CISLAC/OXFAM: Transparency will guarantee financing for development

October 7, 2020

To strengthen fiscal prudence, transparency and accountability within the framework of financing for development with a view to ending mismanagement of public funds by all tiers of government, the Fiscal Responsibility Commission (FRC) with support from Civil Society Legislative Advocacy Centre (CISLAC) and Oxfam, held a one-day retreat for FRC sub-national personnel. Sulaimon Olanrewaju reports.

The essence of the Fiscal Responsibility Act 31 of 2007 is ensuring that the nation’s resources are properly managed to yield maximum benefits to the nation. The Act was enacted to guard against poor management of Nigeria’s resources by ensuring long-term macro-economic stability of the national economy, securing greater accountability and transparency in fiscal operations within the Medium Term Fiscal Policy Framework to birth the promotion and enforcement of the nation’s economic objectives stated in Chapter 2, Section 16 of the 1999 Constitution as amended.

Section 16 (1) of the constitution states that: (a) The State shall harness the resources of the nation and promote national prosperity and an efficient, dynamic and self-reliant economy; and

(b) Control the national economy in such manner as to secure the maximum welfare, freedom and happiness of every citizen on the basis of social justice and equality of status, and opportunity.

However, the Act has been observed in the breach by all tiers of government in the country. The consequence of this is the economy lying prostrate as evident by incessant borrowings and consequently high debt profile, rising fiscal budget deficits, socio-economic decline and widening poverty and inequality.

To correct these anomalies, the Fiscal Responsibility Commission (FRC) with support from Civil Society Legislative Advocacy Centre (CISLAC) and Oxfam Nigeria, recently organised a one-day retreat for FRC sub-national personnel. The retreat, which came up last week in Port Harcourt, Rivers State, was attended by top government officials from the South-south geo-political zone as well as representatives from other states.

While welcoming participants to the retreat, Acting Chairman of the Fiscal Responsibility Commission, Victor Muruako, said that the challenges occasioned by the country’s continuing difficulty in mobilizing adequate revenue made it imperative for a collaborative engagement of all stakeholders in fashioning out a way forward and proposing a better and more prudent management of the nation’s resources with a view to addressing the problem of macro-economic stability.

He said, “The need for this interaction cannot be over-emphasized given the present tough economic challenges orchestrated by Covid-19 pandemic and also noting essentially that more than half of our national resources are expended at the state and local government levels.

“This retreat would take us through (a) an Overview of the Fiscal Responsibility Act 2007, (b) Accountability and Transparency within the Fiscal Sustainability Plan, (c) Strengthening States framework: identifying opportunities for collaborations, (d) Revenue Generation in the post Covid-19 economy and the Operating Surplus Template. States will also be expected to update on their respective fiscal sustainability plans.

“The retreat will also review the implementation of the FRA/FRL at both the federal and state levels with a view to adopting strategies on how to improve the implementation of Fiscal Responsibility law in their respective areas of jurisdiction. This is in a bid to completely draw a line from our ugly past.

“It is instructive to note that prior to the advent of the FRA, 2007 that Nigeria’s fiscal climate was marked by the absence of clear fiscal rules, uncoordinated fiscal relations between the arms and tiers of government, reckless borrowing and debt overhang, poor savings culture, disregard for transparency and accountability and corrupt practices, resulting in chaotic and unhealthy economic outcomes.

“In the last 11 years plus, the Commission has worked at putting these reforms on the right footing. This has by no means been an easy task. Our experience as a reform-implementing agency has demonstrated that much more than strong laws are needed if we must effectively break with the past habit of financial profligacy.”

In his opening remarks, the Executive Director – Civil Society Legislative Advocacy Centre, Auwal Ibrahim Musa (Rafsanjani), said “We wish to chart a course on how to entrench accountability in the management of our public finance in Nigeria.

“We count it a commitment that your interest is in this; to have a framework, strategy and system which reduce the losses alleged in the country through public institutions.”

The CISLAC boss also said, “The Fiscal Responsibility commission in one way or the other has a mandate to curb these menace that is not giving us the desired result in the acclaimed fight against corruption in Nigeria.

