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BANKING AND FINANCE

Adeosun’s Historic Milestone In Federal Ministry Of Finance

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The minister of finance, Mrs Kemi Adeosun has made noteworthy achievements in the nation’s ministry of finance despite the economic woes that ploughed the country in recent times. MARK ITSIBOR takes account of her achievements in the last two years

In her quest to change the tide in the administration of public finance and entrench transparency across all government establishments, minister of finance, Mrs. Kemi Adeosun has endeared herself as the castle of innovations and pillar of economic restructuring for the President Muhammadu Buhari-led federal government. Since assumption of office in 2015, the enthusiastic minister has never hide her passion for a more transparent, diversified and business friendly Nigerian economy. From that, she has not deviated. The evidence is found in the tractable records she has set in the federal ministry of finance.

 

Creation Of Efficiency Unit

To show that she was prepared for the job, Adeosun swiftly went ahead to establish Efficiency Unit (e-unit) in the ministry of finance on November 25, 2015 – barely two weeks to her assumption of duty. The efficiency unit was established to ensure that all government expenditures are necessary and represent the best possible value for money. She found competent hands in the current director general of Debt Management Office (DMO), Ms. Patience Oniha to head the unit that has seen the federal government saving about N15 billion annually since then.

 

Prior to her assumption of office, available records show that the nation’s recurrent expenditure completely dwarfs capital expenditure by a ratio of 84/16. This includes non-wage related overhead expenditure such as travel costs, entertainment, events, printing, it consumables, and stationeries, among others. Since its creation, the unit has undertaken programmed reviews of all government overhead expenditure with a view to reducing wastage, promoted efficiency as well as guaranteed quantifiable savings for the country. Specifically, the efficiency unit has been monitoring the ministries, departments and agencies (MDAs) of government, identifying and eliminating wasteful spending, duplication and other inefficiencies; and identifying best practices in procurement and financial management.

 

The unit has also introduced price guidelines and shared services policy among MDAs to increase transparency in the procurement process, while the work processes and practices would be reviewed to identify and eliminate areas of wastage, excess capacity and duplications. The efficiency unit, in its short history, has made several achievements engaging and working with key public sector stakeholders. the e-unit has embarked on several cost cutting initiatives that has influenced the issuance of circulars to all MDAs by the secretary to the government of the federation, improved the subsisting procurement process to generate savings using the government’s large purchasing power, improve transparency in the procurement process through introduction of a price checker, a web based platform which provide a portal for vendors to upload prices of their goods which MDAs will use for procurement, thereby providing more transparency and eliminating sharp practices in the procurement process.

 

Introduction of VAIDS

Adeosun’s knack is not only in cutting cost and saving for the federal government. She has also proved that the federal government can have a more sustainable source of revenue than oil. Her priority is taxation. she was the brain behind the drafting a new national tax policy for the government, which has helped to remove the encumbrances to tax collection and remittances, with a focus to encourage investments in Nigeria and raise more funds for the government. That has since been adopted and now yielding the desired result.

 

Beyond that, adeosun also piloted the introduction of the ever celebrated voluntary assets and income declaration scheme (VAIDS), a time-limited initiative that allows defaulting taxpayers to regularize their tax status relating to previous tax periods. VAIDS, is an amnesty programme that provides tax defaulters a nine-month opportunity to voluntarily and truthfully declare previously untaxed assets and incomes. It also ushers in an opportunity to increase the nation’s general tax awareness and compliance.

 

At the last count, VAIDS had generated over $50 million in revenue between June 29, 2017 when it was launched and october 31, 2017. Two foreign companies have also agreed to pay $110 million in regularizing their tax status. about $1 billion additional revenue is being targeted from the scheme. Already, the federal government has recruited and trained 2,190 community tax liaison officers (CTLOS) under the scheme.

 

Establishment of DBN

The establishment of the Development Bank Of Nigeria (DBN) is another milestone of the federal government through the federal ministry of finance to spur growth of micro, small and medium enterprises (MSMES). The federal government had during the 2016 annual meetings of the IMF/world bank reached agreement with the World Bank group, African development bank and the European investment bank for the release of $1.3 billion for the take-off of the DBN. The DBN became operationalized in the first quarter of 2017 following the issuance of operating license by the central bank of Nigeria (CBN). The bank met the CBN’s minimum capital requirement of n100 billion as well as the reconstitution of the board of the bank. The DBN  has created a credit line of n5 billion to be accessed by MSMES through its partner financial institutions.

 

The minister of finance, who led Nigeria’s team to the meeting, explained that the development bank of Nigeria (DBN) will focus on SMEs and giving them low cost loans. In March 2017, the ministry announced that the central bank of Nigeria had approved the grant of a wholesale development finance institution licence with national authorization to the DBN.

 

Clearing Of Pension Arrears

The federal government and the federal ministry of finance have been eulogized by the various workers’ unions for deeming it fit to clear the inherited arrears of pension benefits for 2014, 2015 and 2016. In April 2017, the federal government through the federal ministry of finance released n41.5 billion to the national pension commission for onward payment to retirees being their accrued pension benefits for 2014, 2015 and 2016.

The finance minister also confirmed that the sum of n12.5 billion being outstanding for January, February and march 2017 had been settled based on 2016 appropriation, bringing the tally to over n54 billion. The N41,566,565,184 released to Pencom was the outstanding appropriated for the year 2014 and 2016 by the national assembly for the settlement of the retirement benefits of federal government employees.

 

Whistleblower Policy

In line with the government’s decision to recover stolen funds and her anti-corruption posture, the federal ministry of finance under her supervision in December 2016, developed a whistleblowing policy, which empowers citizens to report public corruption the authorities.

The primary goal of the policy is to support the fight against financial crimes and corruption by increasing exposure of financial crimes and rewarding whistle blowers. It is hoped that through this policy, there will be increase in accountability and transparency and more funds would be recovered and deployed in financing Nigeria’s infrastructural deficit. To step up the work, the federal ministry of finance through pica opened a portal where information were supplied, and also recruited competent staff to handle the assignment. Series of petitions have been received, some of which are currently undergoing investigation.

According to Adeosun, over 2,500 reports have been made through various reporting channels as at July 2017, with 365 being actionable tips.

The minister said the tips related to issues of contract inflation, ghost workers, illegal recruitment and misappropriation of funds. Others according to her, include illegal sale of government assets, diversion of revenues and violation of treasury single account (TSA) regulations.

She said, “thirty-nine per cent (144) of the actionable tips relate to misappropriation and diversion of funds/revenue, 16 per cent (60) relate to ghost workers, illegal recruitment and embezzlement of funds meant for personnel emolument.

“Fifteen per cent (56) relate to violation of TSA regulation, 13 per cent (49) relate to contract inflation/violation of the procurement act. Others include failure to carry out projects for which funds have been released and nine per cent (34) relate to non-remittance of pension and national health insurance scheme (NHIS) deductions.”

According to the minister, others include concealed bail-out funds and embezzlement of funds from donor agencies.

She added that a commission of between 2.5 per cent and five per cent of the amount recovered as an incentive would be paid to the whistleblowers that provides information that are original and directly lead to the recovery of stolen or concealed funds or assets.

She disclosed that the sum of n375.8 million had been paid as reward for 20 whistleblowers in the first batch payment, while payment for the next batch would soon be made.

The impact of the whistleblowing policy in terms of recoveries has exceeded the administration’s expectations.  The tighter rein on public finances has allowed the government to invest us$500 million in country’s sovereign wealth fund, during the recession.

 



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