By Juliana Taiwo-Obalonye
Hon. Oluwole Oke, a representative of the Oriade Federal Constituency of Osun State in the House of Representatives, on the side lines of the 11th Pan-African Conference on Illicit Financial Flows and Taxation (PAC 2023) spoke on how Nigeria Employers’ Consultative Association (NECA), others were frustrating efforts to tackle illicit financial flow.
He spoke on various issues at the event held on November 22–24, 2023, in Accra, Ghana, with the theme: “Making Global Tax Governance Work for Africa.”
What’s the takeaway from 11th Pan-African Conference on Illicit Financial Flows and Taxation (PAC 2023). How will this impact on your work as a parliamentarian as regards illicit financial flow?
The essence of this summit is to check issues bordering on revenue leakages through superior skimming that comes in form of tax schemes, transfer pricing, tax holidays, capital allowances, free trade zones; in tax parlance, we call them tax breaks. Ordinarily, they are designed to encourage foreign direct investments but because they’re not transparently implemented, they have now become very harmful to our economy. To really confront this, you need a lot of legislative work. As lawmakers, we need to go back to the drawing table, evaluate all the fiscal policies which were designed to attract foreign investments but which over time we have seen that are very harmful to us.
For example, why would you have several regulatory agencies? We have the Nigeria Export Processing Zones Authority (NEPZA), we have an Oil and Gas Free Zone in Onne. So you have all these arrays of bodies that are put in place to regulate fiscal policies. And over the years, we have seen that they are not helping us because you see companies that will hide and be double dipping. Double dipping means a company taking advantage of 1234 tax incentive.
So the take away from this summit is how do we ensure transparency in the administration of the tax incentives in Nigeria? How do we ensure disclosure of beneficial ownership? How do we ensure disclosure for tax administrators so that they can give the best for the country without costing the taxpayers any harm? You have to balance the two. So the essence of this is that we need to redesign our tax system. Otherwise, the foreigners who come under the guise of coming to invest based on the incentives that we throw up, end up taking undue advantage of Nigeria, both in the extractive industry and all other sectors of the economy.
PAC2023, co-organized by the African Tax Administration Forum (ATAF) and the Tax Justice Network Africa (TJNA), brought together policy makers, civil society organisations (CSOs), and tax justice stakeholders to discuss how African nations can lead international discussions that affect their efforts to engage in domestic resource mobilisation and stop illicit financial flows from the continent. So how will you be driving that as a parliamentarian?
As a member of the Finance Committee in the House of Representatives, even as chairman of the judiciary committee, I have presented a motion to the floor. The Parliament should look into this issue of tax breaks and see how it affects us negatively and cure it. Unfortunately, the private companies that are enjoying this are fighting the parliament under Nigeria Employers’ Consultative Association (NECA). As a matter of fact, they have approached the court to say the parliament has no power to investigate them. Yes, if you say because we don’t appropriate funds to you, but the parliament is to investigate the activities of regulators, who are babies of governments under Section 88 of the Constitution, we have that power because we appropriate funds to them. Even when you go back to the provisions of legislative arm Section 17, the Parliament has the power of inviting people to get evidence from them. So for example, if I’m inviting Julius Berger, yes I don’t appropriate funds to Julius Berger but you’re enjoying tax holidays, you’ve gotten a certificate of acceptance from the Federal Ministry of Industry. So you enjoy capital allowances. To the extent of how has the Federal Inland Revenue Service (FIRS) performed? How have the industries performed? I can invite you to get information from you. So I am not investigating you per se, I simply want information from you to evaluate the performance activities of these agencies of government. So we must all come together, the members of the press, the civil society, NGOs and the parliament, we must work together and educate Nigerians on this.
For example, look at how our gold is being illegally mined. If we really police our solid minerals sector, do we really need to borrow money to finance our budget? No we won’t. So we must come together to work together to salvage our country.
President Bola Tinubu in his visits to other countries has been inviting investors, telling them we’re open for business. Telling them you can bring in your money and take it out etc. How do you get the executive arm to understand the implications of some of these promises?
Yes, it is all through robust legislation, legislative activism, we can actually put this on the table. Yes, it is good to encourage people to come in but there must be a borderline to what you are entitled to. When you come in, you can do your business, it is after you pay your taxes you can repatriate your profit. There’s no problem about that provided you operate within the limits of the law. It is important for lawmakers to be on top of their game and adopt best international practices. Thank God, you saw how we won at the United Nations, Africa led by Nigeria’s Ambassador to the UN, Tijjani Muhammad-Bande, unified against the flow of illicit money and how the tax regime should be all inclusive and not to be at the detriment of developing nations on November 23rd. So, we must plead with the executive to sign for this.
Speaking of the victory at the United Nations, concerns have been raised at the summit that Nigeria might be targeted because it led this African group to this victory. Ahead of moving to the fifth committee stage, what do you think should be done to protect Nigeria?
