Business

Remittance: How revenue generating MDAs fleece govt

Recent findings by the Fiscal Responsibility Commission (FRC) revealed that a sizeable number of revenue generating agencies still engage in underthe- table dealings, thus remitting pittance into the federation account. ABDULWAHAB ISA reviews the findings

The central government’s revenue loss continues unabated, courtesy of the nefarious dealings in ministries, department and agencies (MDAs). Deliberately, majority of the MDAs have render impotent a provision of Fiscal Responsibility Act, 2007, which mandates them to remit their operating surplus into the Consolidated Revenue Fund (CRF). Rather than comply with this key provision, MDAs pocket larger chuck of revenue they generate and remit pittance to CRF account. MDAs continued fleecing of government’s accrued revenue denies it (government) the resources to execute projects captured in annual budgets. In a recently released report, the ICPC tendered a detailed account of obnoxious ways officials of revenue generating MDAs defraud government. Similarly, an audit report by the auditor general of the federation corroborated manipulation across MDAs. In another damning report evidencing ways MDAs undercut Federal Government of its revenue, the Fiscal Responsibility Commission (FRC), in its recently released 2019 annual report, made stunning disclosures of MDAs under remitting funds to government.

FRC’s damning report

The 2019 annual report and audited financial statement of Fiscal Responsibility Commission signed by the Executive Chairman, Victor Chinemeren Muruakor, detailed activities of the Commission. It covers budget monitoring, physical assessment of capital projects implementation across six geo-politcal zones of the country and compliance by MDAs with revenue generation and remittance provision. Revenue monitoring is one of the key mandates conferred on FRC by FRA, 2007. Over the years, the Commission sends out requests and reminders to MDAs to submit revenue returns on a quarterly basis in order to assess their level of compliance with the provisions. The Commission’s findings are revealing and shocking. Available data to the Commission on revenue returns for the preceding year showed MDAs had been defaulting in the remittance of internally generated revenues to the Consolidated Revenue Fund. A total sum of N2.56 billion was remitted to the treasury by 11 MDAs as independent revenue in 2019. This, it said, showed a decline compared to the sum of N7.75 billion remitted by 14 MDAs in 2018. According to the record, “It is pertinent to state that the responses and submission rate is disappointing despite the requests and reminders for submissions mailed out to MDAs. The Commission’s request would help to assess the achievement of revenue targets and level of compliance. Only eight MDAs completed their 2019 submission, while ten did in 2018. “There is need for the Commission to intensify efforts in system audit of MDAs in order to identify revenue generating potentials and revenue categories. This will prod MDAs to wake up to their responsibilities and the Commission will be in good stead to ensure higher revenue remittances to the treasury in the years ahead.”

Revenue diversion

Reluctant to remit appropriately what is due to government, MDAs hide under running cost to undercut government. This is a common thread that runs across revenue generating MDAs. The prevailing insidious financial abuse by MDAs was let out last year by Muruakor at a retreat in Abuja. Calling for more corporations’ enrolment into fiscal responsibility schedule, the FRC boss expressed his worry about non-remittance of over N1.7 trillion operating surpluses into CRF by some agencies. Describing the development as unfortunate, the Commission noted that despite the increase from 31 captured corporations in 2007 to the current 123 in 2020, some of the agencies were still reluctant to remit their funds, but divert same to running costs in their various organisations. The retreat, themed: “Promoting Prudence, Accountability and Economic Stability in a Post COVID-19 Economy,” was organised by the FRC in collaboration with Grow Africa Consulting Ltd. Muruako said: “We have come to brainstorm, learn more and also rub minds on possible ways of ensuring that the apparent lean national resources, which is obviously getting leaner because of the challenges of COVID-19 are properly managed to achieve better result for the citizens of our country. “The Commission has insisted that only if government can implement its recommendations of reining in more government-owned corporations in the Schedule of the FRA 2007, there might be no need for government to go borrowing to fund the budget. “There is a need, therefore, to add more agencies to the net of payment of operating surplus, as almost all government organisations generate funds one way or the other, but they equally spend on items that are unnecessary, while government continues to seek loans to fund its expenditures.” He assured that the Commission would continue to monitor the implementation of the FRA 2007, including preparation of the Medium Term Expenditure Framework (MTEF) as well as the fiscal strategy papers of MDAs. Muruako, who used the occasion to solicit for increased budgetary allocation to the Commission, said: “It is only unfortunate that while agencies on the schedule of the FRA 2007, have been increased from 30 to 122, the appropriation of the budget of the commission is consistently dwindling, hence making it very difficult for the commission to fully discharge its mandate.” He appealed to participants to note that the Commission owes the country a sacred duty to rally round government at this critical time to reposition the economy.

Way out

Government is aware and conscious of under remittance of revenue into CRF account by MDAs. It drew MDAs’ attention to it through policy instrument. One of the policy instruments is the Treasury Single Account (TSA). Regrettably, the skewed open ended system enables MDAs to carry on undeterred. FRC is unrelenting in the quest to wean revenue generating MDAs from feasting on revenue due to government’s coffers. The Commission said it has had meetings with the chief executive officers/accounting officers and top level management officials of scheduled corporations, particularly from the batch of 92 agencies added by the Ministry of Finance in 2010. The meetings, it said, went a long way in sensitising chief executive officers of the agencies of statutory obligations, particularly, compliance with the provisions of Part IV, especially Sections 21, 22 and 23 of the Fiscal Responsibility Act (FRA), 2007. “Also, attention is always drawn to any outstanding/unpaid operating surpluses payable by the agencies after the computation by the commission using the audited statements of accounts of the agencies and disallowing expenditures using the template developed by the Commission. The Commission continued to strengthen its partnership with the Ministry of Finance, Budget and National Planning and the Office of the Accountant- General of the Federation. “This has helped to ensure that defaulting agencies remit from source into CRF the determined operating surpluses payable as well as verifying previous amounts paid or claimed to have been paid,” it said in a report. To dissuade pillaging of government’s revenue by agencies’ heads, the Commission said it embarked on revenue monitoring exercisee, which entailed scrutinising books of accounts in order to ascertain revenue generating performances and where gaps are identified, effective ways of blocking such leakages and improving on the existing revenue generation drive is suggested to the agencies. The FRC 2007 Act has inherent lacuna. There has been concerted effort by the agency to effect an amendment. The bill has passed through various stages at the National Assembly. The commission is optimistic that with the support of relevant stakeholders and continued engagement with the leadership of the National Assembly and relevant committees that the much required amendment will be actualised in no distant time.

Last line

For government to get over revenue fraud routinely committed by MDAs, there is need to invent drastic measures as a deterrent. Any MDA caught shortchanging government in revenue remittance should be made to face the full weight of the law.

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