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Unremitted Funds: Borrowings Were Worsened By Buhari’s Appointees

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Unremitted Funds: Borrowings Were Worsened By Buhari’s Appointees
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Unremitted Funds: Borrowings Were Worsened By Buhari’s Appointees

Tunde Ajaja examines how the refusal of Ministries, Departments and Agencies to remit into the Treasury Single Account the revenues they generate makes a mockery of this regime’s fight against corruption.

The President, Major General Muhammadu Buhari (retd.), alluded to an obvious fact recently when he said the 2022 budget estimate would be the last full budget he would implement. His eight years tenure has about 19 months left.

He spoke at the National Assembly while presenting the budget.

Clearly, the President inherited many lamentable budgeting traditions; from wasteful projections to yearly repetition of items, unrealistic aspirations and incredibly low revenue, necessitating unabashed borrowing and pushing the country’s debt service to revenue ratio to about 73 per cent. Many experts have agreed this is disturbing.

One of the unfavourable traditions the Buhari regime inherited – and might avoidably pass on to its successor – is the mocking manner Ministries, Departments and Agencies of government refuse to remit to the federation account the revenues they collect on behalf of the government.

In fact, the Director, Treasury Single Account, Sylva Abor, said in 2019 that some MDAs still operated illegal accounts outside the TSA. He noted that few MDAs were given exemptions on certain grounds, but many others were flouting the TSA policy.

The National Assembly has warned MDAs to desist from the practice, but the menace, perpetrated brazenly by some MDAs, especially those headed by those considered as ‘powerful’, has yet to abate. Some analysts would term it economic sabotage while some believe it is criminal. These views are understandable, given how it causes a significant shortfall in revenue.

Already, the 2022 budget estimate has over N6.2tn deficit that would have to be borrowed. In previous years, government also borrowed to fund the budget. In the current financial year, about N4.28tn, representing about one-third of the N13.6tn budget, was sourced through debt financing. Yet, the MDAs still hold on to considerably huge revenue.

Unremitted Funds: Borrowings Were Worsened By Buhari’s Appointees

The country’s debt profile has become worrisome and there is a need to borrow. The Minister of Finance, Zainab Ahmed, highlighted this while giving the breakdown of the budget estimate.

Some persons would argue this could have been mitigated and the debt profile may not have reached over N35tn if the MDAs were remitting what they got.

In May, the Senate said between 2014 and 2020, calculations from the Fiscal Responsibility Commission showed that about 60 MDAs refused to remit about N3tn to the Consolidated Revenue Fund, contrary to the Constitution and the Fiscal Responsibility Act 2007.

Similarly, the Executive Chairman, FRC, Victor Murako, said in May that 32 MDAs, including the Federal Radio Corporation of Nigeria; Bank of Industry; Nigeria Immigration Service and National Drug Law Enforcement Agency refused to remit N1.2tn.

He noted, “Sadly, many MDAs still persist in defaulting and practically keeping money away from the Federal Government’s reach for funding its budgets.”

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Earlier in March, the Office of the Auditor-General of the Federation in its 2016 Audit report alleged that the Nigerian National Petroleum Corporation did not remit N4.076tn into the Federation Account from operational proceeds made between 2010 and 2016, a report the NNPC denied, saying the money went into pipeline repairs, domestic fuel supplies and security and management matters.

There were several frightening revelations in the 59 recommendations contained in the report of the Senate Committee on Public Accounts on the annual report of the AuGF on the accounts of the federation for the year ended December 31, 2015.

Unremitted Funds: Borrowings Were Worsened By Buhari’s Appointees

The extent of corruption and leakages in the system was disquieting, given how billions of government funds end up in private pockets, unchallenged.

The President of the African Development Bank, Dr Akinwumi Adesina, said on Monday at the opening of a two-day mid-term ministerial performance review retreat that “Nigeria’s challenge is revenue concentration.”

Sadly, one could safely conclude that Nigeria is wasteful, accustomed to spending its scarce resources as if there is no future to be concerned about.

It loses revenues in known ways and moves on as if it has excess and its ‘barn’ overflows nonstop.

Otherwise, it could be difficult to explain how the leadership or managers of the economy close their eyes to glaring leakages that shrink government’s revenue – and line the pockets of corrupt individuals, but would rather unashamedly go cap in hand to borrow from disciplined nations and organisations.

Realising the impact of unremitted funds on the current fiscal challenges, the President a few days ago gave his approval that a coalition of anti-graft agencies, which include the Economic and Financial Crimes Commission, the Independent Corrupt Practices and other Related Offences Commission, Nigeria Extractive Industries Transparency Initiative and the Nigerian Financial Intelligence Unit should recover about N2.65tn unremitted funds by 77 oil companies.

