Plugging Leakages In The Fiscal System

Nigerians in and out of government are unanimous in asserting that the cost of governance in the country is scandalously high and may be one of the highest in the world. We have a situation where the cost of running the bureaucracy gulps about 80 per cent of the federal budget. This is the cost to maintain just less than one per cent of the population and getting the wheel of government going. However, governmental service delivery remains abysmally poor and what we get out of this huge investment is not commensurate with the input. Beyond the cost of running government, the fiscal system leaks at many points. The capital budget becomes a paltry sum which cannot meet our demands for new infrastructure and the maintenance of existing ones. Every new government promises to reduce the cost but ends up increasing it. The areas of waste are very well known but government after government take no action to reduce the waste.

A review of some of the areas of waste will follow. The Constitution in Section147 gives the President the power to establish offices of the ministers of the Government of the Federation provided that the President shall appoint at least one minister from each state, who shall be an indigene of such a state. The implication is that at any given point in time, Nigeria will have a minimum of 37 ministers representing the 36 states and the Federal Capital Territory. In 2014, there are 41 offices of ministers. This is an unwieldy arrangement that increases the cost of governance. Who needs 41 ministers? The remuneration and allowances of ministers are as stipulated by Certain Political, Public and Judicial Office Holders (Salaries and Allowances, Etc) (Amendment Act) of 2008. It includes (using the annual basic salary of N2,026,400 as the basis) accommodation 200 per cent; utilities 30 per cent domestic staff 75 per cent; entertainment 45 per cent; medical facilities and security are provided by the state and will cover treatment in foreign hospitals; furniture 300 per cent; personal assistants 25 per cent; motor vehicle loan 400 per cent; motor maintenance and fuel allowance 75 per cent; severance gratuity 300 per cent; leave allowance 10 per cent; newspaper allowance 15 per cent; duty tour allowance N35,000; estacode USD900; and monitoring allowance 20 per cent. The constitution can be amended to provide for not more than 15 ministers.

What has happened to the monetisation policy of government? It is not clear whether the policy is still being implemented. Some persons whose entitlements have been monetised still have the same facilities provided for them again at the public expense. It makes sense to insist that the Federal Government should meticulously and rigorously implement the monetisation policy. The gains of monetisation as stated by the Ufot Ekaette committee include efficiency in resource allocation, equity in the provision of amenities and encouragement of public servants to own personal houses. It also enables public servants to plan for a more comfortable post-service life. Furthermore, it minimises waste, misuse and abuse of public facilities. For these reasons, the concept of monetisation has gained worldwide acceptance. In more specific terms, monetisation of facilities, such as housing, furniture and vehicles will reduce capital cost, maintenance and running costs. It also promotes the observance of maintenance culture and discipline in the use of public utilities since the individuals will now have to pay for such services, which hitherto were paid for by government. In addition, the monetisation of medical treatment will go a long way in curbing submission of spurious bills and delays in processing refund of medical bills.

Open competitive bidding should be the norm in federal procurements while special and restricted tendering are exceptions to the rule, to be employed in special circumstances justifiable under the law and the regulations made by the Bureau of Public Procurement. However, special and restricted tendering has become the norm accounting for about 72 per cent of procurements, while open competitive bidding has become an exception to the general rule. It would not be asking for too much if Nigerians insist on the full and proper implementation of the Public Procurement Act to save costs. The Ibrahim Bunu Presidential Committee which submitted its report in June 2011 reported that there were 11,886 abandoned capital projects which will require N7.78trillion to complete. Abandonment of projects leads to waste as sums already invested give no benefit to society. If the projects are to be kick-started, undue cost overruns will weigh heavily on the treasury and at the end of the day; the project will be completed at a cost higher than would have been if it was not abandoned. The National Assembly in responding to this challenge should speed up the enactment of the Project Implementation Continuity Act as provided by Vision 20:2020. It is a Bill to make development planning compulsory for all tiers of government in Nigeria and to create coherent and measurable targets in developmental initiatives in support of the attainment of Vision 20:2020 and for other related matters.It guarantees inter alia development planning, creates a register of projects and makes it compulsory for ongoing projects to be completed before new ones are initiated.

Section 21 of the Fiscal Responsibility Act requires that four fifths of the operating surplus of government corporations and agencies be paid over to the Consolidated Revenue Fund not later than one month following the statutory deadline for publishing each corporation’s account. Many government corporations have defaulted in paying over operating surplus to the treasury. However, the FRA did not define operating surplus. In accounting terms, it is a proxy for total pre-tax profit incomes – but these corporations are not set up for profit. Operating surplus, according to Wikipedia, should include factor income, value added, and increase in the value of inventories held with or without a valuation adjustment reflecting average prices during the accounting period. It is not clear whether the Accountant-General of the Federation has published the rules for the computation of operating surplus considering that it is his duty to publish general standards for the consolidation of government accounts. Available information indicates that the corporations and agencies are using different accounting methods; while some are calculating their accounts and operating surplus based on cash accounting, others are using accrual accounting. The implication is that two agencies with same income and expenditure may pay different operating surpluses to the treasury. Some corporations are also resisting paying their surpluses to the treasury. The Fiscal Responsibility Commission should take concrete and targeted steps to collect the operating surplus of corporations and agencies.

Comments for this post are closed.