Customs, Other Revenue Agencies Stink of Corruption, Adeosun Discloses

bondsMinister of Finance, Kemi Adeosun
  • Customs, Other Revenue Agencies Stink of Corruption, Adeosun Discloses

Minister of Finance, Mrs Kemi Adeosun, yesterday, told the Senate that the Federal Government would sustain its over N6trillion national budget in the 2017 appropriation bill, expected to be submitted by President Muhammadu Buhari, after the consideration and subsequent approval of the pending 2017—2019 Medium Term Expenditure Framework, MTEF and Fiscal Strategy Paper, FSP, by the National Assembly.

Adeosun told members of the Senate Committee on Finance, led by its Chairman, John Owan Enoh, PDP, Cross River Central, who were on oversight visit to her ministry that government would maintain its over N6trillion annual budget because it spends over N3 trillion out of the budget sum for salaries, pension and debt services , leaving a paltry amount for capital projects.

She insisted that the country would be gambling with the figure for now as it can’t go below it anymore in the face of high expectations from its citizens.

Senator Enoh had told the minister that the committee’s visit was “actually driven by the collective decision of the Senate a few weeks ago that all its standing committees embarked on oversight visits to all ministries, departments and agencies of government.’”

“So, for us as a committee, in addition to having to respond to that requirement, it also became imperative that we embark on this maiden visit.

“Our hope is that on this visit, the minister, quite apart from giving us some highlights of the implementation of the Ministry of Finance budget in the year 2016,would also throw some highlights on few of some of the things that she feels the committee should know,especially the performance of our economy, no matter how briefly, and some things that we could take advantage of because we oversight her ministry, so that we don’t just hear as secondhand but hear as firsthand.

“This is October, the Medium Term Expenditure Framework is already sent to the National Assembly for approval so that the 2017 budget can come. We have a few revenue challenges, most of all is the performance of the independent revenue of government. So we think that the minister would take advantage of this meeting and be able to bring us to speed with a few of these things, “he added.

The Committee berated the minister for what it described as her poor handling of agencies under her watch, resulting in monumental leakage and loopholes.

”There are a lot of drained pipes and leakages in the customs, I don’t think that the ministry under your watch has given sufficient attention to the customs in particular, “Senator Hope Uzodinma, a member of the committee and Chairman, Senate Committee on Customs told her.

Responding, Mrs Adeosun disclosed that government’s efforts at realising money from revenue generating agencies to meet the expectations of Nigerians were being hampered by high-level corruption still existing in the agencies, especially the Nigerian Customs Service, which she described its men as “cohesive crooks hard to break.”

To this end, she solicited an urgent intervention of the National Assembly in curbing the loopholes and excessive leakage not only in the revenue sourcing agencies but also all other Federal Government’s agencies, saying they were stinking of corruption.

The minister particular disclosed that about two trillion from the budget was going out for salaries of workers and pension alone the sum of N1.4 trillion was also going out for debt servicing, saying the situation considerably slashes down the budget sum, a development she noted, made it impossible to downsize the budget.

According to her, doing so would mean forgetting capital projects and only concentrating on payment of salaries, pension and servicing of debt alone.

She was responding to the plea of a member of the Senate Committee, Joshua Dariye, APC, Plateau Central, who asked that the budget be trimmed down, so that government can focus on key areas of development.

Dariye said with the budget figure, Nigerians were expecting so many things and if they don’t see most of the things at the end of the year, they would believe that the money was misapplied or stolen.

“The Senate is worried over the issue of recurrent expenditures in all MDAs, especially on the issue of recurrent purchase of stationery and computers. I appeal to government to stop this so that economy can work. We should not be afraid to spend money because I believe that if we do a few things right, it’s going to give us results, “Dariye said.

The Minister said: “About the size of the budget, the point I would add is this:salaries on their own are about N1.8 trillion to N1.9 trillion and by the time you add the judiciary, the National Assembly, pension and so on and so forth, you are at two trillion. Add debt service which is about N1.4 trillion. So, if you want to bring down the size of the budget, you won’t be able to do very many capital projects.

“That’s the problem and that has been the vicious circle that has been affecting Nigeria for so long. By the time we pay salaries, pay debt, nothing is left.

“So, I think for this next few years, I think we have to take a gamble as a nation. We must take a gamble that look, if we fix our roads, fix our power, can we generate more than that additional cost. I think we can, from what I see of a country, I think we can. ”

We have things rotting everywhere, we have young people sitting down idle everywhere and I think we can. It doesn’t take a law to work out that if you put in infrastructures in place, these people can work. And one thing about Nigerians is that they are not lazy. When you give them opportunity, they will really try and I think we, as a nation just have to give them that enabling environment and let’s see what they can do.

