FAAC Urges Refund of N228 Billion Loan Allocated for 2023 General Elections.
In a startling revelation that threatens to undermine public trust in Nigeria’s financial management, the Postmortem Sub-Committee of the Federal Account Allocation Committee (FAAC) has uncovered contentious deductions from the non-oil excess revenue account.
The committee, chaired by Kabir Mashi, a former acting Chairman of the Federal Inland Revenue Service (FIRS) and a Federal Commissioner of the Revenue Mobilization and Fiscal Allocations Commission (RMAFC), recently released a detailed report spanning the period from January 2020 to October 2023.
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Unraveling the Intricacies: A Deep Dive into Non-Oil Excess Revenue Account Movements
The genesis of this scrutiny dates back to a FAAC Plenary meeting held in September 2023, during which members expressed concerns about substantial deductions from the Non-Oil Excess Revenue Account. To address these concerns, the Sub-Committee initiated a thorough investigation, soliciting information from the Office of the Accountant-General of the Federation (OAGF).
The report unveils a complex web of financial transactions, with the loan taken for the 2023 general elections standing out as a significant point of contention. The Sub-Committee reveals that this loan accounts for approximately 26% of the total deductions, amounting to a staggering N864.16 billion between January 2020 and October 2023.
Further breakdowns expose the diverse purposes behind these deductions, including an N20 billion refund of gas flared penalty to the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA). Other notable deductions include refunds for PAYE to states (N136,571,812,718.58), FCT (N31,311,515,329.52), and a refund for Paris Club Loan Deduction from the SRA of FCTA (N28,608,118,834.81).
The report also sheds light on borrowings by the Federal Government for various purposes. Notable among these are N41,844,164,400.00 for the payment of final settlement of ground rent liabilities, N2,750,000,000.00 for contingencies related to the Office of the National Security Adviser, and a substantial N227,998,501,190.36 earmarked for the funding of the 2023 General Elections.
Sub-committee’s Recommendations
In response to these findings, the Sub-Committee recommends a comprehensive overhaul. Foremost among its recommendations is the call for the Federal Government to refund the entire sum of N864.16 billion deducted for various purposes back to the Non-Oil Excess Revenue Account.
Moreover, the Sub-Committee emphasizes the need for future deductions to adhere strictly to the vertical revenue allocation formula, a move that aims to restore fiscal discipline and ensure equitable distribution of funds among the three tiers of government.
While the report brings to light the complexities surrounding the Non-Oil Excess Revenue Account, there remains a paucity of information regarding the creation of this account. However, its function appears to parallel that of the Excess Crude Account (ECA), established in 2004 to serve as a fiscal buffer during economic downturns.
The Non-Oil Excess Revenue Account likely operates as a reservoir for surplus revenues generated from non-oil sources, ensuring a safeguard against economic uncertainties. Nevertheless, the report highlights the Federal Government’s recurrent deviation from the established vertical revenue allocation formula, indicating a need for more stringent fiscal management protocols.
Efforts to revise the revenue allocation formula have faced consistent resistance. Proposed changes under the previous administration, including a reduction in the Federal Government’s share and an increase for states and local governments, were not approved. The current administration seems content with maintaining the existing distribution, underscoring the challenges in achieving a consensus on equitable revenue sharing.
A Paradigm Shift for Fiscal Governance
The revelations from the sub-committee’s report demand urgent attention and action. Nigeria’s struggle with economic challenges has heightened the call for fiscal responsibility. Experts have called for strengthening financial management protocols, ensuring adherence to allocation formulas, and fostering transparency in the use of non-oil revenues as imperative steps toward securing the nation’s financial future.