Let the Fiscal Responsibility Commission stay
Over the years Nigeria has experienced the problem of gross fiscal misappropriation and misprioritization of funds to different sectors of the economy. There is also poor budgetary planning which mostly did not fit into any development target. The fallout of this has hampered our ability to meet targets. As a result meeting developmental goals such as Vision 2010, Vision 2015 and the various National Implementation Plans were never realized.
There is need for planning and prudence in the management of resources, hence, the Fiscal Responsibility Act, 2007. The FRA is designed among others things, to encourage a savings culture. According to section 35 of the Act which states that, “Where the reference commodity price rises above the predetermined level, the resulting excess proceeds shall be saved. Currently, this is being implemented in the savings of proceeds in the excess crude account.
In addition, we were witness to over $300bn debt accumulated during the military era, which former president Olusegun Obasanjo rallied around to cancel, the FRA is meant to provide limitations and guidelines for borrowing by states and the federal government. The Act also made provisions for transparency and accountability of public resources.
The general overview of the Act is to provide for prudent management of the nation’s resources, ensure long-term macroeconomic stability of the national economy, secure greater accountability and transparency within a medium term fiscal policy frame work, and the establishment of the Fiscal Responsibility Commission to ensure the promotion and enforcement of the nation’s economic objectives and for related matters. This provision gives support for achieving macro-economic goals through medium term plans. The provisions of the Act are in no doubt needed in Nigeria to checkmate corruption and also engender sustainable development but unfortunately the fortunes of the FRA is currently threatened by the decision to merge the Commission.
The call for the merging of the Fiscal Responsibility Commission was borne out of the report produced by the committee on the rationalization and merging of government agencies which has duplication of functions. The committee came up with the need to merge the Fiscal Responsibility Commission with the Revenue Mobilization and Fiscal Allocation Commission.
The committee should be commended for some of the recommendations it made. But, considering the present rate of corruption ravaging the country and the need for transparency and accountability, it will suffice to state that the committee’s recommendation on the merging of the FRC with the RMFAC is mired in oversight. It can be described as an error and a setback in our effort to rid the country of corruption and improve on our economy.
The rationale for merging two agencies arises where the two agencies of government are seen to be having duplication of functions, but in the case of RMFAC and the FRC their functions are widely different from the other. For the avoidance of doubt, the functions of the two commissions as provided by their enabling Act; the Fiscal Responsibility Commission function as contained in part I of the FRA provides for; the establishment of the Commission with the responsibility to compel any person or government institution to disclose information relating to public revenues and expenditure; and to cause for an investigation into whether any person has violated any provisions of the Act. In subsection (a), (b) and (c) of the Act, the Commission is to monitor and enforce the provision of the Act and by so doing promote the economic objectives contained in section 16 of the Constitution. Also the Commission is to disseminate such standard practices including international good practice that will result in greater efficiency in the allocation and management of public expenditure, revenue collection, debt control transparency in fiscal matters; In addition to its function, the Commission is to undertake fiscal and financial studies, analysis and diagnosis and disseminate the result to the general public, make rules for carrying out its function under the Act and finally perform other function consistent with the promotion of the objectives of the Act. Meanwhile the Revenue Mobilization and Fiscal Allocation Commission derives its own function from the 1999 Constitution as follows; Monitor the accruals into and disbursement of revenue from the federation account, Review from time to time, the revenue allocation formula and principles in operation to ensure conformity with changing realities: Provided that any revenue formula which has been accepted by an Act of the National Assembly shall remain in force for a period of not less than five years from the date of commencement of the Act; Advise the Federal, State and Local Governments on fiscal efficiency and methods by which their revenue is to be increased; Determine the remuneration appropriate to political office holders, including the President, Vice-President, Governors, Deputy Governors, Ministers, Commissioners, Special Advisers, Legislators and the holders of the offices mention in Section 84 and 124 of the Constitution; and
Discharge such other functions as are conferred on the Commission by the constitution or any Act of the National Assembly.
A careful look at the functions of these two Commission shows that there is a very big difference in the function of the two. In brief, the function of the FRC is to ensure prudence in management of resources while that of the RMFAC is to determine, from time, to time the revenue allocation for public officers. It will be necessary to call on the attention of Mr. President to rather than merge the Fiscal Responsibility Commission, strengthen it, to function as it should. It is a clear fact that the Commission has not made much impact in the discharge of its functions and this has frustrated the efforts towards ensuring transparency and accountability in government. However, the situation would be a far cry if the Commission is merged. The following implications would arise from the merging of the two agencies. First, is the legal frame-work which sets up the two Commissions are different and to wit they do not perform the same functions. While the FRC is set up by an Act, RMFAC originated from the 1999 constitution. This means that the FRC has a specific focus on general management of the economy which is not in line with the core focus of RMFAC.
Also the President needs to consider the fact that, the FRC has taken steps to ensure that most states in the federation adopt the fiscal responsibility law in the economic planning of their states; and presently 12 state in Nigeria has successful adopted the law. With the adoption of the law by some states, there is need to encourage other states to tow the same line. Hence it makes it empirical that the Commission remains in existence so as to continue to offer institutional support and play advisory roles to the states, with the focus of getting other states to adopt the FRA in the nearest future.
In consideration of rationalization of scarce resources, the FRC compared with other agencies of government cannot be seen as an institution that contributes to the shrinking resources of government. Currently, the FRC only requires allocations to maintain its secretariat, the personnel and also carry out activities in line with its mandate. It is not saddled with responsibilities that requires much funding. Having stated this, the president can consider reviewing the composition of the FRC to be run without necessarily adopting Commissioners from the six geopolitical zones.
The structure makes the FRC to took more like a political mandate in running the affairs of the Commission than a service delivery agency. The political structure of the Commission can be traced to the inefficiency of the Commission in time past.
As Nigeria we competes to be among the best 20 economies of the world, there is need for us to adopt international best practice, in the planning and management of our economy; and this cannot be effectively done by the RMFAC and FRC merged together. The task of economic planning requires the concerted efforts of government and the supervision or monitoring of such outputs is best concentrated in one single entity such as the FRC. Let RMFAC concentrate on its constitutional mandate while the FRC help out in ensuring that every other agencies and arms of government, complies with the provisions of the FRA.
Considering the lingering state of corruption and economic instability plaguing the nation, it would be unwise for your cabinet to consider merging the FRC with RMFAC, This will betray government’s resolve to fight corruption and manage the economy effectively.