Strengthening Fiscal Responsibility In Nigeria

The fiscal responsibility act has become ineffectual

To the extent that the economic prosperity of a country and fiscal responsibility are directly linked, the Fiscal Responsibility Act 2007 is a crucial piece of legislation. It is aimed at blocking wastages, checking corruption, and ensuring accountability in the management of public finance. Sadly, the law has become increasingly ineffectual. Apparently in response to this development, the National Assembly has initiated a bill to strengthen the law while streamlining its powers towards improving transparency, fiscal discipline, and macroeconomic stability. It is a very much needed elixir at a period we need to restore a measure of sanity to the system.

Sponsored by Aisha Dahiru, a senator from Adamawa State, the bill seeks to curb financial fraud and wastages within Ministries, Departments and Agencies (MDAs), and ensure efficient delivery of public services. Besides, the amendment bill will seek to expand the functions and powers of the Fiscal Responsibility Commission (FRC) and ensure adequate funding. At a recent public hearing on the bill organised by the Senate Committee on Finance, chairman of the Commission, Victor Muruako lauded the move to repeal and replace the act. He also said it would end the current impunity with which statutory obligations imposed by the act are routinely ignored by many MDAs and government-owned enterprises (GOEs).

As contained in section 16 of the 1999 Constitution (as amended), the key objective of the law is to enshrine greater efficiency in the allocation and management of public expenditure, revenue collection, debt control and transparency in fiscal matters. Established in 2007 to enforce provisions of the act, the FRC has struggled to generate some N2 trillion for the consolidated revenue fund (CRF).

Structured after that of Brazil, the application of the FRA has diminished chaos and corruption in the economy of the South American country. In Nigeria, the opposite is the case. The implementation of the FRA has revealed some inherent loopholes, weaknesses and defects which have detracted from its noble objectives. Notable among these are lack of clear offences and stipulated sanctions regime to identify and deter fiscal delinquency. The composition and functioning of the commission are exposed to partisan maneuverings.

Even with the “war” on corruption, there is a growing misplacement of fiscal priorities as resources have been increasingly frittered away or cornered for personal pursuits. The imperatives of well-functioning fiscal responsibility law and due process are still missing. Indeed, there is large scale fiscal irresponsibility within the system today. Annually, audit reports detail how poor oversight deprive the Nigerian government and people of huge revenues. The Auditor-General of the Federation, Adolphus Aghughu said recently that the MDAs failed to account for N4.97 trillion in 2019. And according to the House of Representatives Committee on Public Accounts, the level of impunity is such that about 65 public agencies had never been audited since they were established.

The amendment bill promises to remedy many of these defects. A notable provision is the proposed reform of the current unwieldy and partisan-coloured composition of the commission towards a more professional, and broad-based representation. To guarantee independence and security of tenure, the bill proposes that the appointment of the executive secretary shall be subject to Senate confirmation while removal of a member of the commission by the president shall be supported by a simple majority vote of members of the Senate. This is apparently to strengthen the leadership of the commission. Besides, the bill proposes a range of offences and sanctions for defaulters to ensure compliance with the law.

We urge the National Assembly to expedite action on the bill.