While Nigeria continues to battle with the ravages of financial constraint leaving the Government pressurised, the profile of revenue leakages has not ceased from its oscillating patterns within the systemic architecture of Government framework in the Country. Hence, while the echelons of Government authorities have continued to lament revenue shortfalls, leakages of Government revenue within the architecture of its own institutions have been a monumental source of losses. This is not however, to say that such leakages are only limited to Government bodies, but it is arguable that the practice is only assuming entrenchment from private entities owing to negative legacies from Government establishments.
The disturbing waning of the economy, with deepening crises of debilitating effects has continued to attract reactions with recommendations which have included the significant necessity for the Government to downsize the profligate driven cost of governance, and similarly to block leakage channels within the structural formations of Government owned institutions. In recent times, investigations by the National Assembly have continued to reveal depth of revenue leakages, including, unremitted, unaccounted and untraceable funds on the part of several Federal Government Ministries, Departments and Agencies (MDAs). The inability of several of these MDAs whose report before panels of either the Upper or the Lower Chamber of the National Assembly were found wanting to provide vivid explanations, speaks volume of the rot dwelling within the strata of Government architecture in the Country. One would only sit to ponder on the depth of losses the Country has been made to suffer over the defective system where sapping gaps have been left so wide that exploiting commonwealth resources for personal aggrandizement has become a featural tide within Government formations. It is thus, perceivable that the prevailing system has only been ridden by porous structures which are largely insensitive to guide against corruption.
It, however, appears the phenomenon of revenue leakages has transcended from within the formations of public offices to private entities. On Tuesday, the Joint House of Representatives Committee on Finance, Banking and Currency did disclosed that Nigeria lost no less than $30 billion from 2005 to 2019 annually from revenue leakages. The leakages as noted, were basically from activities of agencies and companies in banking, oil exploration, engineering, procurement, construction, installation, marine transportation, manufacturing and telecommunications. According to the committee, the Country has lost significant foreign exchange and revenue shortfall from the infractions.
The Chairman of House Committee on Finance and Co-chairman of the Joint Committee, James Faleke, in his remarks at the commencement of the investigative hearing on the allegations, was quoted: “The necessity and commencement of this investigation was as a result of growing problems in the financial management of all the God-given resources in our country, Nigeria, from our vast natural resources to the value added by these resources in the form of foreign exchange earnings and revenue generation, etc. into these investment environment and opportunities. Thus, this Committee deemed it imperative to investigate revenue leakages and loopholes in the system, that have contributed to a loss of over $30 billion dollars in annual federation tax revenue between 2005 and 2019.
“The investigation therefore, was premised on the documents received from target agencies and companies in banking, oil exploration, engineering, procurement, construction, installation, marine transportations, manufacturing and telecommunications, upon which the Committee noted significant foreign exchange and revenue shortfall infractions against the Federal Republic of Nigeria by these stakeholders. This places an imperative need to put an end to, or at best, minimise all attributable infractions that have been instruments in the hands of some stakeholders in bringing economic woes to this country and her people. During our documentation compilation and a further look at the economic woes caused the country by some companies, the Committee has noted the following major infractions which have multiplier effects on other infractions:
“Lifting of some crude oil and gas by oil exploration companies, that were not wholly and legally allocated to the Consignors in JV, PSC and PSA exploration activities including those whose crude oil Certificates of Quantity were not signed by the Department of Petroleum Resources and terminal operators; Concealment and non-disclosure of some crude oil liftings that ought to have been subjected to Petroleum Profit Taxation at PPT rates ranging between 50% of profit for PSC and PSA companies, and 85% of profit for JV companies; Inflow of foreign investments in the form of equity, foreign cash loans, equipment loans whose utilizations are majorly subject to tax, end up in transactions, foreign transfers that were at variance with the purpose of such inflows.
“Overnight and fictitious disappearance of Naira proceeds of foreign inflows from the bank accounts of Nigerian beneficiaries, and subsequent allocations of foreign exchange by CBN for Capital repatriations, Principal loan repayments and Interest payments; Multiple foreign exchange allocations to holders of foreign inflow Certificates of Capital Importation (CCI) over and above the amount brought into the country, leading to capital flight of the country’s much needed and scarce foreign exchange.
“Loan backed Certificates of Capital Importations without evidence of transfer to the foreign lenders in the form of principal repayment and interest payments; Some expected imports that were funded by foreign equipment loans and other direct allocations of foreign exchange for foreign exchange valid transactions were neither translated to imports nor their import duties paid to the Nigerian Customs Service; Capital Flight using the Form ‘M’ valid for Forex and Forex obtained by the beneficiary companies without utilization of the Forex to reflate the economy and taxes paid.
“The Committee shall extensively review all of the above infractions among others, to ensure that all federally collectible revenues are not only identified and recovered, but also to sanction companies involved in the other non-civil infractions in order to serve as a deterrent to potential classmates of the affected companies.”
It is apparent that the Country is presently bleeding economically. The debilitating effects have continued to pose ravaging impacts on the entire societal formations. The Government is practically grappling with the reality of revenue shortfalls. The need for the Government to get more reliable access to diverse sources of revenue is indisputable to execute capital projects necessary for resuscitating the economy from the crumbling state of precipitation. However, the prevailing phenomenon of revenue leakages constitute one of the strong forces of drawbacks hostile to such efforts to vitalising the economy. In as much as the Government continues to struggle to execute capital projects necessary to revitalise the economy due to poor availability of funds, it is indisputable that the economy would continue to suffer. It is therefore imperative for the National Assembly in harmony with the echelons of the executive arm to dovetail and channel seasoned efforts towards devising pragmatic structures to build up intelligent system virile to check against and responsively address the menace of revenue leakages cheating on the Country.