FAAC sub-committee asks FG to repay N228 billion borrowed for 2023 general elections
The Postmortem Sub-Committee of the Federal Account Allocation Committee (FAAC) has recommended that the Federal Government refund the about N228 billion loan it took from the non-oil excess revenue account to fund the 2023 general elections.
This is according to a report on the inflow into and payments from the non-oil excess revenue account for the period January 2020 to October 2023, which was signed by sub-committee chairman, Kabir Mashi, on December 14, 2023.
Mashi, who was once an acting Chairman of the Federal Inland Revenue Service (FIRS) is also a Federal Commissioner of the Revenue Mobilization and Fiscal Allocations Commission (RMAFC), representing Katsina State.
The genesis of this report can be traced back to a FAAC Plenary meeting held in September 2023. During this meeting, members raised alarms over the substantial deductions from the Non-Oil Excess Revenue Account, prompting a deeper investigation.
These concerns were primarily centred around the large sums being borrowed by the Federal Government. The sub-committee further wrote to the Office of the Accountant-General of the Federation (OAGF) to provide some information as it examined the Non-Oil Excess Revenue Account Ledge.
FG made N864.16 billion in deductions
The loan taken for the 2023 general elections makes up about 26% of the total deductions between January 2020 to October 2023, according to the sub-committee.
There were other deductions made for different purposes, such as a refund of gas flared penalty to the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).
The findings of the sub-committee read:
- “That the total inflow into the Non-oil Excess Account for the period January 2020 to October 2023 was N2,607,067,427,659.48;
- “That the total amount distributed to the three tiers of Government was the sum of N1,035,298,000,000.00 in the period under review;
- “Total deductions from the Account for other purposes amounted to N846,159,187,753.64 in the period under review;
- “That the sum of N20,009,001,423.57 was deducted as Refund of Gas Flared penalty to NMDPRA;
- “That the sum of N20 billion was transferred to the 20% of the Amount due to States on ECA withdrawals Account;
- “That the sum of N136,571,812,718.58 was used for Refund of PAYE to States and the sum of N31,311,515,329.52 for FCT respectively;
- “That FGN borrowed the sum of N41,844,164,400.00 for the payment of final Settlement of Ground Rent Liabilities;
- “That FGN borrowed the sum of N227,998,501,190.36 for the funding of 2023 General Elections;
- “That amount borrowed by FGN for Payment of Contingencies to the Office of the National Security Adviser was N2,750,000,000.00;
- “That the sum N28,608,118,834.81 was deducted from the Account to Refund Paris Club Loan Deduction from SRA of FCTA;
- “That the difference between Foreign taxes figures on Component Statement and Actual was deducted from the Non-Oil Account to the tune of N73,066,073,856.80;
- “The sum of N30,000,000,000.00 was deducted from the Account for refund to CISS being amount borrowed for FIRS’s Priority Projects;
- “That there was no record that the amounts borrowed by FGN were paid back.”
In its recommendations, the Sub-Committee recommends that the total deductions of N864.16 billion for other purposes should be refunded back to the account.
It also stressed that further deductions from the account should be in line with the vertical revenue allocation formula.
The recommendation for the Federal Government to refund the borrowed funds is a significant step towards ensuring transparency and accountability in the management of Nigeria’s financial resources.
While there seems to be no known specific information available about the creation of a non-oil revenue account in Nigeria, its concept appears to parallel the structure of the Excess Crude Account (ECA).
Established in 2004 by then-President Olusegun Obasanjo, the ECA functions as a natural resource fund, primarily serving as a fiscal buffer during economic downturns.
The ECA accumulates revenues exceeding the benchmark crude oil price set in the national budget, providing a savings mechanism for the country.
In a similar vein, it is conceivable that the non-oil revenue account operates on a parallel framework, wherein surplus revenues from non-oil sources are earmarked for savings.
Notably, the Federal Government’s approach to withdrawing from these accounts has occasionally deviated from the standard vertical revenue allocation formula outlined by the Revenue Mobilization Allocation and Fiscal Commission (RMAFC).
This formula currently allocates 52.68% of revenue to the Federal Government, 26.72% to states, 20.60% to local governments, and 13% for derivation.
The Federal Government’s deductions from the non-oil revenue account, often contrary to RMAFC stipulations, highlight ongoing challenges in adhering to established fiscal management protocols.
Also, efforts to revise the revenue allocation formula under the previous administration of Muhammadu Buhari led RMAFC to propose a new distribution: 45.17% for the Federal Government, 29.79% for states, and 21.04% for local governments.
This proposal represented a shift in resource allocation, reducing the Federal Government’s share by 3.33%, while increasing the states’ and local governments’ shares by 3.07% and 0.44%, respectively.
However, akin to prior attempts to revise this formula, the proposal was not approved. There appears to be no immediate prospect of such a revision under the current administration, reflecting a continuity in the status quo of revenue allocation in Nigeria.