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Revenue agencies’ exclusion from budgetary allocation?

Editorial Board

Sept. 16, 2020

A report the other day revealed that the Senate was planning to advise the Federal Ministry of Finance, Budget and National Planning to exclude about 60 revenue generating Federal Government agencies from getting budgetary allocation from the national budget as from 2021 Financial Year. Some of the targeted agencies include: the Federal Inland Revenue Services (FIRS), Nigeria Customs Service, Securities and Exchange Commission (SEC) and National Broadcasting Commission (NBC). There are others that are reported to cover various sectors of the economy including Agriculture, Aviation, Education, Health, Maritime, Communications and Technology.
One of the main reasons advanced by the Senate for this move is the Senate’s belief that the targeted agencies generate enough revenue from their operations and should therefore able to fund their respective overheads and salaries. The other reason, in this regard, is the need to control wastage of financial resources. Yet another justification is the expediency of putting an end to indolence in the management and operations of the agencies. The move is also aimed at ending poor revenue profits and hence, remittances to the Consolidated Revenue Fund Account. The icing-on-the-cake of adduced reason to move in the direction proposed by the Senate is that, it is in the interest of Nigerians to prevent having non-implementable national budgets due to fiscal deficits. Meanwhile, to effect the change intended, the Senate intends to amend the Fiscal Responsibility Act,
As plausible and harmless as the Senate’s proposal may seem, there is the need to properly and critically situate and interrogate it prior to any official decision and commencement of implementation. A close evaluation of the proposal will reveal that it carries with it some fundamental implications, if implemented.
First, the targeted revenue generating agencies will, directly or indirectly, be conferred with financial autonomy or independence. This, no doubt will mean that each of the agencies will be accountable to itself, both in terms of their revenues and expenditures. Consequently, part of the monies they generate will be used to service their operations and activities. They will also not be obliged to make any specific contributions from any targets to the Consolidated Revenue Fund Account. Furthermore, there may be no credible means of effectively monitoring whether they receive surplus revenues over their expenditures. Indeed, more expenses are likely to be made under the financial autonomy arrangement where there will be no superior authority’s specified expenditure limit as subsists in the present dispensation.  The subsisting dispensation mandates the remittance of all revenues to the Consolidated Revenue Fund Account under the Single Treasury Account (TSA) system with a specified and allowed expenditure limit.
The second implication is that the financial autonomy will bring with it the empowerment of the affected agencies to fix their remunerations and pay themselves as they deem appropriate. Besides, they will prepare and approve their own annual budgets without interference from external quarters or third parties. This will mean a total hands-off in their financial affairs by the Federal Ministry of Finance, Budget and National Planning.
Third, the proposed policy will obviously short-circuit and make ineffective or indeed, moribund, the recently established Treasury Single Account. Thus, the noble and accepted ideals of pooling government’s revenue into a single platform that will facilitate better and enhanced financial decisions will be defeated. The agencies will return to multiple-account holding that breeds unpalatable accountability and monitoring challenges. What is more, government’s revenue position will be hard to determine with grave consequences for effective and efficient financial planning and management.
The above highlighted implications will need to be taken care of before adoption and implementation of the Senate’s proposal. It should also be a point for deeper reflection whether financial indiscipline will be better addressed under what is being proposed by the Senate against the status quo with, of course, some modifications or fine-tuning.
It is a near certainty that the Senate does not intend that financial autonomy should be conferred on the target agencies without collaborating with the executive arm of government, which supervises these bodies. Certainly, since this is a delicate policy direction in the context of economic development, there is need for proper debate, good thinking and a thorough assessment of the risks involved in this plunge.
In conducting a proper assessment of the situation, the most cogent question to ask is: what exactly is the problem that the policy seeks to solve with the Senate’s proposal? If the problem is clearly identified then, the second logical question is: whether the identified problem will be truly solved by what the Senate is proposing? Third fundamental question is: whether there are alternative and better solutions beyond what has been tabled? If there are other credible alternatives, a choice can be made of the best that will not lead the Federal Government and the nation into unintended negative outcomes.
In the main, the Senate needs to carry the people along too because there are bound to be questions to the federal legislature, which once queried the financial autonomy of NNPC, CBN and others, which failed to submit budget proposals to the same legislature. What is the trigger for this sensitive policy that has implications for economic development?  The Senate should therefore tarry on this proposal because it is a weightier matter of public finance policy – that should not be trifled with.
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