Looking at the senator, she said, “I heard what you said about expectations because when people hear N6trillion, they will say ‘ah’, and it’s difficult to explain and most people will believe that when the project is not forthcoming, it’s because somebody has stolen the money. No, because the money didn’t come in come. So, we have to be careful, you are right that we have to balance it.”

Speaking on the issue of the Nigerian Customs Service, Adeosun, who admitted that the agency was financially bankruptcy, disclosed that her ministry was working with the Nigerian Sovereign Wealth Authority, to remedy its financial fate,so that it can live up to its responsibility of safeguarding the nation’s territorial borders.

She disclosing that the the moment, the customs has no scanners except the unit at Idiroko, she, however regretted the corruption stinks in the agency.

“On the issue of Customs, we are actually working very closely with them, they have some challenges. The general contraption in the economy has really affected their level of inputs-forex scarcity and so on.

“And also, they have some leakages which we are working with them to try and block. Largely, all their scanners are not working except the one in Idiroko.

“We have no working scanner in Nigeria, just one working for the whole country which means a lot of manual discretion in the assessment of Customs and of course, that brings in a lot of leakages.

“We’re are working with them now with Sovereign Wealth Authority to invest, to bring in back the scanners. But the scanners are in millions of dollars. Unfortunately, the one we had was given to a politician to maintain and he didn’t maintain them. We even even got in touch with the manufacturers but told that the person forced them to write it off.

“We are going to work with them to try to get this single window so that we can improve. We are the only country, even Ghana has a single window and when they implemented that, their Customs revenue went about sixty percent. So we are trying to implement it in conjunction with the Sovereign Wealth Authority because we have to look for money, Customs doesn’t have money.

On corruption in the agency, Adeosun said: “Colonel Hamid Ali is trying his best to try and instil some discipline but being an outsider in an insider’s place, is a difficult job. ”

In fact, we have an incident, we were there together. There was one transaction they blocked since February until I realized what their issue was and it took us less than ten minutes to unlock it. They are a very cohesive crook and very difficult to break but we’ll work more on that.”

2016,tough year for Nigeria:

“As you know, it’s been a very tough year for Nigeria, we have gone through storm, we went through the problem of oil price which went to as low as $28 a barrel and when it recovered, we entered into the problem of oil quantity, which is a more intractable problem to try and solve. Of course, it has hit performance very high at the worst possible time. But one good thing about Nigeria is that we have a very resilient economy and I think the fact that we were able to withstand this is a testimony to the resilience of the Nigerian economy.

“We have seen that we haven’t developed well at all with our oil money and we know that if there’s infrastructure, there’s so much that every single corner of this country that is so blessed can do. There’s no single corner of this country, that doesn’t have something growing or doing if only we could provide the infrastructures. And we believe that that is the most important thing for us to do if we can do that, this economy can develop and we can solve the unemployment problem.

Government has reached its limits of creating jobs

“Even when the economy was growing, when GDP was eight and nine, we had a massive unemployment problem especially our graduates. I’m sure most of us know that graduates stayed for up to ten years without job and the only sector that was really creating jobs was government and government now, has now has reached its limit, that a 165 billion amount, I don’t think government can reasonably employ any more people so we have to develop our private sector and to do that, we need infrastructures.

“So, this government is really set about driving infrastructures and that is what we have been trying to do. Everything we have trying to do, whether it’s been chasing ghost workers, whether it’s efficiency, it all end on one thing-creating that head road so that we can invest in infrastructures.

“We know that if you build a road, in 40 or 50 years time, it would still be there but when you go for training and you go and come back, it’s over. So, it’s a different kind of demand but we think that it’s the foundation of getting this economy moving and creating jobs for our people. So, we have embarked on that, we have been releasing capitals for roads, for power and for so many things.

“But we have uncovered some challenges , some of which I think we will be coming back to speak to you as a committee.

“Some of the contractors haven’t been paid since 2012, so they just sat on the money and little can they be blamed because their problem is ‘how do I know that this money I have, I would be able to get another one for the next four years.’ So, while we expect them to go back to sites, in fact, in some cases, the bank even sat on their money, didn’t even allow them access to the money at all. The the inspecting activities which everybody thought would be forthcoming has not been forthcoming, we have to solve that problem. I would be coming to talk to you on what we are proposing to do.
“We believe that most people in Nigeria, whether contractors, whether…., are owed something by the federal government and we have to sit down and sort it out. The same problem with the states, they too, are claiming that they are owed, the reason why they can’t pay is that they are owed by the federal government. So we need to have a discussion, deal with the problem so that the economy can move forward.

