Cash Crunch: Senate Backs Oronsaye Report

Cash Crunch: Senate Backs Oronsaye Report
  • Says rationalisation of agencies will save economy from collapse
  • Urges diversification of revenue sources
  • Moves to block revenue leakages, rejects N6trn tax waivers

By Mbachu Godwin, Abuja

After years of recommendations, the senate yesterday called for the immediate implementation of the Oronsanye report on the rationalisation of government agencies, noting that it will save the country from dwindling revenue and economic collapse.

Recall that the Oronsanye Committee was set up by the Obsanjo’s administration on rationalization of government parastatals and agencies. 

Chairman, Senate Committee on Finance, Senator Solomon Adeola, APC Lagos West, made the call during the day-two interactive session with the federal government’s ministries, departments and agencies, MDAs on the 2023-2025 Medium Term Expenditure Framework and Fiscal Strategy Paper, MTEF-FSP.

Besides, the upper legislative chamber called for the revitalisation of cocoa, groundnut, rubber and palm oil plantations in the country to further diversify the economy from crude oil.

According to Senator Adeola, it has become necessary to diversify Nigeria’s economy from crude oil to other agricultural commodity products due to the increasing dwindling revenue profile of the nation.

The chairman said there was a new economic order in Nigeria that required ministries, departments, agencies and MDAs of the federal government to think of alternatives to improve the country’s revenue profile.

Sen Adeola averred that the emphasis at the moment was how best to earn more foreign exchange, adding that cocoa, groundnut, rubber and palm oil were major foreign exchange sources for Nigeria in the past.

He said: “We are having shortfalls in daily crude oil production and so we must make frantic steps to bring back the groundnut, cocoa, rubber and palm oil produce to earn more foreign exchange for Nigeria”.

The Legislator said the Senate was committed to ensuring the setting up of the required regulatory bodies to drive the production of the commodity products.

He also called for the provision of relevant data on the monthly and yearly production and sale of cocoa from the Cocoa Research Institute of Nigeria.

Executive Director of CRIN, Dr. Patrick Adebola explained that the institute has estate plantations of cocoa, cashew and coffee in all the six geo-political zones of the country, adding that efforts were on to make agricultural products the mainstays of the economy as it used to be before the advent of oil.

Adebola lamented that Nigeria which used to be the second highest cocoa producer in the world now ranks fourth after Indonesia, Cote D’Ivoire and Ghana, but assured that the country would soon recover its rightful place with efforts being put in place by the federal government.

He disclosed that CRIN has diversified into the production of cocoa bread, cocoa juice, cocoa butter etc to further boost its revenue generation.

Meanwhile, the Senate Committee on Finance has kicked against a N6 trillion tax and import duties waivers in the 2023 proposed budget.

The Committee said this during a panel meeting between the Minister of Finance, Budget and National Planning Mrs Zainab Ahmed and heads of revenue generating agencies in Abuja.

The meeting reviewed the proposed 2023-2025 medium-term expenditure framework and fiscal strategy paper, MTEF/FSP’.

The minister informed the committee that the N19.76 trillion proposed as the 2023 budget would have a deficit of N12.43 trillion because N6 trillion had been projected as tax and import duty waivers, while fuel subsidy would take N6 trillion.

In his reaction, Solomon Adeola, chairman of the committee, rejected the budget proposals.

Adeola said the projected N12.43 trillion budget deficit and the N6 trillion tax and import duty waivers should be adjusted before sending the proposals to the national assembly for consideration and approval.

He also urged the minister to look into the list of beneficiaries of the waivers for the required downward review to N3 trillion to give room for the reduction of the N12.43 trillion deficit figure.

According to him, the issue of waivers should be given top priority by relevant authorities, adding that Nigeria does not have room for wastages and leakages.

“The proposed N12.43 trillion deficits for the 2023 budget and N6 trillion waivers are very disturbing, and must be critically reviewed”, he said.

“Many of the beneficiaries of the waivers are not plugging accrued gains made into expected projects as far as infrastructural developments are concerned.

“The same goes for the tax credit window offered by the FIRS to some companies.

“Billions and trillions of naira can be generated by the government as revenue if such windows are closed against beneficiaries abusing them and invariably provide required money for budget funding with less deficit and borrowings.

“The NCS should help in this direction by critically reviewing waivers being granted on import duties for some importers just as the FIRS should also review the tax credit window offered to some companies without corresponding corporate social services to Nigerians in terms of expected project executions like road construction.

“We cannot accommodate these N6 trillion tax waivers. It is in this way that the committee frowns at the projected N12.41 trillion budget deficit contained in the 2023-2025 MTEF/FSP and the alarming projection of ‘no provision for treasury-funded MDAs’ capital projects in 2023.

“This scenario is unacceptable, and we must find ways to drastically reduce the deficit.

“It is apparent that the borrowing trends cannot be allowed to continue unchecked and conscious efforts must be made to reduce budget deficits.

“Achieving these goals requires us to look inwards towards increased revenue generation, blocking of leakages and restraints on what are generally frivolous expenditures by MDAs, particularly the Government Owned Enterprises, GEOs.

“Our preliminary findings and directives to some of the agencies had led to the payment of millions of naira into CRF in accordance with the fiscal responsibility Act 2007 and the 1999 Constitution.

“It is needless to say that these millions not paid to CRF contribute to the yearly huge budget deficits of the federal government.

“The investigation was also able to get some agencies to accept opting out of the Federal Budget altogether based on their internal revenue generating ability. Some of these findings are relevant to the proceedings of this 5-day interactive session.

“From the challenges thrown up against our economy in terms of the Russia-Ukraine war, the impact of crude oil theft, insecurity, and continuing infrastructure deficits, it is time for all to agree that it cannot be business as usual for government revenue and expenditures.

“We need to block all revenue leakages and misuse in Ministries, Departments and Agencies ,MDAs, as well as control expenditure to free funds for needed infrastructure development and provision of social services”.

The committee also directed the Nigeria Customs Service, NCS, to carry out a downward review of the proposed waivers in the fiscal document by 50%.

It added that the Federal Inland Revenue Service ,FIRS, should critically look at abuse of tax credit by some companies.

Ahmed, however, said the issue of the budget deficit is a result of debt servicing, adding that tax credits are issued when companies construct projects and the projects are certified and issued certificates by the federal ministry of works.

On his part, Muhammad Nami, FIRS chairman, told the committee that tax credit was an important innovation of government, adding that it had yielded positive results from September 2019 when it was introduced through Executive Order 007 by President Muhammadu Buhari.

He urged the committee not to move in the direction of scrapping, saying it is only given to companies with evidence of projects executed.

On his part, Hammad Ali, Comptroller-General, Nigeria Customs Service,NCS, assured the committee of an improved revenue generation in the 2023 fiscal year.

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