Subsidy: Deploying effective public sector accountability

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WITH the emergence of a new crop of leaders in Nigeria, the country stands at a crucial juncture in its pursuit of unity, progress and key reform initiatives that seek to reduce corruption, increase government revenues and reflate Nigeria’s depressed economy. Notable leaders in history have attempted to improve the performance of their public service through several reform programmes, but all ended up failing to meet the desired results due to lack of effective accountability framework to curtail the excesses of public institutions and officials responsible for managing public affairs in the country, especially under the present democratic dispensation. In his inauguration speech on May 29th 2023, President, Bola Ahmed Tinubu, joining other African leaders who had recently seen subsidy removal as a necessity for their country’s economic balance, had announced Nigeria’s exit of the over five decades’ fuel subsidy regime – a bold endeavour that would go down in history as one of the most daring policy decisions of his administration. Though there are no institutionalised safety net programmes for most Nigerians, which is why fuel subsidy is regarded as one major way in which the government supports the over 63 percent multidimensionally poor masses. With the recent phase-out, there is no gainsaying that a larger percentage of the citizens are currently grappling with rising transportation costs, increased prices of essential commodities, little or no significant increase in their income, and the burden of adjusting their budgets accordingly.

Dataphyte, in its report published 28th May 2023, a-day to the swearing-in of President Bola Tinubu had projected that, “If President-elect Bola Tinubu retains fuel subsidies, his administration will spend an estimated N14.01trn within the next four years, which might hurt Nigeria’s fiscal outlook.” Hence, it is safe to say that the removal will be saving Nigeria from such significant loss. According to Nigeria Extractive Industries Transparency Initiative (NEITI) reports, fuel subsidy payments have gulped N13.7trn in the country’s national budgets between 2005 to 2021, an equivalent amount to the entire budget for health, education, agriculture and defence in the last 5 years. In the 2023 budget, President Muhammadu Buhari allocated N3.3trn to fund fuel subsidy for the first half of the year 2023, having (according to NNPC), spent N4.39trn on same, in 2022. These outrageous amounts of money could have helped the government to provide more social services, build more hospitals, schools, road networks and improve infrastructure that will enhance citizen’s quality of life. Asides the fact that the subsidy payment had only benefited the wealthy households, it had also been a regressive policy owing to its severe impact on the nation’s economy.

Drawing insights, going forward

As we embark on this new phase of development as a nation, the Federal Government must recognise that the success of any agenda to redirect saved funds to critical supply chain infrastructure projects in the country to mitigate the impacts of fuel subsidy removal on vulnerable citizens heavily relies on the establishment of a robust accountability framework to curb misappropriation and mismanagement. Subsidy reforms will be creating more fiscal space in the country’s general budgeting, hence increased fund allocation to critical MDAs. It is however unnerving to state that Nigeria’s supreme audit institution responsible for auditing the nation’s accounts and ensuring value for money in government financial activities still operates with a pre-independence audit law (the 1956 Audit Ordinance Act) which has

become obsolete and has continually rendered the Office of the Auditor-General for the Federation less effective and less efficient. The interim report of the Auditor-General of the Federation on resources received and spent by the Federal Government towards tackling the Covid-19 pandemic was published for public accessibility in February 2023 (29-months after conducting the audits). Analysis of the report by the Paradigm Leadership Support Initiative (PLSI) revealed that funds allocated to the Presidential Task Force and the participating agencies for the containment of the effect of Covid-19 were either not utilised or had low levels of utilization. Of the 21 participating agencies, only 9, utilized some of the allocated budget, with turnout of 23.4 percent utilisation of the funds allocated to them (i.e. N10.9bn of N46.8bn) as of 30th June 2020.

Also, the 2019 audit report, published 23 months after the end of 2019 fiscal year, shows that 70 MDAs of the Federal Government could not account for the total sum of N455bn in 2019 fiscal year, and till date, there are no intentional efforts towards corresponding investigations or fund recovery. The late publication of Auditor-General’s reports has sadly become the norm and has led to a backlog of audit reports, poor level of accountability in public finance management, and slow socio-economic development in Nigeria. This habitual lateness needlessly denies accountability stakeholders, including the parliament, anti-corruption agencies, civil society organisations, media, and citizens the audit information to timeously track the economy, efficiency and effectiveness of public spending and leakages in revenue generation. The enactment of a modern federal audit service law that provides for administrative and financial autonomy for the Office of the Auditor-General for the Federation is long overdue and should be given topmost priority in the legislative agenda of the 10th National Assembly and President Bola Ahmed Tinubu’s administration.

If enacted, the law will empower the supreme audit office to timely and adequately perform its constitutional mandate and advance the fulfillment of President Bola Tinubu’s utmost promise to Nigerians as stated in his policy document (Renewed Hope 2023) – “in helping to shape this more dynamic economy melding the best of the extant sectors with what is new on the economic horizon, our government will be fiscally active; yet equally prudent in the ‘how and why’ of public expenditure because public money is also a storehouse of public values and public trust”.

Nigeria, as an oil producing country, faces the irony of being an oil importing country. President Tinubu’s administration should pay attention to the rehabilitation of existing refineries while actively encouraging private investments in establishing new refineries. This will strengthen Nigeria’s domestic refining capacity, reduce dependence on imported petroleum products, and contribute to long-term energy security and economic growth in the country. Additionally, there should be an overhaul of Nigeria’s anti-corruption agencies, particularly the Economic and Financial Crimes Commission (EFCC). Reforms in the area of institutional structure, governance mechanism, recruitment and training processes, and operational procedures are crucial to enable the agency to potently deliver on its core mandates as enshrined in the EFCC Establishment Act 2004.

Finally, the President must ensure round pegs are put in round holes in his appointment of officials to spearhead key reform initiatives, while ensuring citizens involvement and provision of timely and accessible information on the utilization of funds saved from the fuel subsidy removal. By doing so, it can instill confidence, garner public support, and lay the foundation for a prosperous and inclusive Nigeria.