Minister says oil revenue should be for national development, not sharing

Minister of State for Finance, Yerima Ngama, today challenged all tiers of government, particularly states, to evolve strategies of boosting their internally generated revenue base, rather than continue to wait for the monthly allocation from the federation account for their development activities.

Mr. Ngama, who was addressing reporters at the end of the meeting of the Federation Accounts Allocation Committee (FAAC) in Abuja, said government should find better use of the oil revenue for national development, as is the practice in most other oil producing countries, rather than share everything every month to the different tiers of government.

“The biggest challenge for government is not how to share the oil revenue available to the different tiers of government, but how to grow the revenue base,” the minister said. “We have to look again at the practice of sharing all the revenue that comes from oil. Government is supposed to run its business from the revenue generated from taxes and other internal sources, while revenues from oil and other mineral resources should be channeled into strategic reserves for national development and growing the economy.

“Oil revenues are not supposed to be for payment of salaries. When the people were agitating for state creation, one of the requirements was whether the state would be viable and has the ability to generate enough revenue to run the state. We should aim at building enough reserve that, even if the country does not produce oil again in the near future, we will still have enough revenue to continue with national development.”

Noting that every state has its peculiar capacity for internally generated revenue, the minister underlined the need for states to focus attention on those issues that would help grow their economy, evolving suitable strategies to boost their internally generated revenue to supplement the allocation from the Federation Account.

According to him, interactions with the various states representatives revealed that there were some states that spend more than 60 percent of their revenues on capital budget and 40 percent on recurrent, while there were others that spend only 20 percent on capital and 80 percent on recurrent.

On the delay in the payment of salaries of civil servants as a result of the late release of cash backing for last month’s allocation to the three tiers of government, the Accountant General of the Federation (AGF), Jonah Otunla, gave assurance that steps were being taken to ensure that all workers are paid before the end of next week to enable them prepare for the forthcoming yuletide.

The delay was as a result of the disagreement between the Federal Government and the other tiers over issues relating to the disbursements from the Federation Accounts Allocation for the $1billion take off grant for the Sovereign Wealth Fund (SWF) and the N450billion unremitted funds by the Nigerian National Petroleum Corporation (NNPC), which led to the rescheduling of the meeting to allow for consultation among all stakeholders.

During the meeting, the deliberations covered plans for the various states and local governments in the country to embrace the internationally accepted private sector accounting standards in their operations, particularly the budget for the training of the relevant accounting staff to understand the global accounting standards and principles.

The meeting also reviewed the FAAC account for the outgoing year as well as the budget for its secretariat for next year.