Tuesday, 11 August 2015

BUHARI’S DIRECTIVE ON SINGLE REVENUE ACCOUNT

Muhammadu Buhari,
As part of his sweeping reforms to block financial leakages, President Muhammadu Buhari has directed all revenue generating agencies to pay all revenues collected into government’s account in line with the provisions of the 1999 Constitution as amended.

 Hitherto, the practice was for the agencies to sequester their revenues and splurge them on phoney contracts and dodgy recurrent expenditure, while a fraction of the funds is then paid into the treasury. It set off parallel budgeting in the country with deleterious consequences for the economy. This departure is, therefore, a welcome development.Under the Constitution, Section 80 provides for the establishment of a Consolidated Revenue Fund, into which all revenues received by the Federation are paid, while the Federation Account, as stipulated in Section 162, is a special account “into which shall be paid all revenues collected by the Government of the Federation.” It is from this account that funds are distributed monthly to the three tiers of government –federal, states and local governments.

The President, while inaugurating the National Economic Council recently, ordered all revenue generating agencies such as the Nigerian National Petroleum Corporation, Central Bank of Nigeria, Federal Inland Revenue Service, Nigeria Customs Service, Nigeria Ports Authority, Nigeria Liquefied Natural Gas, Nigeria Maritime Administration and Safety Agency, among others, to henceforth comply with stipulated financial regulations and administrative instructions in their remittances into the Consolidated Revenue Fund. Not surprisingly, virtually all government agencies are in breach of this constitutional imperative on revenue remittance as they justify their actions by hiding under the various Acts that set them up, which empower them to tamper with their incomes. However, this is a non-issue as it conflicts with the constitution. Any law that is inconsistent with the constitution, to the extent of its inconsistency, affirms the supreme law of the land, is null and void, and of no effect. Indeed, this is at the root of decades of brazen corruption in government agencies. Non-compliance with this constitutional provision is at the heart of the NNPC’s inscrutable, corrupt model in accounting for Nigeria’s crude oil revenues.

What are the facts? Between 2012 and May 2015, for instance, the NNPC earned N8.1 trillion, out of which it paid into government coffers, N4.3 trillion, which the three tiers of government shared. “What it means is that the NNPC withheld and spent N3.8 trillion, alone,” screamed Governor Adams Oshiomhole of Edo State, recently. So pervasive are the corporation’s shenanigans that the Nigerian Extractive Industries and Transparency Initiative (NEITI) drew the President’s attention to the NNPC’s non-remittance of $11.6 billion to the Federation Account, shortly after he assumed office.

The NNPC is not alone in doing violence to our extant financial regulations. Many other revenue-generating MDAs follow its weird pattern. The House of Representatives, which probed this anomaly, discovered that 60 MDAs failed to remit a staggering N9.1 trillion they generated between 2009 and 2012. Yet, some of them still draw funds from the national budget.

It is only a graft-driven government that would brook this bizarre order of managing public finances. The $2.1 billion the NLNG remitted to the Federation Account in June clearly showed a paradigm shift in public finance management. For this to be a permanent template, the National Assembly, which failed in the past to amend the enabling laws of these agencies in order to control their financial recklessness, should act now. It must also include the much-abused Fiscal Responsibility Act 2007 that stipulates that agencies should remit revenue “based on an operating surplus framework.”

The implication of the single revenue account is that all the MDAs’ expenditures must be budgeted for; forwarded to the executive for scrutiny; and approved by the legislature. Oshiomhole was spot on when he submitted: “If the Federal Government cannot spend without appropriation, why should any agency spend without appropriation?” In the United States, only Government-Sponsored Enterprises, where the federal government does not own any equity in them, but receiving their finances from private sources, are not reviewed by the President or Congress in the same manner as other programmes. These are enterprises that engage in credit activities, borrow funds in capital markets and lend money to homeowners, farmers, and others. Even at that, the financial statements of such enterprises are published in the President’s budget. Good governance dictates nothing less.

Really, the financial haemorrhage this constitutional breach wreaked on the economy is well-captured in a recent interview by the Central Bank of Nigeria Governor, Godwin Emefiele. “It is no longer that you will receive the revenue, keep it, spend it as you wish, exceed your budgetary allocation, then hand the small change or balance to the government. This is what the pronouncement by the President means and we have benefitted immensely from that,” Emefiele said. The new order has actually helped to bolster Nigeria’s depleted Foreign Reserves, which currently stand at $31.5 billion, as against the $29.5 billion it was on May 28, the last day of Goodluck Jonathan in office as president.

This new measure should be total; but it calls for a pain-staking budgeting process. Budgeting is an enormously complex process in civilised and open societies. The US Congressional Research Service says: “The ‘power of the purse’ is a legislative power. It entails dozens of sub-processes, countless rules and procedures, the efforts of tens of thousands of staff persons in the executive and legislative branches, millions of work hours each year, and the active participation of the President and congressional leaders, as well as other Members of Congress and executive officials.”

Our Budget Office, therefore, must take preparation of the national budget more seriously, while the parliament should ensure that the new budgeting system and approval of the MDAs spending that will evolve are not mired in the cesspool of corruption and subversion of national interest as has been the case since 1999. (Punch)