The truth is this, Nigeria remains world assets, global assets, waiting to be tapped. Is it in terms of human resources of about 220 million people? Is it in terms of what God in his infinite mercy has put under our soil? So they all know that the nation they need in West Africa, in Africa, is Nigeria. And for Nigeria to have come out that way, is a signal. So you will see them you know, also looking at their bilateral and foreign affairs policies to work in tandem with the realities on ground. It means the developing nations are also waking up, that enough is enough. For all of us to come to equity, we must come with clean hands and that’s the message.
In terms of illicit financial flow and terrorism funds, Nigeria’s financial institutions have been known to be a conduit for all these. In terms of your oversight, what is the parliament doing to halt this?
I agree with you that the banking system is very porous. If you look at people being kidnapped and they are taking ransom from them, where do they take the money to? It means they have collaborators. So we need to revisit our banking and monetary policies to ensure an efficient cashless economy. We also need to ensure that we have the infrastructure. You know when you have IT infrastructure. People particularly from the very rural areas, hide under the fact that they don’t have internet services so they cannot do XYZ, so they should be allowed to operate Cash Wise. No! Federal government should stand up, NCC should regulate, service providers – MTN , Airtel, Glo, 9mobile, should be forced to provide services in rural area, let there be large coverage so that nobody can be hiding under the fact of not having internet service bandwidth to encourage this large volume of cash transaction. They will need to handle that. If they don’t do that, we are just wasting our time.
From available evidence in court judgements and reports of the anti-corruption agencies, procurement is believed to be the weakest link in the fight against corruption. How does the National Assembly intend to tackle this challenge?
I agree with you because I’ve been privileged to chair the procurement committee of the House in the past in the 8th assembly and truly, if we really want to wage war against corruption particularly in the public sector, we need to enforce adherence with the provisions of the Public Procurement Act. The law is very good and is one of the best laws we’ve crafted in this country. So, the regulatory body BPP – Bureau for Public Procurement should be up and doing because they are also encouraging corruption. Because they issue certificates of no objection based on which the Federal Government at various and threshold levels award contracts and they do so without due diligence, they are also conniving with the procurer, with the agency, and of course, the company. So we know these things. So we should be honest with ourselves. We have a good law in place. But what is important is to confirm and implement that law to the letter and let there be sanctions. Various cases in court based on violation of the procurement Act, where are they? Have they come to a conclusive end? Have they been sanctions? A situation where you have a case in court for over six, seven, 10 years , then what do you expect? Everybody will be tired. So there should be strict adjudication on validation so that it will serve as a kind of caution to anybody who also wants to do such. But a situation where I violate the procurement Act and I can manipulate the court for the case to last for five, 10 years, even when all the actors, witnesses may have left or died, you see the case becomes a bad one. So, those are the challenges we are having. I agree totally, that to a larger extent we are not fair to this country Nigeria; the abuse is through the procurement process.
In the PAC2023 summit at a particular session, we were made to see the disadvantage Nigeria and other African countries are as a result of exporting our raw materials, and bringing in finished goods. There’ve been talks about patronising our made in Nigerian goods one of which was the criticism you lawmakers faced as regards your decision to go for foreign SUVs as against patronising our local manufacturers like Innoson. With what you’ve heard, what will be the way forward? What will you be championing among your colleagues as well as when you’re doing your oversight work?
In Nigeria for example, we have all the other factors of production on ground except power. Power is our major problem in Nigeria. Once we’re able to fix power, I mean it’s not rocket science. We have various sources of power, we have gas, turbine, wind, sun, nuclear. We have all the sources of power, you know it. So we need to fix power in Nigeria, once we do that every other thing will flow. In fact, you will see manufacturers coming in. But in a situation where you want to manufacture in Nigeria, and you have to spend 50 per cent of your money to buy diesel to power your equipment, you are not breaking even. That’s why you see so many companies Michelin, Dunlop all of them leaving Nigeria to other climes where there’s power. So, the moment we’re able to fix, everything will be fixed. Those who are producing vehicles locally, you need to go and find out from them what they go through when it comes to bills when they have to purchase power or buy gas. It’s very expensive. And that’s why both small, medium scale industries are dying because they can’t just survive without power.
So what do you call what President Bola Tinubu is doing, are you saying inviting investors to come and invest in the country without fixing power first is a wrong move?
It may end up in policy somersault. The first thing we need to confront is to fix the power. And I’m sure Mr. President understands that. And that might have been the reason why he is reinventing Germany Siemens cooperation with Nigeria in the areas of power generation. You need to fix power. If you don’t fix power, you can’t go anywhere, you will just be dancing around on the same spot. You need to fix power. Is it agriculture, manufacturing, you name it. Assuming you produce fresh farm produce, where do you store them when you don’t have power? So we must have power. So we have to go back to make sure power is readily available and is not too expensive beyond the reach of the businesses.