Low revenue generation has become the mantra of successive federal administrations. Despite unending promises by the last government to change the narrative, the story has remained the same. In seeking to make a difference, Ndubuisi Francis, urges the current administration to thread with caution to avoid the pitfalls of the Muhammadu Buhari years.
Barely a year ago, former President Muhammadu Buhari approved the process of restructuring the Ministry of Finance Incorporated (MOFI), the federal government’s investment vehicle, as part of overall measures to boost government revenue.
Before then, his government had tinkered with various revenue generation measures, each of which were dressed in the garb of game-changers. Whether they lived up to their billing is better determined by the current lamentations over paucity of funds to run the country.
The first major revenue drive under the Buhari administration was the Voluntary Assets and Declaration Scheme (VAIDS) which was launched on June 29, 2017 at a well-attended event at the State House Conference Centre of the Presidential Villa, Abuja.
VAIDS was a tax amnesty programme, which sought to boost the country’s very low tax base and shore up revenues.
As a programme, it was designed to provide tax defaulters an opportunity to voluntarily regularise and truthfully declare previously untaxed assets and incomes and in turn enjoy amnesty from the government.
With a targeted additional four million new taxpayers into the tax net, the idea behind the tax amnesty programme was basically to encourage tax defaulters to voluntarily come forward and pay tax arrears without being punished.
The Buhari government had targeted proceeds from VAIDS to hit $1 billion, but after one year of implementation and a couple of extensions, only about N30 billion was harvested from the programme.
It is instructive that VAIDS was the brainchild of Kemi Adeosun and Babatunde Fowler, the pioneer Minister of Finance, Budget and National Planning, and Chairman of the Federal Inland Revenue Service (FIRS), respectively, under the Buhari administration.
When Adeosun resigned due to the National Youth Service Corps (NYSC) certificate forgery scandal, her successor and last Minister of Finance, Mrs. Zainab Ahmed, came up with her own revenue generating measures and policies.
The flagship programme under Ahmed to rev up revenue was the Strategic Revenue Growth Initiative (SRGI), with four main objectives, including raising revenue-to-GDP ratio to 15 per cent by 2025; expanding the tax base; countering tax evasion and encouraging the payment of taxes by citizens.
The entire objective was to bolster the nation’s revenue base. But despite the measures and programmes of the Buhari administration, the gulf between expenditure and revenue widened, budget deficit hit the rooftops and the government went on a borrowing binge.
In a bid to redress the situation, some desperate measures also came into the mix in government’s revenue drive. Accusing fingers were pointed (and rightly so) at revenue generating agencies, many of which indulged in brazen and unwholesome practices, including remitting abysmally low revenues to the public till despite clear-cut regulations as enshrined in the Fiscal Responsibility Act, 2007 on ‘Operating Surpluses.’
While public debt continued to pile up and revenue generation took a journey south, one of the last options that the Buhari government seemed to have resorted to was to take a look at dead or seemingly redundant assets.
MOFI in the Mix
The Ministry of Finance Incorporated (MOFI) was established in 1959 as a federal government investment vehicle, to take charge of all investments made by the Federal Government of Nigeria.
It manages a significant portfolio of federal government’s investments, spanning a wide variety of asset classes, including corporate assets, financial assets, fixed assets, mineral and intangible assets, and cash-flow-generating transactions.
The immediate past Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, had last October disclosed that MOFI would be restructured as part of overall measures to revive non-performing assets and boost government revenue.
Few months later, precisely on January 20, 2023, then President Buhari approved the appointments of the members of the board and their inauguration to kickstart what he described as MOFI’s crucial mandate, including the mobilisation of capital and investing same in assets that are critical to the federal government’s revenue drive.
He challenged the officials to create policies that will push up the MOFI’s current value from N18 trillion to possibly N100 trillion by 2023.
Interestingly, the Governing Council of MOFI is chaired by the President, with the Minister of Finance as vice chair.
Members include the Ministers of Petroleum Resources; Aviation; Industry, Trade and Investment; Transportation; Central Bank Governor, and three experts appointed by the president–Prof. Muhammad Sagagi, Dr. Ayo Teriba and Prof. Ken Ife.
