Barring any last-minute changes, the Senate is set to advise the Federal Ministry of Finance, Budget and National Planning to exclude 60 federal agencies from getting allocation from the national budget, starting from next year.
The agencies include Federal Inland Revenue Service, Nigeria Customs Service, Security and Exchange Commission, National Broadcasting Commission and Oil and Gas Free Trade Zone Commission.
The move, Sunday PUNCH gathered, was due to the conviction that the agencies generate enough revenue to fund their overheads and payment of salaries, and would therefore not need to be funded from the national budget.
Investigations by one of our correspondents on Friday indicated that the Joint Committee on Finance and National Planning had concluded plans to include the proposal in its report which would be submitted to the Senate at plenary on resumption on September 15.
The joint panel on Tuesday concluded a five-day interactive session with the various Federal Government revenue generating agencies based on the 2021-2023 Medium Term Expenditure and Fiscal Strategy Paper.
The panel, in most of its engagements with the heads of the agencies, expressed disappointment with their poor revenue profile, huge wage bill and poor remittances to the Consolidated Revenue Fund account.
The Chairman of the joint committee, Senator Solomon Adeola, told the heads of the agencies after the session that many of them had no business receiving allocation from the federation account.
He said the Senate would work out an arrangement to amend the Fiscal Responsibility Act that would stop the agencies from spending the money they generate as they pleased.
He said some of the agencies like the Oil and Gas Free Trade Zone Commission, had willingly pulled out of being funded from the federal budget, meaning they would no longer collect allocation for salaries and overhead from the federation account.
A member of the joint committee told our correspondent on condition of anonymity on Friday that the panel had identified 60 agencies that would henceforth be funding the national budget and be responsible for their overheads and salaries of their workers.
He said the affected revenue generating agencies cut across the agriculture, aviation, communications, education, energy, environment, health, maritime, media and science and technology sectors of the economy.
He said, “We want to put an end to indolence and wastage of revenue. Many of the agencies have more than enough to remain on their own but they are still being funded from the national budget. We are doing this in the interest of Nigerians because we are tired of passing budgets that are not implementable due to deficit.”
Adeola, in his reaction, did not confirm the exact number of agencies that would exit the national budget but said some had willingly agreed to pull out of being funded from the budget and that their list had been compiled.
He said apart from those who would be placed on zero allocation, some would henceforth bear their overheads and cost of executing capital projects.
He stated, “We have invited all revenue generating agencies and ministries that are directly affected to ask questions bothering on the document before us and to deliberate on how we can improve the revenue of the Federal Government.
“From what we have seen and witnessed, it goes to show that we have a lot of work to do in the areas of ensuring that all government revenues get to the coffers of the government. Frivolous expenditure being used to take away the revenue will be blocked.
“This is just the beginning of good things to come. Once this has commenced, we would have a lot of savings and seriousness on the part of the government agencies.”
He said they were trying to put together the cost of collection to be given to all the revenue generating agencies so the government could have enough revenue at its disposal to fund the budget.
“With the repositioning that we have started, we will ensure that all revenue generating agencies play their critical roles in supporting government’s programmes and policies,” he added.
The Director-General, Bureau of Public Enterprises, Alex Okoh, had told the Senate Committee on Privatisation in October 2019 that 600 Federal Government-owned enterprises gulped not less than $3bn yearly with little or no returns from them into the federation account.
During the just concluded Senate session on MTEF/FSP, the Nigerian National Petroleum Corporation, the FIRS and Nigerian Customs Service projected to generate N43.5tn as revenue for the country between 2021 and 2023.
A breakdown of the N43.5tn projected revenue shows that FIRS planned to generate N19.1tn; NNPC, N19.5tn; and NCS, N4.927tn in the next three years.
Meanwhile, a member of the committee, Senator Abdulfatai Buhari, said the Senate would make the affected agencies see reasons why they should no longer be funded from the budget even as he expressed confidence that they would not protest against the move.
Buhari, who is also the Chairman, Senate Committee on Land Transport, said the action was being taken in the best interest of the country and that it was not a witch-hunt.
He added, “We know that when a change is coming, there would be some resistance but the most important thing is that the country is greater than anybody. What we are saying is that if we have a means to finance our budget we will go for it. We will let them see reasons why they should be removed from the budget.
“We know that the country is allocating billions of naira every year to buoyant agencies that don’t need the money. They are agencies that can conveniently finance themselves. There are lots of revelations during the five days that we held our interactions with the agencies.
