By Segun Lawal

IT is quite relieving the House of  Representatives Adhoc Committee on Unclaimed Funds has found good reasons to reconsider its earlier position that the Nigeria Social Insurance Trust Fund, NSITF, did not remit its Operating Surplus Fund to the Consolidated Revenue Account of the Federation between 2003 and 2020.

Recall that the committee had recently, through its chairman, Unyime Idem, summoned the Fund for non-remittance of N3.8 billion. According to the House Committee, “these figure are extracted from documents that they submitted before us. I wonder what would happen by the time they fully submit all documents required by the committee.”   

Ever since this development, experts on labour and social insurance have been x-raying the position of the House and throwing up issues that conflict the status of the NSTIF as a non-treasury funded, non-income generating agency with the intendment of the Fiscal Responsibility Act, upon which the House premised its summon. 

The NSITF for some time now, has ceased being in the news for the wrong reasons since the new management took over the agency last year, even though the ghost of her sordid past occasionally appears.

Many were, therefore, surprised when the gargantuan figures billowed from the Green Chambers. However, the clean sheet which its current management is avowed to, came justified when it was frontloaded. The red flag by the House was after all misplaced.  A legal issue has been thrown up by the development and it is interesting. It may in the end, add to the nation’s jurisprudence.

The crux of the matter is whether the provisions of sections 21 and 22 of the Fiscal Responsibility Act align properly with the Employee Compensation Act, 2010 which established the NSITF, in a manner to demand or task the Fund to remit the balance of its Operating Cost by way of obligation. 

To seek for clearer understanding of the issues in question, one has to run through the relevant sections of the Act whose preamble is premised on providing “for a prudent management of the nation’s resources, ensure long-term macro-economic stability of the national economy, secure greater accountability and transparency in fiscal operations within a medium term fiscal framework, and the establishment of the fiscal responsibility commission to ensure the promotion and enforcement of the nation’s economic objectives and related matters.”  

Forthwith, section 22(1) of the Act provides that “notwithstanding the provisions of any written law governing the corporation, each corporation shall establish a general reserve fund and shall allocate thereto at the end of each financial year, one-fifth of its operating surplus for the year”; and its subsection two also provides that “this surplus shall be classified as a Federal Treasury Revenue”. 

However, giving flesh and blood to the spirit and letters of provisions of these relevant sections of the Act clears every confusion as it concerns its focus on regulation of budgetary preparation, its implementation, indeed, management. The reason is that whereas the explanatory notes to sections 22 and 23 of the Act relate to preparation of estimates or revenue and expenditure by corporations and submission of such estimates to the Ministry of Finance, it creates no confusion as to its limited ambit in governing only the estimates of revenue and expenditure of government agencies that are treasury-funded and, or revenue generating.  

Hence, an agency like the NSITF which is not treasury-funded and whose statutory mandate does not include revenue generation for the government, will not be deemed to be covered by the Act. In fact, what the House of Representatives Adhoc committee called operating surplus is nothing but the one per cent contributions from employers, which ordinarily is an equivalent of insurance premium and never an internally-generated revenue as being misconstrued. The amount standing to the credit of the Fund account does not fall under the operating surplus intended by sections 22 and 23 of the Act.

Verily, the balance in the fund account which the committee erroneously termed surplus are funds meant to be invested in line with section 32(e) of the ECA Act 2010, meant to be used for the payment of death claims, medical compensation and rehabilitation expenses, the core mandate of the agency. 

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It becomes clearer consequently that the inclusion of the NSTIF in the schedule to the Fiscal Responsibility Act is an exercise in error. The reason is that it is contradictory to categorise a non-treasury funded and non-revenue generating agency, whose source of fund subsists on contributions from private employers, as that which is obliged to remit surplus to the federation account. 

Probably, the little confusion could have stemmed from the fact that the Federal Government had in 2011, by Appropriation Act, made an initial take-off grant for the implementation of the compensation scheme. However, this grant cannot be subjected to a straight interpretation to mean a statutory appropriation for the management board of the Fund. That grant from the Federal Government can at best be seen as its own contribution on behalf of near three million civil servants under its employ.

That could have also informed the reason for depositing the money in the Fund’s account, entitled “Employee Compensation Contribution”.Observers in the industry are of the view that the solution to the anomaly and exempting the NSITF from the bracket of fund remission intended by the Fiscal Responsibility Act is to seek amendment of the Act by the National Assembly. Giving cognisance to the special status of the Fund and freeing it from responsibility is the way out. Luckily, the National Assembly appears to have got a clearer picture of the issues and is disposed to a solution.

It is commendable that the House has directed the fund to liaise with its Public Accounts Committee and the Office of the Auditor General of the Federation in this regard; but the process of amendment could be serpentine and long. Even the option of seeking judicial interpretation of the intendment of the Act in relation to the establishing Act of the fund and the nitty-gritty of its operations will neither come faster.

Bottomline is that the NSITF has a solid case to the extent that all the eyes that popped and the brows raised when the House Committee mentioned the long digits in accusation, now realise that the current management’s steadfastness to new ways is real and not a phantom.

***Lawal, a  labour relations practitioner, wrote from Abuja.

Vanguard News Nigeria


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