Financial experts have raised concerns over the N790 billion saving from June’s distributable revenue of N1.9 trillion amid the economic hardship facing the majority of Nigerians.
The development comes amid the increased 22.79 per cent inflation rate, a hike in fuel price, as well as unstable forex market with Naira depreciating against the Dollar, which was at N799 to $1 during the weekend, resulting in baggage of hardship.
DAILY POST recalls that on Thursday last week, the federal government distributed N907.054 billion in revenue to federal, state and local government councils.
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The figure presented a substantial differential between the N786.161 and N655.932 billion distributed to the three-tier governments in May and April, respectively.
The increase in revenue is not unconnected with the revenue saved from fuel subsidy removal.
Dele Alake, special adviser to the president on special duties, communications and strategies, disclosed that out of accrued revenue for June, N790 billion would be saved.
In 2013, the ex-Governor of Rivers State, Rotimi Amaechi, had asked the former President Goodluck Jonathan’s led federal government to share savings accrued from the Excess Crude Oil Account.
But, the situation looks different today, as the state governors seem to be behind Tinubu’s federal government in saving N790 billion from June’s FAAC revenue.
According to the federal government, the savings would complement its proposed Infrastructure Support Fund, ISF.
However, DAILY POST gathered that the government has not established the required legislative framework and policies against the funds’ looting.
To this end, the Center for Fiscal Transparency and Integrity Watch on Monday said the three tiers of government must ensure they implemented the ‘Open Portal Policy’ introduced by former President Muhammadu Buhari’s regime.
Speaking with DAILY POST on Monday, Dr Basil Chukwu, a Senior lecturer at the Department of Economics & Development Studies Alex Ekwueme Federal University, Ndufu-Alike, said that instead of the government saving the N790 billion during a period of severe economic shocks, it should be used for salary increment and to boost the capacity of existing refineries.
“There’s nothing wrong with a country saving part of its accrued income for the provision of infrastructure (where there are deficits) and rainy days.
“However, Nigerians are cautious of government’s promises over time. The last two administrations repeatedly removed oil subsidies and pledged to invest equally in infrastructural development, especially education, health and roads. These gains, rather than meeting the targets, ended up unaccounted for.
“Two questions beg for answers. First, what is the guarantee that this move will provide different results, especially given that not much has changed in the command structures of government in the past eight years? Rather than saving during this period of severe shocks on the economy, I think the government should apply the savings to increase salaries/wages to stimulate aggregate demand; fix the ailing refineries to at least operate (if at all) at 30-40 per cent installed capacity”, he stated.
On his part, a popular economist and the former President and Chairman of the Council of Chartered Institute of Bankers, Prof Segun Ajibola said it would be prudent for the government to set aside savings for infrastructural development at the grassroots levels.
He noted that apart from savings from fuel subsidies payment, the government had made additional revenue from the recent foreign market reforms introduced by the Central Bank of Nigeria.
“The increase in the amount sharable from the Federation Account arose from not just the savings from petroleum subsidy removal, but mainly from the monetization of the foreign exchange component of government revenue at the increased Naira to US$ for June.
“It is prudent, therefore, to set aside a portion of the enhanced Naira revenue for purposes such as infrastructural development at the grassroots. It is also a way of saving for a rainy day.
“One, therefore, hopes that a good template for managing and accounting for the new infrastructural support fund would be put in place”, he stated.
Similarly, an accounting and financial development don at Lead City University, Ibadan, Prof Godwin Oyedokun said that every Nigerian should watch the federal, state and local governments to ensure that the savings were used for infrastructural development.
According to him, only when the funds were judiciously invested in infrastructural development can the government’s impact be felt by the citizenry.
“The amount that is being saved from increased revenue should reflect on infrastructural development. The States and the local governments must judiciously use the revenue for improved infrastructures”, he stated.
Meanwhile, Eze Onyekpere, Lead Director of the Centre for Social Justice (CSJ), noted that President Bola Ahmed Tinubu’s administration has no policy or legal framework guiding its decision to save N790 billion from June’s FAAC revenue.
He said: “this new and unprecedented savings fund must be based on a clear legal and policy framework approved through the law-making powers of the National Assembly, based on agreements between the federal and state government, showing how the funds will be managed, including its distribution, accruing interest and investment by the three tiers of government.
“The reasons stated for withholding this money may be part of the objectives of the new law, and this is essentially about creating a convergence between fiscal and monetary policy”.
He stated that the proposed ISF should be backed by law and a clearly defined policy framework, not a mere pronouncement.
Onyekpere added that Nigeria’s current economy calls for prudency, accountability and transparency.
“The hardship in the land demands the greatest value for money in the allocation, expenditure and management of public finances.
“It is time to reintroduce the practice of publishing allocations to states and local governments in major newspapers and on the Federal Ministry of Finance website.
“Increased transparency in revenue allocation will enhance public awareness and promote accountability in the use of public resources”, he stated.
