OrderPaperToday – The yeoman’s job performed by the Fiscal Responsibility Commission (FRC) in helping to shore up Nigeria’s troubled and troubling revenue profile came to light during the week as stakeholders came to the conclusion that the agency needs to be strengthened to deliver more.
This was at the public hearing on the ‘bill for an act to repeal and re-enact the Fiscal Responsibility Act’ held by the Senate Committee on Finance on Tuesday 6th July 2021, at the National Assembly Complex.
Present at the public hearing were several civil society organisations, ministries, departments and agencies of government, among others.
Setting the tone…
The Senate President, Dr. Ahmad Lawan, who was represented by the Chief Whip of the Senate, Senator Orji Uzor Kalu, in a speech to declare the hearing open, acknowledged the dire straits of the country in terms of revenue earnings.
He however remarked that “in the face of these realities related to increased requirement for prudent management of resources, faced with dwindling revenue and determination to meet the yearnings and aspirations of the people, the Fiscal Responsibility Commission Bill seeks to strengthen the Commission as a corporate body”.
This view was further re-echoed by the sponsor of the bill, Senator Aishatu Dahiru who stated that “what this bill seeks to do basically is one, to provide for prudent management of national resources, two to ensure economic stability, three to promote transparency and accountability in Nigeria’s fiscal operations and four establish a fiscal responsibility commission.”
If there was any doubt about the resolve of the Senate to consolidate and expand the powers of the Fiscal Responsibility Commission to ensure proper remittances to the Consolidated Revenue Fund (CRF) were quickly dispelled when the Chairman of the Senate Committee on Finance, Sen. Solomon Adeola, remarked that the Commission has been a great pillar of support in its work.
He stated that “the Senate Committee on Finance is currently engaging with all Ministries, Departments and Agencies to ensure Fiscal responsibility [and even though] many MDAs are now paying remittances in millions,” adding: “Beyond these remittances there is need for legislation to plug the loopholes and ensure punitive measures for institutions which do not [comply].”
The Lagos senator went further to explain: “The FRC Bill seeks judicious expenditure [and] Fiscal responsibility within the Medium Term Expenditure Framework (MTEF). The Fiscal Responsibility Commission, an agency of the Federal government created via an Act of the National Assembly (FRC Act 2007) has the mandate to ensure proper accountability in the MTEF and ensure that MDAs remit the statutory percentage of their operating surplus to the Consolidated Revenue Fund (CRF).
“The FRC Act however did not empower the Commission as its enforcer to impose sanctions or carry out prosecutorial actions on defaulters. This inherent loophole has always hampered the effectiveness of the Commission, with rogue MDAs routinely defaulting on statutory remittances to the CRF.
“In spite of these weaknesses in its establishment Act, the Fiscal Responsibility Commission has continued to mop up operating surplus from MDAs as alternative government revenue up to the tune of N2 trillion.”
The Senate Committee Chairman on Finance further stated that “we also are looking at how we can further strengthen the Fiscal Responsibility Commission so that we can reposition them and give them the teeth to bite so that many agencies of the government can be prim and proper, it cannot be businesses as usual, we are supporting them”.
Subtle rebuke to naysayers…
Responding to a submission by the Chairman, Revenue Mobilization, Allocation and Fiscal Commission (RMAFC), Mr. Elias Mbam, that a 2011 government white paper on the rationalization of Ministries, Departments and Agencies (MDAs) raised the need to halt consideration of the bill, the Committee Chairman stressed that “the ongoing legislative process of repealing and re-enacting the Fiscal Responsibility Commission(FRC) enabling Act in order to strengthen the Commission is long overdue and cannot be reversed.”
Sensing how unpopular the RMAFC submission was, Sen. Adeola advised Mr. Mbam to “join us in this fight to reposition the Fiscal responsibility Act and the Commission,” a call which elicited spontaneous applause from stakeholders at the hearing.
In his presentation, Chairman of the FRC, Mr. Victor Muruako, revealed that “ over 12 years of operation of Fiscal Responsibility Commission Government has not invested more than N6 billion [in the Commission]; look at the quantum recoveries that are emanating from the Commission, in one particular scoop this Commission recovered over N26.6 billion from one of the Federal government agencies.”
The Chairman ended his speech by reiterating that “ we believe that this bill will not only improve our fiscal life as a nation but will also improve the revenue which the country is in dire need of.”
What stakeholders recommended…
Submissions by stakeholders focused on several aspects of interventions to strenthen the Fiscal Responsibility Commission. This range from autonomous funding for the Commission, to granting of investigative and prosecutorial powers, as well as reforms of the budgetary system, amongst others.
