Economic Confidential, January 2008

COVER

Tracking the Revenue Allocations

By Victor Segun Olomola

The recent edition of Economic Confidential, a monthly magazine that has consistently published the summary of statutory allocations to federal, states, local government and two revenue agencies, reveals the total amount of revenue that went to each of them between January to December 2007.

The publication discloses that the 3 tiers of government and special revenue agencies (Customs and FIRS) shared a total sum of N3.8trillion over the 12months in 2007. It adds that the figure is only the net from the statutory and VAT disbursements after all the official deductions. The figure does not include other allocations that were occasionally released from the Excess Crude Account which could have amounted to additional 1/3 of the total figure. The highest recipients are the Niger Delta states of Rivers N142bn, Akwa Ibom N107bn, Delta N87bn and Bayelsa N69bn.  The highest recipients from non-oil producing are Lagos N69bn, Kano N67bn and Katsina N50bn. The least recipients with less than N30bn in the whole 2007 are Gombe N26bn, NasarawaN26bn, Ebonyi N27bn, and Ekiti N29bn. The Federal Government received N1.3trillion, while its agencies: Nigeria Customs Service and Federal Inland Revenue Service received N15bn and N22.9bn respectively for their costs of collections.

The basic indices for the differentials in allocations, apart from the derivation principles for oil producing states, are on such factors as population, landmass, water terrain, road networks, hospital beds, school enrolments etc. With the huge amounts allocated how were they utilized to impact positively on developmental projects and worthy programmes for their people.

Surprisingly as cheering as the huge statistics released by the Economic Confidential may sound, the states that are supposed to be living in heavenly paradise on earth are those bedeviled with horror and terror of militants groups. The jobless militants who should ask their governments on how they expend their statutory allocations, rather deny their people peace to live, take foreigners as hostages, while they kidnap wards of influential personalities in their localities for ransoms.

Today what is known as the Federation Account is more of Father Christmas’ pot of porridge where the tiers of government just share the revenue accruing therein without any effort in whatever way in the extraction. With the huge amount of revenue allocation to the tiers of government every month from that Account, the citizens seem not to bother in tracking how the enormous financial resources are collected and utilized for their benefits.

While unveiling an Economic Road Map of the Federal Government, the Minister of finance, Dr. Shamsudeen Usman disclosed that the administration will take the President’s 7-point Agenda and turn it into a specific, measurable, actionable and time bound programme, which will be sold to all the key stakeholders in the Nigerian Project with a view for greater participation of the citizens on government finances and projects implementation.

The Minister also added that the government would soon be setting a new direction towards true fiscal federalism by encouraging the States to initiate and pass their own Fiscal Responsibility laws and set up their debt management offices. These would be supported through a central and standard IT platform for effective and timely linkage with all the relevant agencies, especially to update tiers of government on accurate figures of disbursements and loan deductions from their statutory allocations.

Until lately governors were not even bothered and concerned on how to ensure they receive accurate figures of their dues. Presently in unequivocal terms, governors have insisted on full disclosure on what comes to the Federation Account and the disbursement of fund from Excess Crude.

In one of their meeting recently, the state governors warned that they would no longer tolerate past sharp practices of deduction without their knowledge and endorsement and demanded for openness in the management of the excess crude revenue. They even set up a Committee to collaborate with the federal government agencies so as to determine the actual amount that accrued to the country as excess crude revenue.

According to the Chairman of the Governors’ Forum who is also Governor of Kwara State, Dr. Bukola Saraki, states have caution the federal government from making any illegal deduction from their account to fund any of its initiated projects around the states. According to him, the governors are also demanding to know how much comes into the excess crude revenue and the actual amount that is accruable to them. This, he noted, has been the case in the past where the states and the local governments were oblivious of the actual amount due to them.

Since the federal government is not likely to interfere with other tiers of government on their revenues, going by the posture of most of the governors as regards their allocation, there is an urgent need for the citizens to get involved on how the funds are utilized.

How easy it is to closely monitor the accruals and disbursement of revenue in Nigeria? Recently at a seminar organized by Civil Society Legislative Advocacy Centre, CISLAC on extractive industry, the participants discovered that Nigerians including the government do not know how much oil the country produces or exports as the metering systems in use are outdated and not standardized which often cause confusion. They also observed that that oil revenue regulatory and monitoring agencies do not fully understand and lack the technical and fiduciary capacity to ensure that Nigeria gets the full revenue due to it. It is alarming that experts have also pointed out that the country depends on oil companies for records in determining how much oil and gas is produced and exported.

The struggle for openness and transparency in government is actually not that of the governments alone but that of the citizens who must constantly enquire on how much is received and expended on projects. It is only by massive campaign that the government would be held accountable.

Like it has always been advocated the Federal Government should declare a state of emergency on the incapacity of its agencies charged with regulating and monitoring the extractive industry. The agencies should be empowered to closely monitor revenues from the sector to ensure that Nigeria gets all the revenue due to it as provided by law.

For so long the wealth from natural resources were squandered to enrich the few, while abject poverty permeate the air by corruption and mismanagement. Nigeria has enormous resources that it does not have to borrow money from multilateral institutions once it promotes fiscal transparency and good budget practices. It therefore becomes necessary for the citizens as the true owners of their country’s wealth to force the political leaders towards transparency and spending that responds to their needs.

Unfortunately because of the capital-intensive nature of oil industries, the sector does not create significant employment opportunity just as the country becomes over reliant on the revenues from those resources, While the governments at all tiers are not aggressively pursuing diversification to productive sectors where they can easily create enough jobs and generate additional internal revenue, oil revenue is subject to sudden downward price shocks and is nonrenewable as it can dry up. The fate of a nation at that a situation could better be imagined.

The right steps towards tracking the monthly allocations from the Federation Account is for the civil society groups and citizens to demand that such revenues are channeled to long-term investments and monitor closely how the funds are received and spent. In fact the civil society groups and the media can disseminate budget information and setting priorities. They can also influence revenue policies, as pressure groups, by providing projections and highlighting best practices. Their major responsibility is to track revenues and expenditures and informed the electorates on their findings. The relevant bodies may be forced to publish the receipts, disbursements and executions of the accrued funds. Probably these may instill discipline and probity on revenue collections and expenditure.