Between 2004 and 2012, Ifueko Omogui Okauru led a revolutionary campaign in the Federal Inland Revenue Service (FIRS). Under her leadership during the period, FIRS witnessed extensive reforms and fundamental transformation. In a paper titled: “Transforming the Public Sector in Nigeria: Lessons from my leadership of the Federal Inland Revenue Service” she delivered at a recent event by the Africa Initiative for Governance (AIG) led by Aigboje Aig-Imoukhuede and the Blavatnik School for Government (BSG) led by its Dean, Ngaire Woods, Mrs Okauru reflected on how she provided the building blocks of the reforms in the service and opening Nigeria up for the world. EXCERPTS:
LESSONS FROM LEADERSHIP EXPERIENCE AS CHAIRMAN OF FIRS IN TRANSFORMING THE NIGERIAN PUBLIC SERVICE
First, let me say that I am forever indebted to President Olusegun Obasanjo and his team, who identified, gave me the opportunity and stood by me to serve. I was single, female, young (41 years of age) and without any experience working in the Public sector. What I believe I had going for me was a track record that would come to play in a new role.
Let me also thank all the other Presidents I worked with after President Obasanjo left office – President Umar Yar’adua and President Goodluck Jonathan – for believing in my service and keeping me in office. Continuity matters. If my stay had been interrupted, my story could have been different. Passing the baton, not allowing it fall, and making the race after faster and even better than the last, is for me, a critical success factor in the delivery of Public Service. Let me say that my objective was to demystify public service by showing the difference with private service.
Public service is one in the public eye, with accountability to and expectations from a wider audience and multiple stakeholders, private service, depending on the sector, have multiple stakeholders as well. In both instances, service is the critical word.
Also, I want to communicate that achievement of goals is possible no matter the terrain, but it takes a lot of strategic thinking (timing, the team, trust, consistency in processes that are fair and objective to all), etc., capacity to execute, personal sacrifice and doggedness, to make it happen. Results don’t just happen.
Again, I want to demonstrate that for the person expected to lead the achievement of goals, your readiness for the job at the particular time, how you frame your thinking and goals, determining what you can or cannot do, and how you embrace the people around you, matters in keeping you focused on achieving the goals set. If you are not ready for a job, become ready and wait until you are. Or don’t take it, if you truly want to achieve an impact. Be ready to always challenge your thinking, listen, reflect, communicate to your diverse stakeholders, and stay focused on serving all your stakeholders, even when you risk being misunderstood. Keep learning, but keep communicating.
Let me say that getting to this point of telling this story was not easy. I was exhausted at the end of my tenure and needed a break from anything public service. But, now, I am encouraged a lot more to tell the story of what we did, achieved and our challenges, fueled by the people I meet every day. Let me hope that through these reflections, I will be able to give back what we did and learn what we could have done better for the progress of our society.
On the 3rd of May 2004, I was appointed as Chairman of Nigeria’s Federal Board of Inland Revenue (FBIR) as it was known then.
In that capacity, I was the Chairman of the Joint Tax Board, comprising the FBIR and the 36 State taxing authorities. I was responsible for driving tax reform in Nigeria at both Federal and State levels from 2004 to 2012. At the time, I was single, female and 41 years of age – perhaps one of the youngest persons to be so Recognized, and definitely the youngest person ever appointed as Chairman of the FBIR or JTB. Prior to my appointment, I had no experience of working in the Public Service. The closest I had come was being the lead facilitator of Nigeria’s Vision 2010 initiative, which was done through Public-Private Service partnership and collaboration.
When I joined FIRS, they had about 7,200 staff (80% of which were non-professional staff). It was a mini-Nigeria. Diverse in location, gender, age, creed, ethnicity, et al. The only recognized professional cadre within the service was that of Tax Administration. All other positions were either filled from the Federal Civil Service. Legal, Finance and Admin (HR) functions were filled by staff from the civil service on a rotational basis. Or junior staff hired by the Service for clerical and other work. We also had several persons who didn’t fit the roles they were hired for. Example, drivers that were blind.
Eight years later, FIRS had about 7,000 (80% of which were professional staff), located in every State of the Federation and the Federal Capital Territory. To be a professional in the service, you had a career path in different functional areas beyond just Tax
Administration, to include Tax Research and Policy, Communications, Facility Management, Finance, HR, ICT, Legal, Security, amongst others. With this, not just were we self-sustaining, we were also able to align staff to their areas of best fit. This opened up vacancies in the service, with over 2,000 people created through open advertisement, testing and interviews to take advantage of the new positions created.
