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Published On: Wed, Oct 30th, 2019

Demanding accountability: Where is the money?

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There are many questions that need response in our political sphere. These questions have led many to erroneously conclude based on sentimental hatred, as much as limited understanding of the discourse, many others just throw punches to hit the Buhari-led administration and score cheap political points with remarks like “they are corrupt too”. And of course, there are also the teeming bystanders who just join the choruses without recourse to the facts. This is expected and it is one of the many disadvantages of having corrupted, corroded, power-drunk and insensitive politicians in a nation that is already grasping with the challenges of modulating permissive contents on its media.
Information dissemination and basic national orientation framework system failure are also serious contributors to the many severe misinformation in our space. Nigerians ought not to be in the dark on issues of national relevance and much more, those capable of casting aspersions on government transparency. It is a statement of fact that the National Orientation Agency (NOA) and other related bodies are finding it difficult and/or facing challenges in discharging their responsibilities to Nigerians and the State. We have become silently derailed to the point where the social media has become our source of information and explanation of national issues; we take whatever we are fed with and propagate the same to the detriment of the nation. It is high time this stopped.
In the last five years of the Buhari-led government, on the national finance front, two major items have been the major topics of public debate: first, the fight against corruption yielding results with daily news of convictions, asset seizures, recovery of stolen funds, sales of seized properties and secondly, government sourcing funds to finance the budget and specific relevant infrastructural developments. Nigerians have been inundated with figures of stolen monies recovered and/or repatriated in trillions of Naira and yet the government claims there is the need to borrow money. Justified, Nigerians have the right to ask questions demanding to know why the recovered monies are not just enough to replace borrowing. We need to know what has become of all the advertised recovered loots. How are they retired? Why do we need to borrow again despite all the recoveries? These and many other questions are what the NOA and similar mediums should regularly orientate Nigerians on and clear our doubts in the interest of all. However, since this is not forthcoming, I would attempt to diffuse the financial suspicions by supplying some basic facts on government business and revenue management.
What bothers Nigerians is not only recovered loots management, but also the fact that we have been fed with the increasing capacity of FIRS, NCS and other government revenue-generating agencies to generate more revenue for the government. We read, daily, of Nigerian Customs Service’s daily improvement on revenue generation and then we ask if the Federal Government can earn as much as ₦15 trillion from these agencies in a year coupled with loot recoveries, why do we still have to borrow to finance a budget of ₦8.1 trillion? Except explained, it wouldn’t make sense to an average man in the street and the educated mischievous politicians who are bent on discomfiting the government would have a field day feeding on their ignorance.
So, for the purpose of this discourse, I would take off by reminding Nigerians that we are a federating nation, comprising of the Federal Government, the 36 states and the FCT and then the 774 Local Government Areas. We must also recognise the established norms that each of these entities is primarily financed from a common purse based on a statutory agreed sharing formula. That is why we hear of the routine monthly allocations to states and local governments and area councils.
Since there is a common purse, it is then necessary to make mention of the existence of an account called the Federation Account, domiciled with the Central Bank of Nigeria. Every income accrued and remitted to the Federal Republic of Nigeria from all its revenue generating sources are by law paid into the Federation Account, including all recovered loots and sold assets. It is also pertinent to know that there is a specialized committee (which comprises of all the 36 states’ commissioners of finance) saddled with the responsibility of coordinating the deposited funds in the Federation Account and meet regularly, mostly on monthly basis to share the accrued funds among the federating units in accordance with the agreed revenue sharing formula.
Now let’s talk about where the money comes from. Nigeria has a lot of established revenue-generating agencies. These include but not limited to: NCS, DPR, FIRS, NPA, NIMASA, JAMB, NITDA, NNPC, NLNG, etc. We actually have 122 such agencies that are expected to make monthly or yearly return to the coffers of the government via the Federation Account.
The Nigerian Customs Service (NCS) performs functions which include but not limited to the collection of revenues (import/excise duties and other taxes/levies) on all our land, sea borders and air ports and accounting for the same on a monthly schedule. The Federal Inland Revenue Service (FIRS) collects a list of taxes on behalf of the Federal Republic of Nigeria (not Federal Government of Nigeria). These taxes include: Company Income Taxes (CIT), Petroleum Profit Tax (PPT), Value Added Tax (VAT), Personal Income Tax (PIT), WHT, Education Tax, Stamp Duties, Capital Gain Tax, NITDF Levy. These agencies access, collect and account for all these taxes and other revenues accruing to the federal republic and return the same on monthly basis to the federation account. The Department of Petroleum Resources (DPR) in performing its statutory responsibility of ensuring compliance to petroleum laws, regulations and guidelines in the oil and gas industry, collects royalties on oil producing fields, rent on awarded concessions, processing of leases, remittances for licenses and permit among others. Ultimately, all these revenues, including dividends and stolen assets recoveries become the revenue base of the Federal Republic of Nigeria.
The next agenda is what becomes of these generated revenues. They are all paid into the nation’s common purse, the Federation Account. And what is done with the revenue? Every month, a committee known as the FAAC meet, check what is available and share it in accordance with the national agreed/statutory sharing formula among the federal, states and local governments of Nigeria.
How is the revenue shared? There are three formula appropriated for the sharing of the revenue. The first is the direct removal of 13 per cent of all revenue accrued from oil and gas sources for sharing by all oil-producing states of the federation. The second is the VAT sharing formula: all VAT paid into the federation account are shared in the ratio 3:10:7 among the federal, states and local governments and area councils. This implies that the federal government takes 15 per cent of the monthly VAT collection, the state governments take 50 per cent of the monthly VAT collection, and the 774 local governments take 35 per cent of the monthly VAT collection. The balance in the Federation Account after deduction of the VAT and the 13 per cent derivation is then shared among the three federating units such that the federal government takes 52.68 per cent, the state governments take 26.72 per cent and the local governments and the area councils take 20.60 per cent.
So the big question, why does the federal government still borrows? In 2018, for instance, the collected revenue, inclusive of recovered loots deposited to the Federation Account was estimated at ₦14 trillion. This seems far above the national budget of ₦8.01 trillion for the same year until we recollect that the ₦14 trillion is not for the federal government to keep. After taking off the 13 per cent derivation for oil-producing states, the share of the total revenue that came to the federal government in 2018 was ₦6.61 trillion. The 2018 budget thus has a fiscal deficit of about ₦2.0 trillion which was funded largely by net borrowing sourced locally and internationally.
Summarily, ₦8.01 trillion is the budget of the Federal Government of Nigeria and not the Federal Republic of Nigeria and if the federal government’s share of the national accrued revenue for the year is not up to the federal government’s planned spending for the year as the case has been for a while, thus borrowing is in order. Finally, a major question we are all not asking is where are the balance of the shared revenue outside the federal government shares and how are they retired? The answer is simple: they are with your state governors and local government and area council administrators. If you desire to know how they are retired, engage your local and state governments; ask them questions. They are not only in possession of your state monthly share from the FAAC but also the monthly internally generated revenue (IGR) of your state.
God Bless The Federal Republic Of Nigeria!

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