Lawmakers Put MDAs on Their Toes

Udora Orizu reports on how the House of Representatives tackled ministers and heads of revenue generating agencies of government, who defended the revenue estimates outlined in the 2022-2024 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) submitted to them recently

In line with its commitment towards sustaining the restoration of the January to December budget cycle and open up more revenue sources to finance the country’s budget for 2022, the House of Representatives recently held an eight-day interactive session on the 2022-2024 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) in Abuja with the various heads of revenue generating agencies of government, totalling 83.

President Muhammadu Buhari had on July 8 sent the 2022-2024 MTEF/FSP to the Senate and the House of Representatives for approval. The cover letter which accompanied the document was read at plenary by the presiding officers of both chambers, Senator Ahmad Lawan and Hon. Femi Gbajabiamila.

Buhari in a letter, while seeking the expeditious consideration of the request, said that its timely passage would facilitate the early preparation of the 2022 budget based on approved parameters by both chambers.

Gbajabiamila had referred the document to the House Committee on Finance to consider as the lawmakers are on their two-month annual vacation.

Lawan on his part, gave the Senate Joint Committee on Finance National Planning, Foreign and Local Debt, Banking, Insurance and other Financial Institutions 24 hours to complete work on the report and submit it for consideration and approval.

This according to the duo was to enable the Executive commence work on the 2022 Appropriations Bill.

At the beginning of the interaction on August 16, the finance committee engaged the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed; Director-General, Budget Office of the Federation, Mr. Ben Akabueze; Accountant General of the Federation, Mr. Ahmed Idris; and Director-General, Debt Management Office, Patience Oniha.

Before interfacing with the agencies’ heads, the Committee Chairman, Hon. James Faleke, advised all federal government’s Ministries, Departments and Agencies (MDAs) to scale down on white elephant projects contained in their budget proposals, to shore up revenue for critical infrastructure and development of capital resources that have direct impact on the people.

He said the practice where the MDAs recycled unnecessary capital projects in the budget without due regards to essential projects that would engender sustainable development in the country was no longer tenable.

The lawmaker added that during the exercise, the committee would scrutinise the capital vote, line item by line item, and provide funds for agencies in-house capital requirements that were necessary bearing in mind the overall objectives of the MTEF/FSP.

Corroborating Falake’s statement, the Speaker of the House of Representatives, Gbajabiamila, said the exercise required honest assessment of local and international economic dynamics that underpined decisions about budgeting, spending, and strategic planning.

Gbajabiamila who was represented by the House Leader, Hon. Ado Doguwa, added that it was not in the best interest of Nigeria to make plans based on projections that were unlikely to come to fruition.

In her presentation, the Minister of Finance, Budget and National Planning, Ahmed, said the government planned to borrow about N5.62 trillion from internal and external sources to finance the deficit in its proposed 2022 budget of N13.98 trillion due to dwindling revenue.

Ahmed had noted that the perception of the naira being over-valued despite recent the adjustment by the Central Bank of Nigeria had compounded Nigeria’s risk aversion in the global capital market, which she said would further put pressure on the foreign exchange market, stressing that foreign portfolio investors had yet to return to the Nigerian market.

The minister stated that while the government planned to borrow to fund the N5.62 trillion deficits in 2022, it will reduce capital expenditure by N259.315 billion, as the reduction would become necessary due to economic volatility occasioned by unstable global oil market as well as the effects of the COVID-19 pandemic.

Ahmed said for capital expenditure next year, ministries, departments and agencies would get N1.76trillion as opposed to the N2.02trillion spent in 2021.

She also said the exchange rate had been pegged at N410.15 to a dollar per dollar and oil benchmark at $57 per barrel.

The minister noted that non-oil GDP continued to grow at 169.69 trillion, compared to oil GDP of 14.68 trillion included in the nominal GDP.

Nominal consumption was 130.49 billion.

In her submission, the Director-General, Debt Management Office, Oniha, while explaining some of the points in the presentation earlier made by the minister, had noted that the debt stock would keep increasing as revenue was declining.