If the President could ‘dispatch’ four major anti-graft agencies to go after oil companies to recover unremitted funds, many people would wonder why he has yet to make examples – including sacking and prosecution – of his appointees who defy extant policies by holding on to government revenue.

Politicians are powerful, especially those in any ruling party, and this corrupt act by MDAs didn’t start with the Buhari regime.

But it becomes worrisome that such persistent abuse of office would continue under the President, who promised to fight corruption to a standstill. The MDAs, some of which shun invitations by the National Assembly, seem to be untouchable.

“Fighting corruption is extremely difficult. It’s so difficult, but I will keep on trying,” Buhari said recently in Owerri during his meeting with key stakeholders while on a visit to Imo State.

But, according to a seasoned economist and former Director-General, Lagos Chamber of Commerce and Industry, Dr Muda Yusuf, what is lacking is the political will to compel the MDAs to do the right thing. He said most of the MDAs that are culpable are usually headed by influential persons who could hardly be controlled.

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Yusuf, who is also the founder/CEO, Centre for the Promotion of Private Enterprise, said, “It boils down largely to the political will to compel them to remit what they are supposed to remit. Many of them are richer than the ministries that supervise them, and they live large correspondingly.

“Consistently, what we describe as independent revenue, which is supposed to be the revenues from the MDAs, has consistently fallen short of target, and they fall short significantly. I also suspect that because some of those who sit on those parastatals are very influential people, sometimes it makes it difficult to compel them to remit what they should remit.

“What is important in all of these is the political will to make sure they remit it. You would notice that for a long time, the National Assembly has consistently expressed frustration on the issue of oversight over some of these MDAs, particularly the big and influential ones. It has been quite difficult.”

Speaking to whether full compliance by the MDAs in their remittances would reduce government’s borrowing, he said, “I agree that if they all remit their revenues, our fiscal position will not be as bad as this, but all along what we hear year in, year out is the rhetoric that they should remit but at the end of the day, nothing happens. No consequences.”

The ex-DG of LCCI also spoke on the issue of wastage in government.

“If you add the unremitted funds to having addressed the high level of wastage in the system, we could have reduced our debt burden. If the MDAs were spending cost-effectively, if they were managing resources well, I’m sure the level of fiscal deficit will not be as high as this.

“And if the deficit is not high, the need to borrow will be much less. But year in, year out, there is huge recurrent expenditure; maintenance, travels and such things are examples and it is a big issue.”

Also, an economist, Prof Akpan Ekpo, said government borrowing could reduce if the MDAs transparently remitted their revenues.

He said they were supposed to remit the funds, prepare their budget and when approved they could get funds to fund the budget.

“But there are MDAs that generate revenue and they spend a lot before they give the government the balance”, Ekpo, who is also the chairman of the Foundation for Economic Research and Training, said.

“They should remit their revenue to the government and they would be given what they want. That is the way to increase revenue. Otherwise, this borrowing is getting too much,” he added.

Asked if full remittance by the MDAs could reduce government’s borrowing, the don said, “We don’t know but it will help because it is part of domestic resource mobilisation which we are encouraging. So, it will help if they do it genuinely.

He explained, “Some of the agencies are even richer than their parent ministries, and it doesn’t make sense. For example, NIMASA is richer than the Ministry of Transport and you saw in the last administration what we later read about the corruption in NIMASA at that time.

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“The MDAs should remit their revenue, prepare their budget and let it fall within the parent ministry. It will go through the normal budget process where they can defend their budget and get what they want when it is passed into law. The MDAs should be monitored. If they need money for capital expenditure, there is a process. The borrowing is getting too much.

“You would find that some of the heads of the agencies are even more powerful than the minister because they control a lot of resources. The MDAs should remit their budget, and maybe it will reduce the borrowing because we are told they are borrowing because they don’t have revenue. Let there be transparency.”

A professor of Political Economy and management expert, Pat Utomi, said the refusal of the MDAs to remit revenue into the designated account was criminal and that people found culpable ought to be prosecuted.

Unremitted Funds: Borrowings Were Worsened By Buhari’s Appointees

“How can you say you have TSA and some people refuse to remit revenue, running into trillions; it means they have violated your laws. You should send them to jail and not just remove them. They are liable for a criminal offence,” he said.

Utomi, however, suggested the adoption of specific tax uses, in which case tax revenue from a particular sector or activity is used to finance a certain activity that benefits the people.

He stated, “I may not completely agree with the TSA but it exists and it’s a law. I think we lack creativity and innovation in finance. We developed a tax-and-spend culture that doesn’t look at the goal of public expenditure and the sourcing for the expenditure.
“I am a huge fan of what is called specific use taxes, which directs revenue to specific activities and ensures that they maintain that activity. For example, in the United States, the gasoline tax – which you pay anytime you buy petrol in the United States – goes directly to highway maintenance.

