✕ CLOSE Online Special City News Entrepreneurship Environment Factcheck Everything Woman Home Front Islamic Forum Life Xtra Property Travel & Leisure Viewpoint Vox Pop Women In Business Art and Ideas Bookshelf Labour Law Letters

The crisis of revenue leakages without sanctions

It is ironical for the states and federal government to sit on a huge pot of revenue and yet be complaining of poor funds. Several…

It is ironical for the states and federal government to sit on a huge pot of revenue and yet be complaining of poor funds. Several revenue tracking policies of government such as Treasury Single Account (TSA) and Government Integrated Financial and Management Information System (GIFMS) have been introduced with an objective of coordinating all government payment systems into one account source as well as increase government ability to undertake central control and monitoring of expenditure receipts of MDAs. 

Despite this policy, it has proven difficult to bridge the leakage of funds from government coffers. Most government agencies have devised creative means to circumvent government financial tracking systems. The ICPC recently observed that some MDAs still conduct fake recruitment and enter the details of the employee into the Integrated Payroll and Personnel Information System. With connivance of some staff of the IPPIS, some MDAs have a way of manipulating wage increase of personnel into the payment system. These continuous leakages explain the increase in government recurrent expenditure with nothing to show for it. The FG has up to 600 agencies that are expected to generate revenue for the government in line with their mandates. With the exception of a few, most of the government generating agencies do not meet their financial targets or remit a portion of their income to the Consolidated Revenue Fund, yet they still receive budgetary allocations, further depleting government’s funds. 

The Fiscal Responsibility Commission has identified the lack of sanction in the Fiscal Responsibility Act as a major reason the MDAs default in the remittance of their operating surplus. The absence of sanctions in the FRA, has given rise to some of the MDAs ignoring the queries raised by the commission. Most of the MDAs withhold and refuse to give information concerning their operations and finance as required by law.  On the production of audited report, the OAUGF report has indicted a lot of MDAs that have failed to submit updated audit reports. The revenue drive of the federal government will continue to dwindle, if MDAs underdeclare their incomes or fails to remit appropriately to the treasury. Some MDAs that have licence to borrow from domestic sources, without due recourse to the enabling guidelines in the Fiscal Responsibility Act, further deepen the pressure on Nigeria’s domestic debts. The FG must also put a stop to MDAs’ spending without appropriation or diverting sums allocated for a particular project or services in an Appropriation Act to another service.

To achieve the above, there is an urgent need to amend the Fiscal Responsibility Act to include sanctions against MDAS responsible for leakages in government revenues. Some of the proposed sanctions to be considered include: Penalties against any person who willfully hinders the responsible agents of the Fiscal Responsibility Commission from performing the functions or duties imposed on it by the Act. Any person acting on behalf of the MDAs who makes a partial (instead of full) disclosure of information to the commission or its agent, Federal Ministry of Finance, Budget Office of the Federation, Auditor General of the Federation etc, in response to a request made in the performance of the function of the agency or the responsible agents listed above should be convicted of an offence and given appropriate sanctions. 

Also, responsible government agents which, without lawful excuse, fails to perform a public duty imposed upon or assigned to them or the office which they occupy leading to shortage of government revenue should be seen to have committed an offence and necessary sanction should be imposed on them. 

On the issue of borrowing, any person acting on behalf of the government MDAs who borrows or lends in contravention of the Act should be prescribed applicable sanctions. To address the issue of underdeclaration of public revenue, maximum sanction should be imposed in the Act against any person acting on behalf of the government MDA which underdeclares public revenue generated or collected by his agency or institution. Beyond the prescribed sanction, such a person should be made to refund the total amount underdeclared. This should also apply to persons acting on behalf of an agency of government that fails to remit funds generated by the government agency in line with the provision of the FRA. Beyond sanction, such persons should be made to remit the full amount to the treasury. Sanction should also be imposed on persons acting on behalf of a government agency which duplicates a project or items in the budget, spend or authorizes spending of any amount collected or generated without appropriation by the National Assembly and spends or transfer any sum allocated for a particular project, or service in the appropriation Act on another project or service without approval of the National Assembly. Beyond the sanctions, such persons should be made to refund the total amount involved to the treasury. In line with the above, there should be continuous monitoring of all government MDAs by the Fiscal Responsibility Commission and other Anti-corruption Agencies to ensure compliance with the financial rules.

Victor Emejuiwe 

Good Governance/Public Affairs Analyst