Many FG’s MDAs constitute waste —Faleke

Chairman, House Committee on Finance, Honourable Abiodun Faleke, in this interview by KEHINDE AKINTOLA, speaks on economic issues bothering on the proposed amendment to the Finance Act, investigative hearing into alleged misuse of foreign exchange, under-remittance of revenue by Ministries, Department and Agencies (MDAs), among other issues.

 

At the ongoing investigative hearing being carried out by the House, the MDAs have been asked to refund all revenue they collected on behalf of the Federal Government? Is there any nexus with the 2020 Federal Appropriation Act?

Well, it is the responsibility of the FIRS to ensure that everybody pays what he is supposed to pay. But we discovered that most of government agencies don’t remit what they are supposed to remit; they still keep the income and spend it while at the same time depending on the government to pay their salaries. I’ll give you an instance, there is a particular agency whose salary bill is to the tune of N90 million per month and the total remittance from that agency was about N2.7 billion per annum. I asked them: if all agencies are like you where do you expect the government to get money to pay the workers? These are some of the issues. The agency claimed that the N2.7 was not their maximum revenue generated. They generate a lot of money but remit just N2.7 million because, according to them, they are operating surplus. So, we looked at the Fiscal Responsibility Act and said the idea of operating surplus will not help Nigeria because the agencies will never declared surplus. The Act says you pay 80 per cent of your operating surplus. In order words, after spending all your expenditures, if you have let’s say N10 million left, you should remit 80 percent of the N10 million; that has been their calculation. But I said, no; the agencies don’t have surplus; they declare losses and which means, nothing was coming to government, until we started this review. So, we took it upon ourselves as a committee to see how we can help Nigeria to further move away from oil revenue as the main source of revenue.

There was no Coronavirus effect when we started the review, and since we started so many of the agencies have remitted their arrears. We’ve been able to point out what they owed and so many of them have come with new treasury receipts to show us how much they had remitted, which means the fund is there. All we need do as country, as far as I am concerned, in view of this oil problem and volatile prices, is to look inward. The money in the system, to my mind, if properly managed is more than enough to take care of our needs. I have seen it with the few agencies we have checked. There is so much money when we put their actual income (actual revenue generated); aggregate them together, it’s in billions if not trillions. We have not gone to the agencies in the oil sector whatever like the Nigerian National Petroleum Corporation (NNPC). We have not touched the Nigerian Ports Authority (NPA); we have not touched NIMASA. The big ones like the Central bank of Nigeria (CBN); we are just doing the small ones first. When you look at what even the small agencies are generating and the amount they remit, then we are bound to conclude that we are not being fair to the country. And for us as a committee, we hope to come up with an amendment to the Fiscal Responsibility Act to say that every agency of government should remit every fund generated to the CRF Account and then bring their budget and access the money; failure to comply, the law will have to take its course. The law will also apply to the Ministry of Finance if it fails to pay on time. We will be laying that (FRA amendment bill) on the floor of the House very soon.

 

Don’t you think that it was time we streamlined some of the existing MDAs because current reality in the country?

Based on my interactions with them for four weeks, I totally agree that there is an urgent need to streamline them. We have to merge some of them. We have an agency, for example, that has a staff strength of 1,500 staff and has contributed nothing, absolutely nothing to national growth and development. It’s a research institute and we have not seen the effect of the research institute. We have agencies that have been in existence since 1988; it is also a research institute and has not come out with one research work or one product to be sold either to investors or to help Nigeria.

 

What is your take on the concerns raised by the chairman of the Federal Inland Revenue Service (FIRS) that some Ministries, Departments and Agencies (MDAs) were unwilling to adhere to the 7.5% VAT as passed in the new tax law?

I think that the moment a law is made and gazetted, the agency concerned is supposed to write letters to all the revenue generating agencies and companies to tell them the date of commencement. It’s not enough to think because the president has signed the law that everybody will start complying. The FIRS on its own, should write a letter on the commencement of the implementation; it should notify them and attach the gazette of the law. So, he shouldn’t wait. Nigerians don’t like paying tax, so you have to show them what the law says and if they now refuse to pay, then we will take the appropriate action.

 

What steps does the House intend to take against collection agents engaged by the FIRS accused of conniving with companies to defraud the country?

I’m not aware of that. They haven’t brought those details to our knowledge and so I wouldn’t want to talk about it. The only thing I heard him say was that some of the consultants–I don’t think they have agents–some of the consultants that were engaged before were being paid one per cent. He said what they paid to them was too meagre to even take care of their cost. Of course, I told them the problem had to be with the FIRS; it doesn’t have to do with the country. The FIRS has four per cent cost of collection, so if you delegate consultants to help you audit a company and bring out the liability of that company, it behooves on you to pay what is required.  A company helps you to get say N5 billion from a company that is owing can say out of his cost of collection, he spent so much and you should pay maybe one or two per cent. I think that the FIRS chairman did not give details on the one per cent he was referring because it has to be the percentage they pay to the consultant, depending on the value. So, if somebody is collecting N100 billion on your behalf, you will not be paying two per cent of 1the amount. Such things are graduated. Therefore, he really needs to shed light on what he meant.

 

What can you say on the issue of diversification of the economy, given the crisis in the price of oil in the international market?

I agree with you that we need to step up efforts at diversifying the economy. You know also that this government has made efforts on diversification into agriculture, solid minerals and all the rest. And I think we can only come up with better laws to enhance local opportunities that we have. I think we have ample opportunities in this country and that’s why I’m concerned about electricity which is a major impetus to our economic growth and development as a country.

Let’s look at the public outcry on the new loan being sought by the Federal Government; many Nigerians are saying we don’t need the loan.

I don’t know the people that are saying whether we need this loan or not, but you should know that we passed the Medium Term Expenditure Framework and approved it before the 2020 budget was passed. The MTEF clearly indicated the sources of funding that budget and the loan aspect is there- both local and international, and so if the government in ensuring that they achieved the budget, it is now trying to access the loan, why should we say it’s not good? To me, the sources of funding of government varies. When you compare your income with what you want to spend, the gap you look for is the loan; that is exactly what the government is doing.

Nigerians want to know how previous loans were utilized and the need for the National Assembly to do the needful on the matter. For example, many alleged that bail-out funds and loans obtained by state governments were not really dedicated to appropriate channels.

First, I am not the chairman of the committee in charge of such matter in the House, but I know that the new loans are project-tied. It is not just a loan in the open; I mean you can’t use the loan for just anything. They are bank loans, all those SUKUK and the rest were tied to particular projects. They’ve been in the process for a long time; the evaluation has been done; the process carried out; repayment schedule agreed before they finally agree on the loans. So, if you don’t access it, then the cost of the fund will continue to go up. As at the time of this discussion, we pegged our dollars at N305; today in the black market, it’s more than N400 to a dollar. So, if we don’t do what we are supposed to do today, tomorrow might be too late. As to the utilization, I think that as the representatives of the people, we need to know how the funds and loans are being used; whether they are being used for what they actually secured then for. It’s part of our oversight activities and I think that the National Assembly, especially the House of Representatives has been doing that.

 

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