A storm of controversy is raging again over the unremitted funds by the revenue-generating public agencies. At a recent plenary, the Senate Committee on Public Accounts and officials from the Auditor-General for the Federation’s office accused the Nigerian National Petroleum Corporation of withholding trillions of naira due to the Federation Account. These strong allegations are contained in the 2016 AuGF report. In Nigeria’s opaque system, these accusations are neither shocking nor new.
Specifically, the committee and the AuGF’s office allege that the NNPC did not remit N4.07 trillion to the government’s coffers between 2010 and 2016, as the law prescribes. In its defence, the NNPC said it exploited the window that allows revenue-generating ministries, departments and agencies to spend out of the income they generate. It claimed that it used the funds to repair pipelines, underwrite petrol subsidies, security and management matters.
This argument does not add up. The requirement of legislative appropriation before public funds are spent is at the foundation of constitutional order. Even if backdoor spending is permissible, the funds in question are operating surpluses. It is also a staggering amount of money. It is a hollow argument to spend on these items without properly accounting for them line-by-line. In 2012, the erstwhile Goodluck Jonathan administration generated immense national uproar for spending N2.53 trillion on petrol subsidies in a single year.
Going by Sections 80 and 162 of the 1999 Constitution, the standard process was for the NNPC to have raised a supplementary budget for appropriation before deciding unilaterally to dip its hand into public funds. Beyond that, in this period of prolonged economic distress, the unremitted funds would go a long way. Already, the 2021 budget deficit is N5.6 trillion, while the Federal Government’s component of the total domestic debt of N20.03 trillion (September 2020) is N15.84 trillion or 49.18 per cent, and a further slice of the N12 trillion external debt stock. It is therefore strange that the government is borrowing rapidly to construct railways and roads and meet recurrent needs when its MDAs are sitting on substantial pots of unremitted revenue.
With hindsight, other MDAs are also taking the government for a ride. Accused of withholding N7 billion from the funds it generated from its user fee platform in August 2020, the National Agency for Food, Drug Administration and Control argued that it used it to pay the “tour allowance” of its staff. Before he left his post as the Central Bank of Nigeria Governor in 2014, the Presidency took Lamido Sanusi to task for making generous donations to universities and other causes running into billions of naira.
During her tenure as Minister of Finance, Kemi Adeosun indicted 33 MDAs, including the Nigerian Communications Commission, the Nigerian Maritime Administration and Safety Agency, the National Pension Commission, the Nigeria Ports Authority and the National Health Insurance Scheme of under-remittance. Shockingly, Adeosun said a few days before her threat to report the MDAs to the Economic and Financial Crimes Commission for withholding their operating surpluses, the government removed N640 billion from the coffers of the Nigerian Shippers Council, part of the money it had withheld.
In the same vein, Sanusi accused the NNPC of not remitting $20 billion of oil sales revenue for the 2012/13 period. For blowing the whistle, Jonathan later dismissed Sanusi. Nevertheless, following an audit report by accounting firm, KPMG, in May 2018, the National Economic Council directed the NNPC, the Federal Inland Revenue Service, the Nigeria Customs Service and other MDAs to pay the sum of N526 billion and $21 billion (about N8 trillion then) they had under-remitted.
Apart from this, Chukwuma Soludo, another former CBN Governor, said the country could realise up to N30 trillion annually by stopping leakages, under-remittance and non-appropriated spending by the MDAs. Bode Agusto, a former Director-General of the Budget Office, reckons that the government could rake in N14 trillion annually in taxes from 200,000 wealthy Nigerians, but no serious action has been taken on this. On the average, the non-oil taxes government collected in the five years to 2019 amounted to just four percent of the GDP. This endangers economic growth primarily because the World Bank argues that meaningful growth in a country starts at 15 percent tax-to-GDP ratio. The Organisation for Economic Co-operation and Development countries currently has an average tax-to-GDP ratio of 32 per cent.
This mess underscores the weak state of government and institutions in Nigeria. It should end. To cater to the financial needs of these MDAs, Sections 21 and 22 of the Fiscal Responsibility Act (2007) mandate them to submit their revenue and expenditure schedule for three years ahead of time for appropriation by the National Assembly. This is a sound law, but it is being violated at will, which is why the National Assembly should not stop just at making a noise about these infractions as it has been doing. This time, it should investigate the matter to its logical conclusion.
The most critical duty of the parliament is the power it has over the Appropriation Act. It should start using the power responsibly. It should not pass the budget of any MDA under-remitting and spending without appropriation. In the United States, the Congress has used this power to rein in the executive arm of government. As such, all government agencies were shut down for three days in 1990 under George Bush; some agencies for five and 21 days under Bill Clinton in 1995/96; all for 16 and three days in 2013 and 2018 under Barack Obama. Under Donald Trump, the shutdown of 35 days in 2018/19 cost the US economy $5bn and 380,000 employees furloughed.
There should be legislative prescriptions for the MDAs allowed to engage in backdoor spending. For instance, the US Federal Reserve until recently was the only federal agency that had been given permanent, plenary authority to set its own budget, without congressional oversight. The approach has been justified because of the need to have a politically independent agency in charge of monetary fiscal policy. But Congress has effectively given the same authority to the Consumer Financial Protection Bureau, created in 2010, by requiring the Federal Reserve to fund it. Constitutionalism demands that nothing is done arbitrarily. The NASS should be this resolute and stop being a lackey of the executive. Additionally, all officials of these MDAs should be made to account for their tenure and face the law for their infractions.