“If you have a specific use tax like that in Nigeria, instead of waiting for people to demonstrate that roads are bad, you take representatives of the drivers, Nigerian Society of Engineers, take one or two consultants from the Big Four accounting firms and they become part of the monitoring team for gasoline taxes, which goes directly into maintaining highways.”

Utomi explained that such a model would ensure transparency and cut off people who hoodwink the government into awarding unnecessary contracts for their selfish interest.
He added, “That would bring some discipline into public administration. What we have is just a funny thing; criminally-minded public servants who award useless contracts that become part of our debt profile and we are borrowing from somewhere to pay back somewhere else.”

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Petrol May Sell Above ₦340/Litre, Marketers Plan Imports Amidst Forex Crisis

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Petrol May Sell Above ₦340/Litre, Marketers Plan Imports Amidst Forex Crisis
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Petrol May Sell Above ₦340/Litre, Marketers Plan Imports Amidst Forex Crisis

The pump price of Premium Motor Spirit, popularly called petrol, may go higher than the projected N340/litre in February 2022 when the Federal Government removes its subsidy on the commodity, oil marketers said on Tuesday.

Also, it was gathered that both independent and major oil marketers were perfecting plans to resume PMS imports once the government halts the subsidy regime.

They, however, expressed worry over the fluctuation in foreign exchange rates and how this would impact on petrol price next year.

For about four years, the Nigerian National Petroleum Company Limited has been the sole importer of petrol into Nigeria. Marketers stopped importing the commodity due to their inability to effectively access the United States dollar for imports.

Last week, the Group Managing Director of NNPC, Mele Kyari, announced at a World Bank event in Abuja that petrol would sell for between N320 and N340 per litre from February 2022 by which time the Federal Government have removed the subsidy.

He explained that Nigeria would be out of the subsidy regime in the first quarter of next year, stressing that subsidy would have been eliminated this year but was stalled due to certain conditions.

The current pump price of petrol at filing stations is between N162 and N165/litre, although the product is mostly sold at the upper N165/litre rate due to recent challenges in the downstream oil sector.

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But marketers told our correspondent on Tuesday that the cost of petrol would be higher than the projected N320 – N340/litres if there was no improvement in the foreign exchange rate.

Dealers under the aegis of Independent Petroleum Marketers Association of Nigeria and Petroleum Products Retail Outlets owners Association of Nigeria stated that though they were set to import petrol, the cost of the commodity would be high in February.

IPMAN and PETROAN members own bulk of the filling stations across the country and currently make purchases from depots before selling to final consumers at their various retail outlets.

“Yes, if there is no subsidy, some marketers can import, but the only thing is that it will be costly. The price will be higher than the projected cost because of the exchange rate,” the National Vice President, IPMAN, Abubakar Maigandi, stated.

He added, “The challenge of accessing forex will definitely affect imports because over 90 per cent of petrol that will be consumed across the country will depend on importation. Also this is because the refineries are not functioning.”

The National Public Relations Officer, IPMAN, Chief Ukadike Chinedu, also stated that the foreign exchange rate would determine the cost of petrol from next year after subsidy removal.

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He said, “If the Federal Government says there is no going back on subsidy removal this time round, which is a challenge that has dragged on for about 30 years, then it means that they are going to liberalise the market.

“By liberalising the market it will now help independent and major marketers to be able to freely import petroleum products from any source so that products will be available in Nigeria.”

He added, “However, it is pertinent to note the forces of demand and supply will determine the price of the commodity in Nigeria. So literally, whatever the dollar rate is in the international and local markets will pose the actual challenge to marketers

“The issue of black market and official exchange rates is a serious challenge that we foresee. But we believe that the Federal Government is doing something by meeting with the bureau d’change operators on this, so that whatever is obtainable at the banks is what you get in the open market.”

On whether the forex issue could lead to a higher price than the projected N340/litre, Chinedu replied, “Aside from the adverse effects of the removal of subsidy on the wellbeing of Nigerians, we will, of course, see a price that is higher than what they project.

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“The price will be higher. It will be higher because the dollar to a large extent determines the price of petroleum products. If the dollar goes up, the price of petrol will increase, and vice versa.”

The President PETROAN, Billy Gillis-Harry, confirmed the position of IPMAN, as he, however, explained that members of his association were ready to import the commodity.

He said, “At PETROAN we already have a vehicle that is in place to start importation petroleum products, gas and other products. We encourage the government to completely remove subsidy.

