Senate’s interface with MDAs on 2022-2024 MTEF/ FSP proposals

For three days last week, the Senate Joint Committees led by the Finance Committee, interfaced with MDAs on proposals projected in the 2022 – 2024 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP). TAIYE ODEWALE reports

Meaning and importance of MTEF/ FSP 

The two documents usually called Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper ( FSP)  are documents containing Proposals and parameters upon which budgets estimates of the three years involved are predicated.

Specifically, the documents as projected on yearly basis by the executive arm of government and forwarded to the two chambers of the National Assembly for approval in line with relevant provisions of the Fiscal Responsibility Act, give the required information on planned revenues and expenditure profiles of the Federal Government for the fiscal years involved.

In line with the restored January – December yearly budget cycle, the documents must be worked upon and  forwarded to both the Senate and the House of Representatives latest by July of every year, for clinical dissections as regards attainability or otherwise of the proposals or parameters made.

Little wonder that in the second week of July this year, the executive arm of government forwarded the documents to the National Assembly for legislative scrutiny, which were separately considered in plenary by both chambers on Tuesday July 13, 2021 and thereafter, mandated their relevant committees to organise interactive sessions with about 900 Federal Government owned Ministries, Departments and Agencies (MDAs), involved in the various  budgetary projections.

2022 component of the projections 

Though being a three-year budgetary plans and projections, on yearly basis during consideration at the National Assembly, attentions are usually focused on parameters and projections made for the year following the year of its presentation which is 2022.

The 2022 component of the MTEF/FSP as forwarded by the executive and read on the floor of both chambers of the National Assembly Tuesday, July 13, 2021, contains a total budget profile of N13.98trillion which is just 3% higher than the 2021 budget in terms of the size of expenditure. 

Some of the critical components as stated in the document are N9.16 trillion as projected revenue generation, N5.26 trillion budget deficit through borrowings, $57 per barrel as oil price benchmark, 1.8million barrel per day as projected oil production in line with OPEC recommendation, official exchange rate of N410 to a US dollar, etc.

The 3-day interface 

In carrying out the assignment given to it by the Senate on Tuesday, July 13, 2021, the upper legislative chamber’s joint committees on Finance, National Planning, Banking, Petroleum (Upstream), Petroleum (Downstream) and Foreign and Local Debts, swung into action Wednesday last week for the required interface with heads of the various MDAs.

First to make submissions at the interface which has been extended to next week Monday September 13, 2021, was the Minister of State for Finance, Budget and National Planning, Prince Clem Agba who gave an overview of all the projections and parameters made.

In his own submissions ,the Group Managing Director of the Nigerian National Petroleum Corporation ( NNPC), Mele Kyari, said subsidy on pump price of petroleum remains, pending implementation of the Petroleum Industry Act ( PIA).

This, he explained, was as a result of wide gap between landing cost of N256 per litre to N162 pump price at the various filling stations.

He, however, added that  the issue of subsidy would be taken care of when the recently signed Petroleum Industry Act ( PIA), comes into full implementation.

Following the GMD of NNPC was the Comptroller General of Nigeria Customs Service, Col Hameed Ali (Rtd), who dropped bombshell in his submissions by alleging that bad governance fuel smuggling.

He said: “Smuggling is one of the biggest challenges the Nigeria Customs Service is facing in its operations aimed at generating revenues for the country.

“Though the menace is global but more worrisome in Nigeria because of collaboration of many Nigerians residing in communities across the border lines .

“These Nigerians rather than help Customs operatives to expose and  arrest the smugglers, joined them to fight the operatives.

“All these are fuelled by lack of presence of government at the border communities which made Customs to set up border management committee as a platform of carrying out Corporate Social Responsibility ( CSR)”.

Controversy, however, ensued at the session when it was the turn of the Central Bank Governor (CBN), Godwin Emefiele, to make his submission.

Emefiele who was represented by the Deputy Governor in charge of Economic Policy, Dr Kingsley Obiora, disagreed with the allegation levelled against the apex bank on non-remittance of 80% of its operational surpluses within the last five years by the Chairman of the Joint Committees, Senator Olamilekan Adeola (APC Lagos West).

Adeola had in accusing the CBN of the alleged non-remittance of 80% operational surpluses as stipulated by relevant provisions of the Fiscal Responsibility Act, said “Nigeria wouldn’t have been having problem of inadequate revenue to fund its annual budget if revenue generating agencies, were remitting 80% of their operational surpluses into the CRF as required by the Fiscal Responsibility Act. 

