The Federal Government’s hammer that fell on revenue-generating Ministries, Departments, and Agencies (MDAs) following the compulsory 50 per operating surplus deductions are currently facing tough times in meeting their day-to-day obligations in delivering the dividends of democracy to Nigerians.
While some affected agencies are finding it difficult to pay staff salaries as at when due, others are not finding the policy easy to organise official activities, make necessary travels for awareness promotion in line with their mandate
ThisNigeria findings reveal that over six months down the line when the policy came to light, staff of affected MDAs visited continue to complain that the policy no longer encourages them to discharge their duties effectively as a result of paucity of funds to carry out official activities for the entities, a situation they described as strange and dangerous.
*Policy introduced to regain N1trn yearly loss, says FG
The Federal government is currently faced with cash crunch challenges in recent times occasioned by the inability to meet the Organisation of Petroleum Exporting Country (OPEC) crude oil quota of about 1.50 million barrels per day as against the 1.1 million barrels per day production figures just released by the Nigeria Upstream Petroleum Regulatory Commission (NUPRC).
As part of efforts to meet her financial obligations, the Federal government announced a 50 percent deduction from all revenue generation agencies. This was contained in a circular issued on the 3rd of January, 2023 by Finance Minister and Coordinating Minister for the Economy, Wale Edun, in Abuja
With the circular, a 100 per cent deduction became mandatory for revenue-generating MDAs with yearly budgetary allocations while a 50 per cent deduction was placed on agencies with no yearly budgetary allocation respectively.
Affected agencies were called, “Super Agencies” because of the enormous financial resources at their disposal amounting to a combined total of over N1trn annually of revenues collected by them that are never remitted to government coffers.
The agencies includeinclude the Federal Competition Consumer Protection Commission (FCCPC), Federal Inland Revenue Service (FIRS), National Insurance Commission (NAICOM), Securities and Exchange Commission (SEC), Nigeria Export Promotion Council (NEPC), Corporate Affairs Commission (CAC), Nigeria Export Processing Zones Authority (NEPZA), Nigerian Television Authority (NTA), Federal Radio Corporation of Nigeria (FRCN), Nigerian Ports Authority (NPA), the Nigerian Communications Commission (NCC) Nigerian Customs Service (NCS), among others.
Staff of selected agencies like CAC, NAICOM, SEC, and FCCPC, who spoke to ThisNigeria, but refused their names to be mentioned said, “Almost every day you come to work without specific assignment to be pursued, we no longer have normal activities as before, we now see a situation where salaries are not paid early as before, all the workshops and awareness activities are no more, even when you ask why things have suddenly come to standstill, all you hear is that our agency fall on 50 per cent operating surplus deduction lists.
“But we are appealing to the government to look at our plight and remove us from the lists,” they further argued.
*Trade associations, workers want policy reversal
The Chairman of the Association of Senior Civil Servants of Nigeria, Securities and Exchange Commission (SEC) unit, Abba Mamman Ali, also called on the Federal Government to exempt the SEC from the 50 percent deduction on operating surplus as contained in the Finance Act, 2024 because the commission is a development institution.
Ali made the plea when he led the association members recently to welcome the newly appointed Director-General of SEC, Emomotimi Agama his office in Abuja.
Ali pledged that the union will continue to collaborate seamlessly with the new board under the leadership of the board chairman, Mr Mairiga Aliyu Katuka, and DG to deliver a vibrant capital market in line with President Tinubu’s Renewed Hope Agenda.
He also used the occasion to push forward the demands of the association, “We want this management to look into issues of self-staff promotion, vacancies, and gratuity, we urge them to look at it very well and settle those issues as they concern staff directly.
“Also, there is a need for management to meet with the government on the issue of 50 per cent deductions on operating surplus. These deductions have almost incapacitated the Commissions as the SEC has been having great difficulties carrying out its dual functions of regulating and developing the capital market.”
On the capital market, he said the union is “urging the new management to constitute a market-wide committee that will proffer solutions to the various issues currently bedevilling the market.”
On his part, the Executive Director of Agora Policy, Waziri Ado said, “he respected public policy think-tank based in Abuja recently raised an issue with the funding arrangement, warning that ‘’this cash-rent-extraction. A variant of Parkinsonic’s law states that expenditure always rises to meet income. In short, more money in this form leads to move expenses, not more sense, and this is exactly what happens to these agencies.”
The implementation of the new order followed a presidential directive according to a circular from the Ministry of Finance, dated December 28, 2023.
The directive was sequel to a similar circular dated December 20, 2021, addressing agencies, and revenue remittances to the consolidated revenue fund (CRF).
In addition, the finance ministry said all ministries, departments, and agencies (MDAs) that are fully funded through the Federal government budget and on the schedule of the Fiscal Responsibility Act, 2007 should “remit 100 per cent of their IGR to the SRA.”
According to Ado, “FCCPC said it generated N56bn and remitted only N22.4bn to the federation account in 2022, the federal government has issued a circular directing “Automatic” 50 per cent remittance of the total revenue of all its self-funded enterprises.
It is unclear if the two events are related but a presidency source told The Guardian the reform was “long overdue.”
Although they receive no budgetary allocation from the Federal Government questions have been raised over the huge sums they retain with some agencies getting more than the legislative and judiciary arms of government, he further stated.
*Experts urge FG to peg policy at 20 per cent in the first instance
Contributing, Prof Akpan Ekpo Akpan of the Department of Economics, University of Uyo, Akwa-Ibom State said, there was no need for concerned MADs to be keeping such huge operating surplus funds in their custody even when the government is in dare need of money to develop the economy.
According to the erudite professor of economics, many of such agencies are even richer than their parent Ministries and hence they throw around revenues generated for buying SUV cars, and unnecessary travels with bogus allowances.
He stressed that these are the funds the government is insisting to be transferred to the Federal government coffers for the overall development of the country.
Akpan said he would not be surprised to see concerned agencies having difficulties effectively promoting and executing their various policies and mandates.
He noted, “In my candid opinion, the Federal government ought to have started from20 percent or 30 percent deduction of operating surpluses to government instead of the current 50 per cent peg, beginning straight away from 50 per cent deduction may be too high for the agencies, it may affect the smooth running of the agencies to perform effectively their constitutional mandate, it may also go a long way to reduce the morale of staff if salaries are not paid as at when due and funds are no available to run the agencies.
“My candid advice is to reduce the operating surplus target from the current 50 per cent to 20 per cent”.