“We are here to educate ourselves on the reason why we should support and strengthening of this institution and also cascade it to our different states. This is the best way towards ensuring that our resources are prudently managed especially now that we do not have all the resources. It does not make any sense that we borrow recklessly and also spend recklessly; it is not in any way to our best interest as a country.”

One of the facilitators at the retreat, Eze Onyekpere, in a paper titled “Fiscal Sustainability Plan: Accountability and Transparency and Debt Management,” challenged government at all levels to “open up their books” if they had nothing to hide.

He said, “We borrow without thinking of how to repay. We borrow based on political exigencies. We borrow to spend on un-bankable projects.”

He stated that the sub-national Fiscal Sustainability Plan (FSP) is designed as an economic and public finance management tool with key objectives of improving accountability and transparency; increasing public revenue; rationalizing public expenditure; improving public finance management and ensuring sustainable debt management, adding that publication of budgets, quarterly reports and other fiscal data will not only promote transparency in governance but also build public trust and understanding of the key fiscal challenges.

Onyekpere added, “The impression out there is that Nigeria is a rich country only burdened by its corrupt public officers, but this is far from the truth as the country is virtually dirty poor when compared with her peers. This public belief fuels the refusal to pay PAYE, grumblings about increase in VAT, removal of petroleum subsidy and introduction of cost reflective electricity tariff. Transparency will facilitate the drive to increase tax ratio of the GDP.”

The retreat, at the end of its deliberations, observed that local loans are collected both for capital and recurrent expenditures without particularly meeting the set requirements by the Fiscal Responsibility Act (FRA) 2007.

The retreat, in its communiqué, noted that some states had fashioned domestic fiscal responsibility laws that are not in line with the FRA 2007, others had passed the law but are yet to establish their respective commissions while most of Nigeria’s budgets are on an IPSAS cash basis of public sector accounting as opposed to being on an accrual basis.

The retreat then came up with two recommendations for both the FRC and the states. It  recommended that the Fiscal Responsibility Commission should engage the National Economic Council and Nigeria Governors’ Forum on the need for the domestication of the FRA and the establishment of state commissions, engage the State Houses of Assembly on the relevance of a fiscal responsibility framework and advocate its domestication and effective implementation, embark on an intensive education and advocacy with relevant institutions (private and public sector financial institutions) as regards states compliance with the provisions of the FRA on borrowing, there should be framework that mandates the states to domesticate the FRA as a prerequisite to accessing the funding from the government-supported SFTAS programme and enforcement mechanisms should be put in place to mandate states to publish state budget online annually and budget implementation performance report online quarterly in accordance with the FRA.

The retreat also recommended that states should regard as urgent the need to migrate from the International Public Sector Accounting Standards (IPSAS) cash basis of budget accounting to an accrual basis for public sector finance reporting. It also urged states to include the major provisions of the FRA in their state FRA; specifically, to include capital provisions dedicated to projects, which should be backed up with an unbiased report made public, periodic peer-review visits and trainings  and sign  on to some initiatives that promote fiscal responsibility like the Open Government Partnership (OGP) and establishment of registers for the disclosure of information on beneficial owners of all entities to improve transparency and accountability in governance.

The retreat was attended by dignitaries, including representative of the Honorable Commissioner for Finance for Rivers State, Mr Adue Stephen; Representative of the Honorable Speaker, Bayelsa State, Hon. Tare Porri; the Honorable Commissioner of Finance, Enugu State, Mrs Ada Kene-Uyanwune; the Solicitor-General/Permanent Secretary, Ministry of Justice, Imo State, M. C Uwasomba; Chairman, FRC Cross River State, Hon. Moses Oko; Chairman, FRC Ebonyi State, Mrs Oji-Uzor Ijeoma; Chairman, FRC Ekiti State, Mr. A.O. Ologuntoye; Chief State Counsel, Oyo State, Mr Akintola Akibu; Executive Director, CISLAC, Auwal Musa Rafsanjani and the representative of the Country Director of Oxfam, Nigeria, Mr Henry Ushie.


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