“Specifically, the Central Bank of Nigeria which has yearly budget of N2.3trillion , has not remitted any revenue from its operational surpluses into the Consolidated Revenue Fund within the last five years.” 

But in swift reaction, the CBN  Deputy Governor  said: ” With all due respect to the Senate and in particular, this committee, the CBN as a law abiding government agency, had not at anytime, defaulted in the remittance of its operational surpluses.

“We do this on yearly basis as required by the Fiscal Responsibility Act despite the fact that the CBN Act , requires us , to remit 75% only .

“The Ministry of Finance, the office of Accountant General of the Federation , Auditor General of the Federation and other relevant agencies, can testify at anytime that CBN is their friend as far as remittance of such revenue is concerned”.

The interface between the Commitee and the Director General of Nigeria Mining Cadastre Office ( NMCO), Engineer Obadiah Nkom, was  a storming one which led to the summoning of the supervising Minister, the Minister of Mines and Steel Development, Olamilekan Adegbite over poor regulation and loss of  revenues in the sector.

Summoning of the Minister by the committees, was sequel to failure of Director General of NMCO, Engineer Obadiah Nkom, to furnish the commitee with required explanations on low revenues being generated in the sector and the menace of illegal mining across the country.

The NMCO DG, had in his submissions before the joint committees said in 2019, N2.58billion revenue was generated and remitted to the Consolidated Revenue Fund ( CRF), which reduced to N2.3billion  in 2020 due to COVID-19 pandemic but already increasing in 2021 with N3.166billion realised as at July this year out of the targeted N4billion.

Dissatisfied with his submission , the Chairman of the Committee , Senator Olamilekan Adeola ( APC Lagos West ) , and other members , wondered why   such an agency could not generate revenue beyond the threshold of four to five billion.

Specifically, the Committee Chairman said: “Your submissions on revenue generation is low and not impressive at all because big companies like Dangote Cement , BUA etc.,  with combined  yearly profits of about N5trillion are under your purview.

“These are aside other companies carrying out illegal mining activities across the country that are not captured in your revenue generation.

“A lot of Chinese are involved in  illegal mining in the country without your agency or any other one saddled with regulation of the sector , doing anything as far as licencing them and monitoring their explorations in form of collection of royalties are concerned”.

But the Director General in his response said the mandate of his office is just for licencing of firms and not collection of royalties or monitoring of illegal miners or mining.

“Our revenue is strictly generated from licencing and Annual service fees collected from firms . Royalties and illegal mining are not under my purview and I cannot dabble into them “, he said.

Angered by his submission, the Commitee Chairman in agreement with the members ordered the Clerk of the committee to summon the Minister of Mines and Steel Development for required interface on a way out of the problem in the sector, particularly as regards illegal mining and low revenue generation.

“The Minister will have to appear before this committee for required interface on way out of the problem in the sector .

“As for the Mining Cadastre Office, N15billion is now fixed as  targeted revenue generation for year 2022 , because you have the capacity of meeting up with that as against four of five billion you are proposing ” , he said .

In what sounded as riot act to all the MDAs  as far as aggressive revenues  generations  are concerned , Senator Adeola said: “We will remove any agency that fails to submit its proposed revenue target with the expenditure in the 2022 budget. They will get zero allocation.

“There is a public outcry that borrowings is on the high side. We are not saying that we are not going to borrow but we must reduce it. The only way to do things is to look inward and build our revenues.

“Many of the agencies that generate revenue spend them on frivolous expenditure. There are three agencies of government: Those that are partly funded, those that are fully funded and those that are not funded at all. 

“By law, if you are fully funded, every revenue generated must be paid to the consolidated revenue fund. The government will give the recurrent expenditure, takes care of the personal and at the same time, take care of the capital expenditure.

“Going forward, government has decided  that whatever partly funded and not funded agencies generate, 50 per cent of such revenue will go to the Federal Government.

“We are now going to 70-30. Only 30 will be released to the agency while the 70 goes to the CRF. We are going to amend the law again. 

“If you are generating revenue and you are fully funded, everything accruing to you must go to the CRF. If you are partly funded or not funded at all, the law states that 80 per cent of the operational surplus must be paid to the CRF.

“We are hereby calling on the minister of finance that there is the need to carry out forensic audit into the expenditure of all agencies of government. This will curb frivolous expenditure and boost the country’s revenue base”.

With relevant committees of both chambers concluding their assignments on the MTEF/FSP Documents, the next stage of consideration of the proposals, will be laying of reports in plenary next week for passage which will have the way for presentation of the 2022 budget estimates to the joint session of the National Assembly.