On the possibility of higher pump price than the projected N340/litre, Gillis-Harry said, “That is why we said that every single thing about petroleum products should be premised on the forces of the market.

“The forces of demand and supply should determine the price.”

The spokesperson of NNPC, Garba-Deen Muhammad, told our correspondent that the issue of petrol pricing was not the function of the oil firm.

“Price issues are policy matters. NNPC does not fix price, it has no mandate. It operates in the sector as a business concern governed by CAMA Laws,” he stated.

Marketers, however, urged the government to consider carrying out programmes that would help ameliorate the plights to be faced by consumers when it eventually puts an end to petrol subsidy.

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MTN Nigeria launches sale of shares to Nigerians

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MTN Nigeria launches sale of shares to Nigerians

MTN Nigeria Plc (MTN) has announced the trial of e-SIM services on its network based on approvals received from the Federal Government.

MTN Nigeria Communications Plc (MTNN) has announced the price of its initial public offering to retail investors.

The company is making 575 million of its shares available to the public at N169 per unit, the telecoms heavyweight said on Tuesday.

Sales will open at 8:00 am on December 1 and close at 5:00 pm on December 14. It is the first time the company will invite subscriptions from the public nearly two years after it debuted on the Nigerian Exchange Limited (NGX).

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MTNN made the disclosure in a statement on the NGX website, signed by Company Secretary Uto Ukpanah and seen by newsmen.

“The minimum subscription is for 20 shares and lots of 20 shares thereafter. The offer includes an incentive in the form of 1 free share for every 20 shares purchased, subject to a maximum of 250 free shares per investor,” he said.

“The incentive is open to retail investors who buy and hold the shares allotted to them for at least 12 months, post the allotment date.”

This retail offer will be delivered via a digital platform, the first in Nigeria. By using the power of technology, the telco intends to facilitate the maximum possible participation by Nigerian investors, MTNN said.

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Commenting on the price announcement, MTN Nigeria’s Chief Executive Officer, Karl Toriola, said: “The success and growth of MTN Nigeria is intrinsically linked to that of Nigeria and Nigerians. Therefore, we are very excited to offer Nigerians the opportunity to own shares in MTN Nigeria.”

“Our journey to becoming the largest network in Nigeria has been humbling, but we still have a long way to go. There is much more to do to support the evolution of an inclusive digital economy, and we continue to invest as we evolve into a truly digital operator, capable of seamlessly integrating value across the evolving telecommunications, digital and fintech segments.”

The MTN Group President and Chief Executive Officer, Rolph Mupita, said the offer aligns with MTN Group’s strategic priority to create shared value.

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“In the last 20 years, we have worked diligently to connect 68 million subscribers onto voice and data networks and ensure that we deliver the benefits of modern connected life. With this Offer, we will contribute to the further deepening of Nigeria’s equity capital markets. It is the first in a series of transactions as the MTN Group implements its plans to ensure broad-based ownership by reducing its shareholding in MTN Nigeria to 65% over time.

This move is a broader arrangement to enlarge its market capacity to other African countries including Zambia and Uganda.

MTNN’s shares, listed in Lagos, closed at N190 per unit on Tuesday, recording no movement.

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Cryptocurrencies Bear High Risks – Putin

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Cryptocurrencies Bear High Risks – Putin

On Tuesday, Vladimir Putin, President of the Russian Federation, voiced his criticism regarding the state of the criticism sector at the “Russian Calling” investment forum in Moscow.

According to local news outlet lenta.ru, the president made the following remarks, as translated: “It is not backed by anything, [and] the volatility is colossal, so the risks are very high. We also believe that we need to listen to those who talk about those high risks.”

Putin called for the greater monitoring and regulation of cryptocurrencies and pointed out that certain countries worldwide are seeing significant adoption of digital currencies. Currently, cryptocurrency regulation is still in its infancy in Russia. Although the government is considering the launch of a central bank digital currency, at least eight federal laws and five legislative codes must be changed for the digital ruble to take effect.

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Cryptocurrencies Bear High Risks – Putin

Furthermore, no regulation exists in the country regarding cryptocurrency mining. This has led some to claim that $2 billion in crypto mining revenue is generated annually in Russia, but on that, no taxes are paid. Due to the lack of a regulatory framework, cryptocurrency use has soared among ordinary Russians, with transactions surpassing $5 billion each year.

In other parts of the former Soviet Union, cryptocurrencies are also rapidly gaining in traction. Kazakhstan has become the world’s largest Bitcoin (BTC) miner by hash rate, and its president is seeking to collect more taxes from such activities to fund the country’s expenses. In Ukraine, the government is actively encouraging legal crypto operations. Last year, the city of Olsztyn, Poland, began adopting the Ethereum (ETH) blockchain for emergency services.

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