With the country’s pseudo federal system where resources are shared from a common pool by the three tiers of government, the newly-inaugurated board of the Revenue Mobilisation, Allocation and Fiscal Commission has been given a presidential directive to increase the revenue inflow into the Federation Account, by utilising all its powers.
The RMAFC board, chaired by Elias Mbam, was charged with concentrating more on non-oil revenues. Oil revenues account for about 90 per cent of the country’s earnings, despite the fact that beneath Nigeria’s surface are more than 34 commercially viable solid mineral types that are under-exploited. Most of them are left in the hands of artisanal and rogue miners. President Muhammadu Buhari stressed “the use of all legal ways and means to strengthen its monitoring mechanism and block leakages of revenue from the Federation Account.”
RMAFC is empowered by law to demand information or data on revenue from the Nigerian National Petroleum Corporation, Nigeria Customs Service, Federal Inland Revenue Service, Central Bank of Nigeria and the Ministry of Finance. However, whether from oil or non-oil sources, revenue leakages are phenomenal. The annual reports of the Nigerian Extractive Industries Transparency Initiative illustrate this gaping hole. For instance, it said in its report in October 2018 that $22.06 billion and N481.75 billion had yet to be remitted to the Federation Account by the NNPC and others in the oil and gas sector by 2015.
Since 1993, the Production Sharing Contract has not been reviewed due to deliberate negligence. Since 1985, one oil company has not paid $135.8 million in royalties owed the country. The acting Chairman of RMAFC, Shettima Abba-Gana, said in February that the “inability of the government to review the PSCs for 11 years has led to the loss of $60 billion and when I mean loss, it means it has been going to personal pockets.” This is a most notorious leakage, which no responsible government will sweep under the carpet.
Faced with economic headwinds, the Federal Government introduced stamp duty levy on bank transactions. The N35.2 billion this reportedly generated in 2016 has not been remitted to the Federation Account. The total generated from this stream of revenue is mired in controversy. A report claimed it had hit N20 trillion. As of November 2017, banks held on to N7 trillion they had collected, according to a petition by the School of Banking Honours. But surprisingly, the managing directors of the affected banks shunned a House of Representatives ad hoc committee summons in May during an inquest to clear the mess.
Given its broad mandate, it is obvious the RMAFC has not lived up to expectations. Its duty has always been viewed from the strictures of fashioning a formula for revenue sharing among federal, state and local governments and its periodic review, monitoring of accruals, disbursement of revenue and fixing of public office holders remuneration. But the critical issue of advising the three tiers of government – especially states and local governments – on fiscal efficiency and methods by which their revenues could be increased seems not to have had the expected attention.
It is for this reason that the states’ performance in internal revenue generation is viewed as abysmal, save Lagos State. For instance, it generated N382.1 billion in 2018, while some states generate as little as N2.5 billion annually, an amount not enough to pay workers’ salaries in just one month. These categories of states, therefore, depend on the monthly allocation from the Federation Accounts Allocation Committee to survive.
Experts say if the solid minerals are exploited, they are capable of turning the economy around with an accompanying liberalisation of the sector by the Federal Government. Therefore, the RMAFC should guide the states to create an enabling environment for the exploitation of solid minerals. The private sector must be the key agent in this role. Ironically, the country’s poorest region, the North, is more abundant in minerals and has vast agricultural potential. In the South, cocoa in the South-West and palm oil in the South-East and the South-South are also huge goldmines; but have been neglected since Nigeria became an oil-dependent economy.
Nigeria earned N577.6 billion from non-oil exports in the first quarter of this year, according to the National Bureau of Statistics. But this is far below the potential of this sector. This is evident in the cashew nuts for export valued at $300 million in container trucks that queued to enter the ports for three months early this year, because of congestion; bad road network; non-use of scanners in clearing goods and other graft-driven obstacles.
This negligence should be reversed for the economy to diversify, create wealth and jobs. Australia is a typical example of a nation whose economy is largely sustained by mining. According to The Guardian of London, Australia’s mining exports will hit $278 billion this financial year. It is rich in iron ore, gold, diamond, bauxite, zinc and uranium, among others. South Africa made $37 billion from minerals in 2010, just as Malaysia generated $18.1 billion from palm oil and palm produce in 2017.
On RMAFC’s watch, part of government’s revenue in the past was collected by public and private entities and diverted to private pockets; some oil royalties are not paid, while the NNPC and International Oil Companies are so powerful that the commission cannot supervise their revenue accruals in line with its statutory powers. The remittance of N5 billion to the Federation Account by the Joint Admissions and Matriculation Board in 2017, under Ishaq Oloyede as Registrar, for instance, highlighted the revenue leakages there since its inception in 1978. Regrettably, a Federal Executive Council directive to the Ministry of Finance to probe the board’s past chief executives, given the paltry N50.7 million total they paid to government coffers between 2010 and 2016, has not been carried out. Mbam should ensure that this and other related institutions are investigated.
