Monday 30 May 2016

N916 Billion Loss: Key Revenue Generating Agencies of Federal Government Fail to Meet Target

The Nigerian economy has suffered a massive loss following a setback in the revenue expected from the government agencies. 

President Muhammadu Buhari
Key revenue generating agencies of the Federal Government failed to meet revenue targets set for them in the first quarter of 2016, resulting to revenue shortfall in excess of N916.3 billion. This was revealed in the 2016 revenue performance chart exclusively obtained by New Telegraph.

The revenue generating agencies relied on by the central government to fund the N6.06 trillion 2016 Budget include the Nigeria Customs Service (NCS), Federal Inland Revenue Service (FIRS), Department of Petroleum Resources (DPR), Nigerian National Petroleum Corporation (NNPC) and Solid Mineral agencies.

Out of N2.4 trillion collectively approved to be generated by revenue generating agencies for first quarter 2016, the total amount paid into the federation account stood at N1.5 trillion, indicating a shortfall of N916.2 billion. Document sighted by our correspondent showed that all these agencies fell below their revenue targets in the first quarter of 2016.

Their inability to meet their first quarter target (January – March) is of serious concern to members of the Federation Account Allocation Committee (FAAC) as this is said to be impacting negatively on revenue flow to the federation account, a source told a correspondent.

According to the breakdown of what was paid to the federation account, FIRS paid N345.2 billion in the first quarter out of approved budgeted amount of N751.1 billion, representing 45.97 per cent; NCS paid N123.2 billion to federation account, as against budgeted target sum of N216.7 billion, depicting 43.12 per cent; DPR paid N103 billion into federation account as against budgeted sum of N163.7 billion, indicating 62.9 per cent.

Also, NNPC paid in N451.1 billion instead of N645.7 billion, representing 69.85 per cent, while MM&SD paid N478.1 billion instead of N639.7 billion in the first quarter of 2016, depicting 74.74 per cent “The revenue generating agencies should, as a matter of urgency, review their performance based on specific and realistic parameters in relation to their collection.

“The agencies and all stakeholders, including the Budget Office of Federation (BOF), should meet to review the revenue targets set for them, especially the non-oil collecting ones.

They should strive within the resources available to them to exploit all avenues to enhance their collection,”
 a member of the sub-committee constituted by FAAC was quoted as advising.

However, a source added that both FIRS and NCS faulted the percentage of revenue generation computed for them. The representative of NCS, it was reliably gathered, observed that percentage performance of the agency was supposed to be 52 per cent as against 43.2 per cent computed.

Similarly, FIRS insisted that its portion of Value Added Tax (VAT) generated and paid to federation account was not considered in the measurement of the service performance. Faced with dwindling revenue challenge, the Customs, under the leadership of Col. Hammed Ali (rtd), last March re-imposed ban on rice importation.

The re-introduction of ban on rice across boarders reversed an earlier policy last October, which allowed rice imports through the land borders, once appropriate duty and charges were paid.

At a review session held with Comptrollers of Border Commands and Federal Operation Units, the service noted that the dwindling revenue from rice imports through the land borders did not match the volume of rice landed in ports of neighbouring countries.

The Customs, in a statement by Wale Adeniyi, Public Relations Officer, said: “Rather, reports from border commands indicated an upsurge in the tempo of rice smuggling. Implementation of the restriction order got off to a smooth start, with a high level of compliance in October 2015. “However, revenue started dwindling from January 2016, with importers blaming access to forex as major impediments.

During the five-month period when the importation was allowed, October 2015 to March 17, 2016, a total of 24.992 metric tons of rice valued at N2,335,131,093 were imported through the land borders.

“During the period, total revenue generated amounted to N1,685,112,810, which is considerably lower than the revenue projected to be generated with the removal of import restrictions.

“However, an upsurge in the number of the seizures has been reported across the land borders since January 2016. In the first two months of 2016, a total of 9,238 bags were seized, with Duty Paid Value of N64,666,000 made by the Customs antismuggling patrol teams of federal operations and border commands.”

Similarly, crash in crude oil prices in the last few years has effected a deep cut in revenue flow to the federation account.For over a year, Nigeria is grappling with low oil prices amidst glut in international market, as output rose above demand.

Added to this is a recent spate in bombing of oil facility in Niger Delta by the militant members of Niger Delta Avenger leading to drastic cut in Nigeria’s oil production by almost half. In a related development, the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) may recommend FAAC sanctions against Deposit Money Banks (DMBs), which fail to make available their records to hired consultants authorised by the revenue commission to carry out verification and reconciliation with various banks.

“A commissioner from revenue commission had informed that there was a lot of money accruing from bank charges verification and reconciliation with the various commercial banks and that there was the need for FAAC to consider sanctions on banks who refuse to make available their records to the appointed consultants,”
 a source told New Telegraph in Abuja.

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