Breaking News

Wasteful expenditure threatens 2011 polls, economy

By Hugo Odiogor
LAGOS—WASTEFUL expenditure and fiscal indiscipline among all tiers of government has been identified as a major threat to the forth coming general elections which sources told Vanguard may cost the country N1.3 trillion to execute.

Both the Federal and State governments are splitting hairs over their lean resources but Vanguard  can confirm that contrary to cries of insolvency by state governors and Federal Government officials, fiscal indiscipline and profligacy constituted the biggest threat to the 2011 elections and the economy in general.

Despite the huge revenue derived from sales of oil, the Federal Government resorted to the open market to source N87billion to meet the demands of the Independent National Electoral Commission, INEC, to conduct the voters’ registration exercise alone.

The other processes ranging from printing of election materials, publicity and voter education, payment of election personnel, security and the other logistics required for successful election are projected to cost the country not less than N1.3trn, which the INEC is hard pressed to justify.

Informed sources told Vanguard the 2011 election would be the most expensive in the history of the country. They added that there were no explicable justifications in terms of introduction of new modalities and technologies that would ensure that things were done differently.

Vanguard was told: “First, INEC is still using the same delineation of constituencies done by its predecessors, there are no new demographic information to support INEC’s desire to register 70 million voters.”

All these have created doubts on the ability of the government to fund the 2011 elections and there are moves by the Federal Government to finance the 2011 polls with foreign loans.

Sources told Vanguard that “INEC is creating a situation that will further hurt the nation’s revenue as politicians are cashing in on the commission’s naive reading of the political barometer to make its projections. While politicians are citing dwindling revenues as reasons for their low level performances at all the tiers of government, they were quick roll out funds to bankroll electoral expenses.

“There are serious cases of profligacy and wastage of funds at all tiers of government which is why the Economic and Financial Crimes Commission, EFCC, is on the trail of majority of the political leaders today.” No fewer than four states are being investigated by the anti-graft agency for squandering N50billion.

Vanguard investigations at Revenue Mobilisation, Allocation and Fiscal Commission, RMAFC, office in Abuja last week confirmed that there was indeed glaring cases of fiscal indiscipline, wastefulness and the desire to conserve funds for electoral battles in 2011.

State governors have been inundating their constituents that their accounts are in dire straits owing to the ruinous impact of the invasion of the creeks resulting in the sharp decline in their revenue from the federation account.

Sources at  RMAFC said the total distributable revenue to the three tiers of government in the first quarter, January to March 2010, has been on the rise with N1.495 trillion distributed among them. The 2010 budget benchmark is $60 barrel per day while the global price of oil has stabilized at $75 barrels per barrel.

The excess revenue was supposed to be paid into the Excess Crude Account which was established in 2003 by the Obasanjo administration.

Improved tracking of taxation

Sources close to the office of the Accountant General of the Federation told Vanguard: “The sum of N758.06 billion was distributed to the three tiers of government based on the use of the criteria of the 2009 Appropriation owing to the delay in the passage of the 2010 Budget by the National Assembly”.

Statistics from the Federal Ministry of Finance in Abuja for second quarter show that the states received N340 billion in March 2010. But this rose in April to N361.25 billion and N413.277 billion in May. The revenue for June was put at N607.386 billion.

The revenue accruable to the States and Federal Government has also improved owing to the improved tracking of taxation. Yet State and Local governments claim that they are struggling to fund their projects and have consistently told their listeners that their finances are severely constrained.

Outgoing Minister of State of Finance, Mr. Remi Babalola, in a statement on allocation of revenue to the all tiers of government, recently said: “The shortfall in the revenue distributed to the three tiers of government was augmented by N736.985 billion from the Excess Crude Account.

The state governments have been exacting pressure on the Federal Government to release funds from the Excess Crude Account, which at the end of April 2010 stood at US$460 billion.”

The sum of N1billion was set aside for the Sovereign Wealth Funds which is yet to get the consent of the National Assembly.

Vanguard learnt that the Excess Crude Account, ECA, of $20 billion left by the Obasanjo administration in May 2007 has dwindled to $460 million by July 2010.
Concerns about the management of the country’s resources, particularly oil, and its revenues, has been on the operation of the Excess Crude Account by the government because it does not comply with relevant provisions of the 1999 Constitution.

Investigating missing billions

Apart from concerns over the mismanagement of the Excess Crude Account, there are also worries about revenues from the sale of gases. There are also concerns that the $5 billion earned from Liquefied Natural Gas in the last ten years had not been captured in the Federation Account.

This coincided with conclusion of the recent investigation of the House of Representatives Committee on Finance into the non_remittance of all revenues accrued to the Federal Government into the Federation Account.

The House observed that “revenues accruing to the Federation Account have been seriously managed in breach of the Constitutional provision of Section 162 of the 1999 Constitution by Ministries, Departments, and Agencies of Government.” Section 162 of the 1999 Constitution stipulates that “all revenues on behalf of Government must be paid into the Federation Account.”

In its startling revelation, the Committee found that N165,505,778,329.71 (One hundred and sixty-five billion, five hundred and five million, seven hundred and seventy-eight thousand, three hundred and twenty-nine naira and seven one kobo) were not remitted into the Federation Account from January 2003 to March 31, 2008 owing to duty exemptions/waivers and concessions.

Further investigation by the committee showed that huge sums which ought to be remitted into government’s coffers were not paid into the Federation Account.
The mismanagement of the national resources is a source of concern to the Chairman of National Conscience Party, Mr. Femi Falana, who has called for an investigation.

Falana said investigation by the NCP has revealed that several trillions of naira which ought to have been deposited in the Federation Account are believed to be missing, adding: “This investigation will cover several trillions of naira not remitted into the Federation Account, as required by Section 70 of the Constitution.”

Falana said that facts have continued to emerge daily on huge sums that had either been looted, misappropriated, shared, mismanaged or committed into white elephant projects.

He said: “It is worrisome to observe the highest level of profligacy and irregularities by all tiers of government in the management of the country’s resources and wealth and demand for accountability in the allocation and sharing of resources by the Federal Government of Nigeria.”

A former Local Government Chairman for Oshimili South in Delta State, Hon. John Efianya told Vanguard: “It is even ironical that a country that has produced so much wealth since its existence has done little to make majority of its population benefit from the wealth in terms of meeting their welfare needs.

The problem, as has already been pointed out, is not because the oil that brings in the money has dried up and even if we agree that there is a recession, the fact remains that there is no relating Nigeria’s present economic predicament to the prevailing poverty as fallout of low price or sale of oil.

The problem lies on leadership inefficiency and ineffectiveness of managing our financial resources, or more appropriately mismanagement of the country’s economy.”


Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.