“There’s good news on the horizon in the sense that the prediction that the oil price will be as low as $20 proved to be false alarm and the prediction now is that the oil price will stabilize between $50 and $60, so what Nigeria now has to do is to balance her books so that if it is $50, even if it is $40, we will be able to balance.

“I want to tell you that most of the initiatives have really elicited a lot of savings. We have been able to reduce our payroll. The first payroll I saw when I came here was N165 billion and I think the last one I signed was N165 billion, it’s going down every month. We are removing ghost workers, we are removing dead people, we are removing those who should have never been there in the first place and that is a continuous exercise we must keep up.

“Honestly, we believe that government has to be very frugal with public money money because it’s scarce and this money belongs to everybody, so we can’t spend it any how. We have to spend it judiciously. I want to really assure you that we are committed to that because we can say that if we can complete one or two major projects, this economy can change.

“We are working very hard with the Ministry of Transportation on the rail project which will bring rail back from Lagos to Kano. That corridor will open up our agriculture, instead of carrying goods on the roads.

“We believe this will create a lot of jobs for our people. Similarly, we are working with the Ministry of Works for our new major road projects including looking at how we can maybe get some private sector money so that we can do some tar roads because we believe that when somebody spends five hours on the road, on a journey that should take one hour, he has already paid the toll, whether is not in terms of his tyre, or his petrol or his time or his health.

“So, if you ask that person to pay N200 and do that journey in 50 minutes, I don’t think Nigerians would have a problem. What we want is infrastructures.

“We have gotten together another public private initiative – the Family Homes Fund, which is private sector driven and the aim of that fund is to find a finances solution to housing development for low cost housing. Most of the houses are around N700 million or less and people will be able to put down just ten percent and park in and then pay the rest over up to 20 years under mortgage system.

“I want to tell you that I remain very confident about our economy. By this time next year, this economy will become a different economy. Just think within, don’t lose heart, we are going to be able to turn around the economy because now, the oil price is stable, we have stabilized our finances, a lot of the waste has stopped. A lot of the stealing has also stopped so it’s only for us now to start completing some projects.

Crisis in Niger Delta affects performance of the 2016 budget

“On the performance of the budget generally, I would want to say that we have a very high expectations. But the crisis in the Niger Delta has really hit us very hard, very hard and we cannot overstate it, very very hard. And any month where we don’t hit that revenue target, of course, that means we are borrowing to pay salaries which now is even worsening our problems because it means we cannot now do those capital projects. So there’s a challenge.

How revenue generating agencies frustrating govt

“Non remittances by the revenue generating agencies is a big issue, we have done a lot of work on it. We are auditing about 31 of the agencies and what we found is honesty very shocking, it’s very very shocking. That’s the only way to describe it.

“So what we have done is that we have drafted a template with the Accountant General and the Fiscal Responsibility Commission, we are working together on allowable expenses for agencies.

“For example, is it acceptable for an agency to say ‘I got N40 billion on behalf of a ministry?’ We believe that it should come through appropriation, you cannot say that you collect money on behalf of your parent ministry. That is how they are circumventing appropriation and I think that really has to be stopped.

“There’s so much laxity by these agencies that honesty we will need the National Assembly to urgently put eyes on them. I think if we do that, some of these independent revenues can come in and can be appropriated for. Now, they are outside the appropriation. And also, we saw a revenue sharing and some said they did PPP. What is the PPP? Somebody gave you a generator and as a result of that, he’s taking 40 percent of your revenue. That is not PPP in my small understanding of PPP, that’s just a way to take money out.

“So, there are so many loopholes which honestly, we we can plug them, I think we will have a lot more money to work. And the friction between the civil service men and other agencies could reduce because honestly, there’s a lot of abuse.

How National Assembly can help

“We will be sending that circular out to try an remedy it and when their accounts come, let them go an face the assembly when assembly would ask ‘why did you and your board members spent N50 million each in a years, why does somebody who was taught to go for training in Canada, go through about five countries before arriving in Canada and charge the agencies. It’s wrong but we saw a lot of that. So we believe this is an opportunity to open up on these things and we are looking forward to work very closely with you on these things.

About the Author

Samed Olukoya
Samed Olukoya is the CEO/Founder of investorsking.com, a digital business media, with over 10 years experience as a foreign exchange research analyst and trader.

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