Centre for Social Justice (CSJ): The Centre harped on the need to enhance and increase the powers, funding and functions of the Fiscal Responsibility Commission. Other submissions by the CSJ includes a categorization of MDAs be undertaken to guide the percentage of remittances due to the CRF on the basis of such profiling. It also spoke on bench marking tax relief and expenditure, and increased transparency and accountability in debt procurement by the federal government.
Nigeria Extractive Industry Transparency Initiative (NEITI): Executive Secretary of NEITI, Dr. Orji Ogbonnaya Orji, who was on hand at the public hearing to present NEITI’s position on the bill, noted that Fiscal Responsibility Act is one of the most important interventions in the history of Nigeria’s public finance reforms, calling the ongoing effort at repositioning and strengthening the commission through the repealing and re-enactment of its establishment Act as timely and vital to the economic well-being of Nigeria and Nigerians. “There’s no doubt whatsoever that attaining a culture of accountability in the larger economy will make it easier to achieve accountability in the extractive industry which generates the bulk of Nigeria’s economic resources” he remarked. NEITI’s submission also argued for clear, dissuasive and enforceable sanctions, tenure security, strengthened enforcement powers and adequate resources for the FRC to perform its functions.
Paradigm Leadership Support Initiative (PLSI): PLSI submission recommended that “the Committee consider entry points to facilitate/incentivize domestication of the new Fiscal responsibility Act as soon as it is signed into law to enable fiscal prudence, transparency and accountability at sub-national level.” Furthermore, the NGO called for the Fiscal Responsibility Commission be empowered to apply punitive sanctions as provided for in section 49 (1-15) of the proposed bill and must also address Heads of Scheduled Corporations who fail to generate revenue to government after a number of years of being in existence.
Almagamated Union of Public Corporations, Civil Service Technical and Recreational Services Employees (AUPCTRE): The AUPCTRE memoranda read in part: “We have carefully studied the well articulated section 59 of the Bill for which this memo is submitted and are happy to observe that the Bill if passed and signed into law would greatly enhance fiscal governance for rapid economic growth in Nigeria. We are eternally grateful to the sponsor of this bill in particular the National Assembly. A careful review of the FRA Act 2007 and the Bill before you presents huge hope for our economy even in the face of the present global economic volatility as a result of the Covid-19 pandemic. The sponsor has provided the legislative potion required to take fiscal governance to the next level within a short time if passed, signed into law and enforced efficiently.” The Union concluded by restating its support for the 5% of operating surplus to be paid to the Commission monthly as cost of collection in order to give real effect to the independence of the Commission.
The Economic and Financial Crimes Commission (EFCC): The EFCC argued that giving the Fiscal Responsibility Commission the power to investigate and persecute economic financial offences “encroaches on the powers and functions of the EFCC, ICPC and other [anti]corruption agencies”. The memoranda recommended that the commission be restricted to inspection and preliminary investigations after which they can turn in such reports to extant anti-corruption agencies to carry out further investigation and persecution. However, in a swift response, Senator Adeola said the EFCC and other anti-corruption agencies have a lot of pending cases they are yet to attend to, “we are not against the idea of EFCC, ICPC working on all of this but we are looking at the time frame, we are looking at on-the-spot investigation that once you give an information we can attack it immediately we can nip it in the bud.”
Office of Auditor General of the Federation: The Auditor General of the Federation who was represented by his Legal adviser submitted that certain aspects of the amendment Bill as regards the powers and functions of the FRC in carrying out audit functions are tantamount to usurping the powers of the Auditor General of the Federation who is constitutionally mandated to carry out audit functions. In his reply however Senator Adeola noted that the Office of the Auditor General is severely understaffed and underfunded and as such do not need additional responsibilities. The Lawmaker added that the last published report from the Auditor General Office was in 2017, insisting that the Fiscal Responsibility Commission will only serve to aid transparency cum accountability in Nigeria’s Fiscal space and not necessarily taking over the powers of the Auditor General.
What is Next…
With the conclusion of the public hearing, the Senate Committee on Finance is expected to collate, aggregate and harmonise all suggestions and amendments to the Bill, present its report on the floor of the Senate and then a motion is moved for the bill to be read for a third time.
Analysts are of the opinion that repositioning and strengthening the Fiscal Responsibility Commission through this bill is a step in the right direction of ensuring fiscal transparency and accountability amongst MDAs while also helping to boost government revenue and resources.
The Fiscal Responsibility Commission, an agency of the Federal government brought alive courtesy of an Act of the National Assembly is expected to curb frivolous expenditure and plug revenue loopholes in MDAs astronomically once this bill is passed and signed into Law.