‘How FG, States Can Minimise Revenue Challenge’

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By Eromosele Abiodun

Federal and state governments have been advised to lay less emphasis on supply-focused strategies such as increase taxes, blockage of leakages, and diversification of the revenue base through increased focus on agriculture, increased focus on solid minerals, in tackling the current revenue challenge facing the country.

According to a report on the public sector in the country put together by H. Pierson Associates, while these strategies remain strong and viable options, there is an even stronger need for a demand-side focus.

Such a demand-side focus, the report stressed, requires that state and federal entities give more strategic attention to maximising the optimal deployment of available resources.

“This involves better medium-term planning of projects and programmes where funds are most needed to be applied and defining high standards of quality for the desired outputs from all such spending. Also key is prudent value-for-money costing of the projects and programmes and importantly, effective monitoring to ensure timely implementation against plan,” it said.

The report emphasises that the key focus here is on effective medium-term prioritisation and planning of projects and programmes by states and federal government ministries, departments and Agencies (MDAs), high standards definition, appropriate costing, water-tight monitoring, evaluation, reporting and constant re-alignment to stay within the plan.

“An over-riding element here is a leadership that gives full backing to the framework. As the federal government, states governments and their MDAs continue to experience the impact of diminished revenues from the federal allocation and their internally generated revenue, the key concern for everyone is how to quickly alleviate the current position. Concerns range from the adverse impact on projects and programmes of government, to their inability to pay for basic recurrent expenditure. As the potential for further downward push in oil prices persists, this pressure on state and federal governments remains real,” the report said.

It explained that from the H. Pierson experience, when properly deployed, the Medium Term Sector Strategy (MTSS) and its attendant Medium Term Expenditure Framework (MTEF) provide a good platform for States and federal government and their MDAs to actualise this demand-focused approach.

“As is well known, MTSS is a globally respected and formally structured and documented 3-5 year layout of the policy initiatives, projects and programmes for specific sectors – Health, Education, Agriculture, etc. The objective is to provide structure and acceptance to the priority areas of focus and the critical initiatives required. These are laid out over yearly time lines, reflecting various phases of execution under sound Monitoring and Evaluation. When appropriately aligned within the projected medium term revenues, the MTEF can be derived, H. Pierson said.
According to the report, states that have done quite well in the past on this demand-focused approach include Cross River State where it was responsible for setting this up across all sectors and supporting the framework over an eight year period, as well as Lagos State Government where this has largely contributed to the focused planning and implementation culture across sectors.