MDAs and the fiscal crisis

The parlous state of the finances (fiscal) of federal and state governments is no longer news. It is a fact very well known to a majority of Nigerians and there seems to be no hope in the horizon. Across the states, many governments are owing backlogs of salaries, pensions, gratuities, and allowances and at the federal level, fiscal obligations have been met by the most unorthodox of means involving a heavy price for the present and the future generations. The strange part of it is that during the time of low oil price, oil being one of the funding pillars of federal and state budgets, governments were in lamentation of poor finances; now the price of oil is rebounding, the cries are getting louder. There is utter confusion in fiscal governance and the management of the economy, but it need not be so.

In the 2020 federal revised budget, the Federal Government projected crude oil price at $28 per barrel but the average actual price was $42 per barrel during the year. The production volume was set at 1.8m barrels per day but the actual was 1.79mbpd. Looking at these figures, we exceeded the budget revenue from oil as the FGN share of oil revenue was 157% of the target. Companies Income Tax and Value Added Tax collections were 82% and 68% respectively of the revised targets for the period while Customs collection was 79% of the revised target. Independent revenue performed up to 37.57% of target.These missed targets are understandable against the background of the economic slump following the COVID pandemic. Oil revenue was just 38.57% of the retained federal revenue of N3.94tn. A particular revenue head, stamp duties were reported to have yielded zero revenue notwithstanding the fact that stamp duties were collected daily. For the expected N200billion, nothing came into the fiscal treasury. Till date, there is no official explanation on what happened to the amount and the Federal Government has moved on.

However, it spent about N10.08tn being 101% of the budget, which implies that actual revenue was just a paltry 39.4% of the expenditure. The remaining 60.6% was borrowed money or money we did not earn. Of the entire expenditure, only N1.8tn was for capital expenditure implying that the bulk of the expenditure was for recurrent non debt and debt expenditure. This is the picture of the background to the fiscal challenge at the federal level.

The current discussions on the possible reduction of cost of governance draws partly from this picture of revenue not meeting 50% of the financial commitments. The Oronsaye Committee report has once more become a subject of topical discussion. Issues of merger of Ministries, Departments and Agencies with similar mandates have come up to the fore and possible reduction in personnel of the MDAs is in the picture. While personnel expenditure has been growing over the years, it is not the biggest bulk of our federal expenditure. Our current biggest expenditure item is the servicing of debts. Thus, while we discuss on how to reduce personnel costs, we must also discuss how to cut down the debt service figures.

In the discourse on the cost of governance, one missing aspect in the cost of the rank and file – the everyday public servant is the challenge of productivity. This is not about high-level political office holders who receive bloated remuneration. We may not even have bloated personnel numbers at the FGN level if and only if the personnel were productive. The challenge is how to make these numbers of persons receiving salaries and wages to become productive. The first step will be to find out the targets set for these MDAs by the FGN. What exactly are these agencies set up to do? What targets of performance have been given to them? Who monitors their performance and implements reward or sanction for proper performance and poor performance? We once had a Service Delivery Initiative, what has happened or has been achieved under that initiative?

It is the assertion of this discourse that if up to 80% of the MDAs were faithful and true to their mandate, delivered services and results expected, they would be able to raise revenue or deliver services which will provide the right enabling environment for the private sector to blossom and thereby lead to increased taxes (revenue) available to the FGN and the Federation Account for sharing across the three tiers of government. For instance, the Federal Government’s independent revenue will be fully subscribed if the MDAs return their operating surplus to the fiscal treasury. Who is seriously tracking their revenues to ensure that they do not fritter them away on frivolities and return peanuts to the fiscal treasury?

Take the Ministry of Agriculture as an example, there is a plethora of research institutes with mandates from tubers, cereals, tree crops, agricultural mechanisation, livestock, fisheries, etc. There are universities and colleges of agriculture while most public universities have faculties or departments of agriculture. Over the years, these agencies and universities have been receiving allocations with little or nothing to show in terms of achievements. Why are we still importing food and looking for foreign inputs and technology for the most basic of agriculture production and processing?

Can we justify the humongous $1.2billion loan we took from Brazil for tractors while we have a National Centre or Agriculture Mechanisation in Ilorin? The centre’s vision statement reads: “To be a centre of excellence in accelerating mechanisation in the agricultural sector of the economy in order to increase the quality and quantity of agricultural products in Nigeria and Africa”. Its mission statement reads: “To skillfully engage in innovative and adaptive research leading to design and development of efficient agricultural machineries and technologies using locally sourced materials in order to reduce drudgery and improve the quality of agricultural production and ensure food security for the nation”.  Where are the equipment, tractors and mechanisation facilities designed and bult by this centre over the years to justify its allocations in the budget? A tractor is simply a specified vehicle engine with fabricated parts designed for the agricultural assignment attached to it. Is this beyond the capacity of Nigerian scientists?  If the centre has delivered the right services, we would not take this new loan. Taking this new loan means new resource outlay for servicing and repayment, export of jobs for their fabrication as the tractors would have been fabricated in Nigeria and export of taxation that would have accrued from the local fabricators, etc.

It is time to give clear targets and mandates to every MDA with clear deliverables tied to their statutory competence to realise the very reasons for their creation and existence. These targets should be reached between the agencies, the executive agencies charged with budgeting and legislature and this should be linked to their funding. The leadership of these agencies should have engagement contracts linked to the realisation of specific services. Missed targets that cannot be reasonably explained should attract requisite sanctions and possibilities of defunding.

The government cannot continue to wobble and fumble while the MDAs simply see themselves as expenditure centres, rather than as centres of value addition and service delivery.