Tackling Diversions By Revenue-Generating Agencies
he situation at the Department of Petroleum Resources (DPR), as reflected in its recent presentation to the Senate’s Joint Committee on Finance and Planning, represents the corruption, mismanagement and ineptitude in virtually all federal revenuegenerating agencies. The DPR, one of the agencies that have failed to remit good money to the Federation Account as expected, was queried by the Senate for sending a meagre N44.5 billion into the Consolidated Revenue Fund out of the N2.4 trillion it generated in 2019. The situation at the DPR is mind-boggling.
The agency’s Head of Planning, Mr. Johnson Ajewole, who stood in for his DG, Sarki Auwalu, during the enquiry at the Senate, confirmed the frightening gap between what was realised and what they remitted. The DPR management deducted N88 billion from the N2.4 trillion generated last year as 4 per cent approved collection fee. A monstrous N88 billion as cost of collection in one year? I wonder who approved this.
The DPR could not even convincingly account for the remaining unremitted collections, as it simply said overhead and operational costs swallowed the remaining money, without specific figures tied to them. We are talking about over N2 trillion balance here; that’s about 20 per cent of Nigeria’s budget 2020. The Head of Finance and Accounts of the DPR, Mrs. Lilian Ufondu confirmed that the agency had already collected N1.13 trillion in the first eight months of this year for the federal government and it is projecting N3.4 trillion as revenue for 2021. The bulk of these are usually diverted.
Also recently, a N7 billion under-remittance by the National Agency for Food, Drug Administration and Control (NAFDAC) was confirmed. The agency collected the revenue and claimed it was spent on inspection of factories. Over N7 billion spent on inspection! The Chairman of the House Committee on Finance, James Faleke scolded NAFDAC: “In the past few weeks, we have been talking about Chinese loans when the money is there in the system. We have the money in Nigeria but we are not doing the needful. We are not remitting what we are supposed to remit. The private sector will not remit the taxes and you, government agencies, being paid salaries, will not remit. Where will the government get money to fund the capital projects when we have deficit budget every year.”
At the Securities and Exchange Commission, N10.3 billion is spent annually on the salaries of about 600 staff. That’s an average of N15.7 million per person. SEC is one of the most lucrative places to work in Nigeria. Revenue of N8.36 billion generated in 2019 could not even cover its salaries. So, SEC hardly remits anything to the Consolidated Revenue Fund Account. That was why it projected a revenue of N8.3 billion in 2021 while its expenditure was put at N14.4 billion.
At the Nigeria Security and Civil Defence Corps (NSCDC), good money is made from sold confiscated items and executive services rendered by its operatives. This money is never remitted to the Federation Account.
The Nigeria Customs Service (NCS) is the biggest culprit when it comes to diversion and wastage of revenue. Last year, it deducted over N300 billion from revenue collected, under all manner of approvals – seven per cent cost of collection and another two per cent cost of collecting VAT. Customs expenditure in its approved 2020 budget is frightening. Personnel cost will gulp N98.61 billion while overhead cost will guzzle N15.95 billion while it voted N123.59 billion for capital cost. This year, the Nigeria Customs will consume N238 billion of the revenue it would collect for the FG.
I have persistently stated that this country has no business taking loans to fund its budget if the revenue-generating MDAs are well managed. With a good government, the corruption, mismanagement and ineptitude will be tamed, and these agencies will provide enough funds for our budgets.
The other day, I heard the Speaker of the House of Representatives, Femi Gbajabiamila raising the alarm over the continuous diversion of revenue by government agencies. He vowed that the House of Representatives would stop MDAs from diverting revenues they are supposed to remit to the Federation Account. Gbajabiamila also specified that the failings of the revenue-generating agencies pushed the federal government into seeking loans to finance infrastructural development.
He said: “We need to impose deep cuts in the cost of governance and improve internal revenue generation and collection so that we can free up resources that can then be deployed to fund policy initiatives that will enhance the lives of our people. The revenue-generating agencies of the Federal Government of Nigeria have a vital role to play in this regard. There has thus far been a consistent failure to adhere to the revenue remittance agreements to which many of these agencies have committed.
“We have credible reports that these desperately needed funds have in many cases, been diverted to finance unnecessary trivialities. At the same time, the Government is left scrambling for alternative sources to fund priority projects. We cannot afford this dynamic, and we will not tolerate it anymore. The legislature remains the keeper of the public purse, with broad constitutional authority to act on behalf of the Nigerian people, to ensure that our collective resources are efficiently administered in service of the public good. Let no one be in doubt, the House of Representatives will not hesitate to act on our constitutional authority notwithstanding whatever objections may arise.”
Good that Gbajabiamila recognises that corruption in almost all the MDAs is depriving Nigeria huge revenue. It is not enough to just query these MDAs. The Speaker and his colleagues in the National Assembly should take pragmatic action to end this mess. They should back their tough talks with action, by putting pressure on the Executive to do the needful. A serious Executive, genuinely fighting corruption, would have ended poor remittance of revenue in weeks. Over five years after President Buhari commenced his so-called war against corruption, the story is the same in virtually all the MDAs. Yes, corruption in MDAs predates the Buhari government, but he told us that it won’t be business as usual under him. It was a sham.
Nigerians are agitated by the rising debt profile of the country, with many raising concerns over external loan agreements between Nigeria, global bodies and countries, especially China. Clearly, Nigeria does not need to seek external borrowings, especially from China, if the MDAs fully and honestly remit revenues collected on behalf of the federal government.
State governors should also show interest in the activities of federal revenue generating agencies because they are co-owners. These agencies belong to all the three tiers of government; not just the federal government. This is the truth. Governors must insist on full remittance of revenue collected to the Federation Account. All manner of crooked expenditure must also end.