The Board members also included a former finance minister, Shamsudeen Usman (Chairman), Permanent Secretaries of the Ministries of Finance and Petroleum Resources, Accountant-General of the Federation, Mr Olawale Edun, Fatima Mede, Ike Chioke, Muhammad Nda, Alheri Nyako and an executive from the CBN.
Members of the Executive Management Team are Dr. Armstrong Takang (MD), Eric solo (ED, Chief Portfolio Officer), Sani Yakubu (Chief Investment Officer), Oluwakemi Owonubi (Chief Risk Officer).
While it is absolutely welcome for the government to repackage MOFI and breathe life into such a vital organ which holds federal government assets in trust for all Nigerians, in doing so, the government must thread carefully in order not to create a conundrum.
The present administration under President Bola Tinubu had recently expressed its plan to sell some public assets in order to address a situation where about 90 per cent of government revenue goes into debt servicing.
Flowing therefrom, MOFI had recently signalled a readiness to sell its stakes in many Government Owned Enterprises (GOEs) across the country, to raise funds for the government.
The critical point arising from that disclosure is whether the management of MOFI is going to do so in collaboration with the agency statutorily saddled with the responsibility of selling government stakes in the GOEs, which is the Bureau of Public Enterprises (BPE).
This is critical to avoid a repeat of the convoluted atmosphere that occurred about three years ago between the BPE and the Infrastructure Concession Regulatory Commission (ICRC), and had to take the intervention of the Presidency to resolve the avoidable role overlap.
Need for Circumspection
Established under the Public Enterprises (Privatization and Commercialization) Act of 1999, through its secretariat, the Bureau of Public Enterprises (BPE) is charged with driving the Federal Government’s programme of privatising public enterprises, carrying out sector reforms and liberalisation of key economic sectors
For over 30 years, the agency has built the needed manpower and expertise to privatise, concession and reform public enterprises.
They may not have gotten everything right, but no public institution is currently equipped to supplant their role.
The unsavoury tales of the recent past following the attempts by the Ministry of Aviation under the last minister, Hadi Sirika to concession the nation’s two airports without collaborating with the privatisation agency has given practical expression to the need to thread with caution.
The BPE is the statutory federal government agency with the mandate to optimise value in the privatisation of Government Owned Enterprises
Although the concession of airports was listed by the BPE, the Federal Ministry of Aviation under Sirika opted to undertake the transaction on its own without recourse to the privatisation agency, and met a complete failure.
Aviation workers protesting against the move had alleged: “From the selection of the Transaction Adviser, through the pre-qualification and selection of bidders/winners, to the development of the Full Business Case and conclusion of the concession, only the Minister, his henchmen in the Ministry and the ICRC and the favoured bidder, apart from the wind and walls, have any inkling of the concession process, whereas the whole exercise, by regulation, ought to be carried out transparently within the public view.”
While it is true that MOFI holds government assets in trust for the public, it is not statutorily mandated to sell or concession such assets. The BPE is saddled with the task of optimising of such assets.
There is a clear distinction between an asset owner and an asset optimiser. MOFI is recognised as the owner of federal government assets, while the BPE has been specifically mandated to optimise the assets.
In a bid to maximise the much-needed revenue, this is where the Tinubu administration must draw a line.
There is need to put a clear distinction between the roles of the two bodies–MOFI and the BPE if the drive to bolster government is not to be counter-productive.
Democratic ethos call for due process in handling of public affairs.
The Edun Factor
The fact that the current Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun was appointed a member of the Governing Board of MOFI by the last administration and now doubles as Vice Chair by virtue of his current ministerial portfolio is soothing. It is expected that he would insist on allowing due process prevail even as the quest to boost revenue takes the centrestage.
Interestingly, Vice President Kashim Shetimma is the Chairman of the National Council on Privatisation (NCP) while the BPE is its secretariat.
With Edun and the vice president, both top government officials, it is expected that they should work to streamline the process.
As some people have posited, an uncoordinated privatisation programme is certainly not the way to go, especially now that the federal hovernment has expressed its determination to raise revenue from its assets.
Seamless transactions through which the organisations can provide better services to the Nigerian public are essential, not transactions that would become conduit pipes to siphon the meagre resources through legal battles and judgement debts.