“Many of them are generating as much as N20bn every year, remitting what they like, and they are still collecting money from the federation account to pay salaries and to defray their overhead cost. Apart from removing them from the budget, we will also make sure that they remit the appropriate revenue to the federation account.”
He said apart from the NCS and the FIRS that declare huge revenues, many other revenue generating agencies only remitted pittance from their collection.
He added, “As a serving senator, I was shocked when I saw the huge sums of money that many of these agencies are making, how much they are spending on frivolous expenditure and what they remit to the national purse. It is highly ridiculous.’’
MAN, NACCIMA, economists disagree, say proposal dangerous
Responding to the plan, the Manufacturers Association of Nigeria described the proposal as a dangerous move that would not only reduce the already low Foreign Direct Investments into the country but also make regulatory agencies to overburden businesses for funds.
MAN’s Acting Director-General, Ambrose Oruche, told one of our correspondents on Friday, “It is a dangerous move. The business community will suffer for it. The government should not try it because the businesses pay taxes for running the government. If this proposal is implemented, I don’t see investors staying in this economy.’’
While noting that such would impair the gains of the Ease of Doing Business policy, he added, “It then means that the agencies will be all out to make money from the business community since they are the ones sourcing for their revenue. Businesses will shut down and unemployment will rise.”
The Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture also described the plan as a wrong move, saying the Senate should rather engage the agencies in useful dialogue to achieve the desired goal.
The Director-General NACCIMA, Ambassador Ayo Olukanni, said, “The Senate should not go this way. Such move may in fact sound their death knell. It should rather look for more innovative ways to encourage these agencies to make them more productive and generate revenue.
“If properly funded, they (the agencies) can be challenged to generate revenue, using various innovative business models in collaboration with the private sector with effective supervision.”
Also, a Professor of Economics at the Olabisi Onabanjo University, Sheriffdeen Tella, said he did not agree with the Senate proposal because it would make agencies independent of the federation account and their revenue and expenditure would be difficult to monitor.
He said, “All the money that is generated ought to go into the federation account. In that case, there is supposed to be budgetary allocations for all the agencies. They must have their own budget and they must not spend beyond the money they budgeted for.
“You cannot ask them not to be part of the budgetary system. This is so that we can track how much goes in and goes out. If you say they should spend as they generate, it means they are going to be independent of the federation account which is not good enough.”
According to an economist, Dr Ayo Teriba, if all revenues go into the government’s purse before the money is shared, it curtails excesses and leakages, noting that allowing agencies to spend their revenue and only remit a certain portion would be an aberration. ‘‘This is one of the reasons why Nigeria is poor,” he added.
Teriba, who is the Chief Executive Officer, Economic Associates, stated, “The country has moved towards a Treasury Single Account. The question to ask is; are the federal agencies the Senate is referring to part of the TSA or not? They are.
“Two, what is beneficial – to have a central budgeting system for all the agencies or to take some of them out to run individual budgeting system? It undermines accountability and I don’t know any other country in the world where any revenue generating agency has the autonomy to spend the revenue it collects.’’
LCCI, economist back move
However, the Director-General, Lagos Chamber of Commerce and Industry, Dr Muda Yusuf, backed the plan, but cautioned that there should be proper monitoring to ensure accountability and prevent reckless spending.
He added, “There has to be a proper assessment to know the ones that have the capacity to generate revenue and fund themselves. So, if they have enough capacity to generate funds, why not, and the cost they incur must be realistic because some of them have bloated cost of operations.
“Some of them are really robust in terms of the revenue they generate, but we must carry out proper monitoring of what they generate.”
Also, a Professor of Economics at the Obafemi Awolowo University, Ile-Ife, Osun State, Abayomi Adebayo, welcomed the development, saying it was long overdue.
“I think we are thinking right. Under the pretence that the income generated in those agencies are low, they keep using the revenues to enrich themselves as we have seen in many investigations carried out, whereby you see some of their directors strikingly rich while the government is getting poorer.
He said, “For instance, look at Customs, how can they be collecting subventions from the government considering how much they generate?”
Addressing the concern in some quarters that the affected agencies might be pressurised to generate funds by way of taxing the people more, Adebayo said, “It is nothing to worry about. There are principles that will govern any agency to regulate taxation. But I think anybody who can’t run such agencies should please resign to give room for people who can run them profitably.”