to the Consolidated Revenue Fund (CRF) of the federal government.
The House of Representatives had last November, directed the Committee on Finance to investigate independent revenue generation and remittances by federal government agencies.
According to the Fiscal Responsibility Act, 2007 (FRA), “operating surplus and general reserve fund, notwithstanding the provisions of any written law governing the corporation, each corporation shall establish a general reserve fund and shall allocate thereto at the end of each financial year, one-fifth of its operating surplus for the year.
“The balance of the operating surplus shall be paid into the Consolidated Revenue Fund of the Federal Government not later than one month following the statutory deadline for publishing each corporation’s accounts.
“The corporation’s surplus be classified as a Federal Treasury Revenue where a corporation’s result is a deficit, the deficit shall be classified as the corporation’s loss for the fiscal year. Each corporation shall, not later than three months after the end of its financial year, cause to be prepared and published its audited financial reports in accordance with such rules as may be prescribed from time to time.”
The investigation by the House Committee showed that the Nigerian National Petroleum Corporation (NNPC) and all its subsidiaries were the biggest culprit as they realised Internal Generated Revenue (IGR) of a total of N6 trillion between 2009 and 2012 and did not remit any amount to federal government. This however did not include crude oil sales expected to have been paid into the Federation Account by the NNPC. Also, the Central Bank of Nigeria (CBN) according to the report, raked in N2 trillion between 2009 and 2012, but only remitted 7.5 per cent of the amount to the consolidated revenue. Similarly, while Federal Airport Authority of Nigeria (FAAN) generated a total of N112 billion and remitted only 0.04 per cent of it to the government’s treasury, the Nigerian Maritime Administration and Safety Agency (NIMASA) raked in a total of N122 billion through IGR between 2009 and 2012 and remitted 7.43 per cent of it to the government’s coffers. In the same vein, the Nigerian Ports Authority (NPA) which generated a total of N442 billion in the period under review, but paid in only 5.59 per cent of the sum into the government’s treasury, while the Nigerian Communications Commission (NCC) which realised a total of N141 billion IGR, but paid in only 8.53 per cent into the government’s treasury. Others government agencies on the list include the Bank of Industry (BoI), the Joint Admission and Matriculation Board (JAMB), Corporate Affairs Commission (CAC), Federal Radio Corporation of Nigeria (FRCN), Nigerian Airspace Management Authority (NAMA), Nigeria Deposit Insurance Corporation (NDIC), Nigerian Postal Service (NIPOST), Nigerian Export-Import Bank (NEXIM), National Agency for Food and Drug Administration and Control (NAFDAC), National Insurance Commission (NAICOM), West Africa Examination Council (WAEC), National Pension Commission (PenCom), Standards Organisation of Nigeria (SON), National Inland Waterways Authority, Federal Road Safety Commission, Federal Mortgage Bank of Nigeria (FMBN), Federal Inland Revenue Service (FIRS), National Teachers’ Institute (NTI), National Broadcasting Commission (NBC) and the Nigerian Television Authority (NTA).
In fact, a breakdown of the investigation showed that while in 2009, the agencies raked in IGR to the tune of N3.06 trillion, while remittance to the treasury was N46.8 billion or 1.53 per cent, 2010 was N3.07 trillion while remittance was N54.1 billion or 1.76 per cent and 2011 was N3.17 trillion while remittance was N73.8 billion or 2.33 per cent.
Further findings from the investigation revealed that: “Owing to the nature of the FRA, which allows agencies to remit to the treasury based on an operating surplus framework, agencies endeavour to spend as much of their IGR as possible leaving little or no surpluses for the treasury.
“All agencies have contravened both the Fiscal Responsibility Act 2007, and (b) the Ministry of Finance directive of remittance of 25 per cent of gross IGR effective from 2011.”
In a chat with THISDAY, Chairman, Committee on Finance, Hon. Abdulmumin Jibrin, who expressed disappointment over the development, said the House had given the agencies an ultimatum to remit the amount owed to the CRF.
“We have asked them to bring their evidence of payment between Monday and Wednesday this week and if they fail, disciplinary action will be taken against them. We have also asked them to bring their projected IGR for 2013 along.
“The issue is that independent revenue is generated by MDAs is owned 100 per cent by the Federal Government and so we were alarmed that there is always shortfall in revenue, that was why we started,” he explained.
Jibrin argued that if these IGRs are effectively remitted, it has the potential to fund capital projects in the country.
According to the lawmaker, “what we noticed is that they generate these funds and create unnecessary expenditure to spend them.”
When asked to be specific on the disciplinary action that will be meted out to agencies that fail adhere to the committee’s ultimatum, he said: “That is when we will sit down as a committee to decide the disciplinary action to be taken. But we are working with the Minister of Finance on this.”
Not until we take drastic steps to stop them, huge funds that we would have used to execute capital projects will continue to go down the drain,” he added.
Calling for Executive Action
Financial market analysts that spoke with THISDAY welcomed the report by the House and urged President Goodluck Jonathan to act on the report.
The Chief Executive Officer, Pan Africa Development, Mr. Odilim Enwegbara, said: “The FRA was actually enacted to ensure that all agencies exhibit fiscal responsibility and the Act is specific in terms of remittances to the treasury. But as you know, in Nigeria, nobody obeys the law.
“I want Mr. President to make sure that the Fiscal Responsibility Commissioner is sacked. Also, all the indicted agencies from NCC, CBN, NNPC, FIRS, and others on that list should be properly audited.
“In the meantime, I urge President Jonathan to order that some internationally respected accounting firms re-examine the books of these agencies to see how much these books were cooked because what we are talking about here is not mere financial crime but financial murder.”
Continuing, Enwegbara called for the amendment of the FRA so as to make it mandatory for all revenue generating agencies of government to open an account with the CRF and have all their revenue inflows directly paid into their account with CRF.
“This way, they should never have access to any funds except funds appropriated by the National Assembly in that year's budget. Nigerians should be ready to return to the streets should these financial murder be allowed to go free,” he warned.
When contacted, Director General, Budget Office of the Federation, Dr. Bright Okogu, declined to comment.
In his opinion, a financial market analyst, Mr. Chijioke Obiagwu, said the refusal of government agencies to remit money into the treasury till did not start today.
He also urged the federal government to engage an independent audit firm to audit the revenue of the agencies so as to curtail the level of corruption in the system.
“It goes to show the level of corruption in the system,” adding that these leakages would continue to hinder the growth of the economy.
In its recommendation, the Committee stated that the Fiscal Responsibility Amendment Bill should be worked on and passed expeditiously so as to check the various loopholes, which enable the government agencies to continue to spend what they generate without recourse to the National Assembly.
Part of the recommendation also stated: “Agencies which have outstanding balances to be paid should be compelled to make payments of all outstanding remittances without further delay. Stringent disciplinary action should be taken against any agency found to be spending outside budgetary provisions.
“All revenues due to the Consolidated Revenue Fund of the Federal Government must be paid as at when due. The Accountant-General of the Federation should submit to the Finance Committee a detailed monthly report of remittances of federal government independent revenue.”