Oniha said, “I think one of the things that have come out from the presentation from the honourable minister is, much as we have been conservative in projecting revenues, we still see that we are underperforming in revenue. So, it means that we are relying increasingly on borrowings to finance the activities of the government. And if you look at the figures from last year when the budget was revised because of COVID-19, we can see that the borrowing levels are going higher.

“So, what that means is that the debt stock as expected will keep rising and debt service will also keep increasing, as shown in the presentation. I just thought I should highlight that this is primarily where the debt stock is growing from, and the debt service, which means that we are also servicing, taking from the revenue which has not grown as expected. I thought I should highlight that because there is a lot of concern about debts.”

But the lawmakers at another session two days later, expressed displeasure over the way some MDAs concealed their revenues, thereby denying the federal government the fund for budgeting.

Faleke criticised the way the country resorted to borrowing N5.62 trillion to finance deficit in the 2022 budget, while the MDAs starved the government of funds.

He said: “We are not you happy the way Nigeria is borrowing N5.62 trillion and we have some fund somewhere staying fallow without being used. For God sake, let us build this country together for the sake of all of us.”

He stressed that if the committee discovered that any of the agencies’ capital projects were unnecessary, they would be removed in a bid to get revenue for the country.

At another session, the Nigerian National Petroleum Corporation (NNPC) projected a medium term base crude oil price scenario of $57 per barrel for 2022; $61 for 2023 and $62 for 2024.

The Group Managing Director of the corporation, Mallam Mele Kyari, who made the disclosure in his presentation, had explained that the assumptions were arrived at after a careful appraisal of the three-year historical dated Brent oil price average of $59.07 per barrel premised on Platts spot prices.

On the perennial issue of smuggling of petroleum products, Kyari implored the National Assembly to come to the aid of the corporation in battling the menace.

He noted that the NNPC, based on the directive of the President, had mobilised some customs officers, the Economic and Financial Crimes Commission (EFCC), the police as well as the Nigerian Security and Civil Defence Corps (NSCDC) to find workable solutions to the menace.

Also speaking on the propriety of establishing NNPC retail stations in neighbouring countries to curb the challenge of illegal haulage of petroleum products across the border, Kyari said the NNPC once considered the option.

However, he said the corporation had to jettison the idea when it became imperative that the measure would be counterproductive.

He explained that smugglers were not looking for officially priced petroleum products.

To this end, he said going ahead to establish NNPC retail stations would not yield the desired results since the people who smuggled products across the borders were not interested in selling at the official prevailing prices at approved stations.

Other subsequent sessions had various MDAs and the lawmakers agreeing to disagree. At one of the sessions, the lawmakers walked out the Pipeline Products Pricing Regulatory Agency (PPPRA) for allegedly doctoring figures on its daily output of Petroleum Motor Spirit (PMS) and other petroleum products in the country.

Chairman of the committee, Hon. James Faleke, asked the agency to produce the records of all the daily output of petroleum products as well as the revenue remittances to the federal government unfailingly.

The committee at one of the sessions rejected the N1.3 trillion projected by the Nigeria Customs Service (NCS) as revenue to be generated in 2022 fiscal year. It described the projection as too low for Nigerians, adding that they expected the agency’s proposal to be N2.5 trillion and above.

It also threatened to withhold 2022 budgetary allocation to the Corporate Affairs Commission (CAC) over non-rendition of four years financial statements.

In his closing remarks at the session, Faleke noted that the committee formed the urgent need for a meticulous budget process as it has been established that most agencies are in the habit of recycling projects without due consideration for need. He also accused the agencies of embarking on extra-budgetary spending contrary to the Constitution of the Federal republic of Nigeria 1999 (as amended) and the Fiscal Responsibility Act.

The lawmaker lamented that agencies have leveraged on their establishment Acts to spend their Internally Generated Revenue (IGR) thereby denying the government the needed revenue. According to Faleke, some of these Acts are self-serving and against National interest, hence the need to expeditiously amend such Acts.

He further said that the agencies that are yet to appear before the committee will be re-invited to appear on resumption of the House of Representatives, failing which, their recommendations may include the removal of their capital and overhead from the 2022 budget.

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