NASS and challenges of new Fiscal Responsibility Act

From Ndubuisi Orji, Abuja

When the Fiscal Responsibility Act(FRA) was enacted in 2007, the objective was to block wastes, check corruptionand generally enhance probity in the management of governmentfinances.
The Act was also designed toregulate “fiscal conduct, impose limitations on government spending,and prohibit certain fiscal activities, such as some kinds of debt securitiesand irresponsible borrowing by different tiers of government.”
Essentially, the Act, which isintended to give impetus to government anti-graft drive, had created the FiscalResponsibility Commission (FRC) to ensure enforcement of the Act.
However, 14 years after, analystssay the FRA has largely not been able to achieve its core objectives,owing to several factors, including the absence of clear cut sanctions forviolations of the law.
For instance, while the Act mandatedrevenue generating Ministries, Departments and Agencies (MDAs) to remit certainpercent of their gross earning to the Consolidated Revenue Fund (CRF), thisprovision has been observed largely in the breach.
The chairman, Civil SocietyCoalition Against Corruption, Suraj Olarewanju, told Daily Sun that thatthe operation of FRA, in the country, in the last 14 years had been very low,because the government has seemingly not shown commitment to the operation ofthe law.
He explained that this is moreespecially in the area of strengthening the FRC to effectively enforce theAct.
He said, “I think if I will doan assessment, it is abysmally low, because the Fiscal ResponsibilityCommission that was created by the Act; that commission is completely absent interms of enforcement in terms of the FRA.
“It is not even known toNigerians, if the commission is existing. There was an acting chairmanfor like four years, which tells you that the government is actually notcommitted to the genuine enforcement of any serious fiscal regime in thecountry.
“Even as it is now, thecommission still does not have a board. In the real sense of it, FRA
is not really seriously impacting in theentrenchment of sanity in the fiscal operations of Nigeria.”
The chairman of the FRC,Victor Muruako said the implementation of the FRA is being impeded byseveral lacuna in the law.
He said: “certain inherentloopholes, weaknesses and errors have hampered effective implementation of theAct.
“These include lack of clearoffences regime exacerbated by lack of sanctions; and inadequate funding, bothcritical factors that have greatly hampered implementation of the OperatingSurplus measure which is one aspect of the mandates of the commission that hasadded great value to governance through generation of independent revenue togovernment.”
Regardless, in a bid to make the Actmore effective, there are currently efforts by the National Assembly to amendthe FRA, so as to cure the defects in the principal law.
The proposed legislation,apart from providing clear cut penalties for violation of the act seeks to givemore teeth to the FRC in the discharge of its duties.
The bill passed second readingin the Senate late last year and is currently at the committee state. After itseventual passage, it will be sent to the House of Representatives forconcurrence.

X-raying the FRA Amendment Bill
The FRA Amendment bill isseeking to make far reaching changes to the existing law to make it muchmore effective and make the FRC more efficient.
For instance, the proposedlegislation empowers the FRC to be able to request for and compel disclosure ofinformation relating to public revenue and expenditure; conductinvestigations to ascertain violations of the Act; monitor and enforceremittance of revenue by MDAs into the Consolidated Revenue Fund (CRF) andpublish same at the beginning of every fiscal year; undertake prosecution ofviolators of the FRA.
Also, the bill is seeking to empowerthe FRC to monitor the operation of the Excess Crude Account and the variousFunds created under the Nigerian Sovereign Investment Authority Act, 2011; ensuring that profits and dividends accruable to the Federal Government in anyprivatised entity, where the government has shares are remitted to theCRF.
The proposed law also seeks toguarantee the independence of the FRC by providing an adequate fundingmechanism, security of tenure for the members among others.
The proposed legislation is also providinga clear timeline for the preparation and approval of the Medium TermExpenditure Framework (MTEF). According to the bill, the MTEF shall bepresented to the Federal Executive Council (FEC) before the end of the secondquarter of every financial year for consideration and approval.
According to the proposedamendment, the FEC is expected to approve the MTEF at most by the end ofJuly and present same to the National Assembly, not later than mid-August ofevery financial year for consideration and adoption. While on its part, theparliament shall consider and approve the MTEF before the last day ofAugust of every financial year.
Similarly, the proposed legislationlimits expenditure of MDAs to not more than 75 per cent of their gross revenue,while the amount of operating surplus paid by each corporation shall depend onthe extent of their funding from government treasury.
The proposed legislation isequally seeking stiff penalties for the violation of the Act.
According to the bill,” Anyperson who under-declares public revenue generated or collected by anygovernment institution, corporation, agency, or government owned companycommits an offence and shall upon conviction be liable to refund the totalamount under-declared, imprisonment for a term not less than three years orwith a fine not less than 10 per cent of the total amount under-declared, orwith both fine and imprisonment.
“Any person who duplicates aproject or item in the` budget, or accepts and expends a grant regarding anitem for which monies are appropriated, released and spent from the budget,commits an offence and shall upon conviction be liable to imprisonment for aterm not less than one year or with a fine not less than N1,000,000.00 orwith both fine and imprisonment.
“Any person who contravenes anyprovision of this Act commits an offence and shall where no other punishmenthas been provided be liable to imprisonment for a term not less than three (3)months or a fine not less than N500,000.00”.
Pundits say in an era of decliningrevenue, it behooves on the government to put in place strong fiscal measuresto block loopholes in government resources. Not a few see the FRAamendment bill as more or less a silver bullet in addressing the challenge ofprobity in the management of public finance.
According to Muruako, theproposed legislation if passed into law ‘ not only provides a most veritabletool to reset the economy but also provides a sturdy framework formacro-economic stability and attainment of a prudent and prosperous economyhinged on Best practices of transparency and accountability.”
He added: “we believe that aholistic remedy can only come through a substantial amendment of the FRA,2007.”
Suraj told Daily Sun that the baneof the country is a reckless disregard for fiscal laws and diligentimplementation of many fiscal initiatives.
Therefore, the anti-corruptionactivist argues that any legislative framework that would entrench fiscal disciplinein the country should be encouraged.
He said: “Anything that willentrench discipline in the fiscal regime in the country is more than welcomed;because the major problem pervading the service delivery in the country isthe challenge of reckless abandonment of fiscal laws in the country andalso the implementation of many fiscal provisions either in the budget or actsof the National Assembly or even existing programme of the government.
“So, if there is a proposalthat is looking at the loopholes or lacuna in the Fiscal Responsibility Act canbe filled, to then promote, improve fiscal regime in the country, that would behighly welcomed.”
However, the question is how sooncan the National Assembly complete work on the Fiscal Responsibility Act (FRA)Amendment Bill?
Although the Senate has expressedits commitment to the expedited passage of the bill, there are concernsif the parliament will keep to its promise. Often times, the parliament hasfailed to match words with action.
Therefore, analysts say the onus ison the National Assembly to treat the FRA amendment bill as a matter of urgentpriority, especially as the proposed legislation is perceived asmore or less a silver bullet in addressing the challenge of probity inthe management of public finance.