We developed a culture over time, where we encouraged the use of technology, removing the need for secretaries, removed symbolic computers on the desks of senior officers, and managed the fears people had to even open up computers that were readily made available. We redefined who the tax administrator was – to give staff an opportunity to cross-learn and grow, empowered them to see themselves as beyond just working in the FIRS, but possessing skills that could be attested to within or outside the service and Nigeria. The organization structure was designed deliberately to build tax administration capacity across all the typical functions in preparedness for automation.
We repeatedly encouraged staff through the various meetings and sessions we had, to be self-confident, believe in themselves and their abilities. With that, the sky wasn’t even a limit. We had non-professional staff who were eager to go back to school or to do professional exams, supported by the Service to improve themselves, and succeeding.
We had people empowered to take decisions through policies and a decision-making matrix clarifying their authorities. We gave people confidence through amongst others the rebranding (in form and deed) of the Service and the improved compensation and performance driven bonuses paid; people were proud to wear the badge of the organization.
The general public and taxpayers acknowledged the changes. It was easier to pay their taxes through the one-stop shop and electronic channels we created. They had confidence in having people to report to if they had any issues. Taxpayers were better educated on their responsibilities and their rights. Taxpayers saw evidence that if a tax officer is caught in a fraudulent act, penalties will be imposed, and in certain cases, convictions obtained. We encouraged the youth to get involved through our Students Tax Advocacy Initiative
(STAI) initiative. Today, some have chosen a professional career in tax, because of the work of STAI.
There were still very many ideas not executed and a lot of work in progress, but many acknowledge, that the “ship” turned during that period. It was possible to turn the FIRS around in a disciplined fashion and get people to cooperate.
During the wave of reforms at the FIRS, we had one goal, to triple non-oil revenues by 2007, and grow overall revenues by 25% year-on-year. When non-oil growth was largely achieved in 2007 (N265.1bn in 2003; N714.9bn (vs N795.3bn) in 2007), our goal focused on increasing collections by 25% year-on-year. We focused on the achievement of set goals at every meeting with staff and stakeholders. This guided us.
We could measure, track and reflect on why the targets were met or not met. We had a three-year rolling strategic plan that drove our reform efforts through. A plan that involved all staff, getting their views on where we were, where we wanted to be and how to get there. A plan that clearly set out our vision, mission, values and goals. A plan that got the Federal Executive Council under the leadership of the trigger for all these efforts, President Olusegun Obasanjo, to hold a special meeting for the first time, in October 2004, focused on one agenda, approving the tax reform plan, in the first year of our efforts, and first year of my tenure.
A plan we tracked at every management, regional and stakeholder meetings. Meetings that lasted hours on end, engaged in debates and conversations to ensure inclusion and ensure we carried everyone along. These were meetings staff complained about as too long, but which eventually delivered what we wanted them to. Plans that we cascaded to every department and individual and formed the basis of performance bonuses that were paid to deserving departments and individuals. These steps typically touted as needed to drive change, worked within the FIRS, a then unknown civil service institution that transformed to becoming an esteemed agency of the public service during my tenure.
SURMOUNTING OBSTACLES TO REFORMS
Like I said, it was a function of my mindset, in terms of my philosophy/principles. From day one, my mindset that drove the change efforts I embarked upon was to see the assignment as an opportunity to bring development to Nigeria. It was about restructuring the organization and bring a sense of purpose to every single staff. I was driven by years of experience in leading strategic planning and change management engagements, that placed in me an unchanging belief of the importance of inclusion and buy-in and alignment across the organization as critical to organizational success; sincerely carrying everyone along a journey of developing a clear roadmap that everyone understood and executing same in a disciplined manner; recognizing the importance of people in the landscape of change, and that without the people on the side of change, very little can be achieved.
I was also driven by my inbuilt sense of personal sacrifice, built over time from my very early years, to disregard self and focus on the results expected by those around me. All these influenced how I started my journey at the FIRS; seeking the opinions of others about the change desired; developing a roadmap for change, and getting the buy-ins of all stakeholders in the roadmap – several meetings and sessions after; emphasizing in meetings and one-on-one interactions, the need for a sense of mission, purpose and hope, belief in self, reaffirmation of one’s self-worth; recognizing the need for inclusion, the need for diversity and deliberately seeking this out; focusing on the big things and not sweating out on the small stuff, even at the risk of personal pain and discomfort; listening to everyone, knowing that everyone mattered – young/old, man/woman’ “bad”/”good”; and seeking to enlist believers, while seeking to change the attitudes of those who didn’t believe.
For example, I recall clearly when in one of my staff conferences, I vented my frustration at the level of corruption encountered in the system, I received feedback that people didn’t like my calling them corrupt, as I was boxing everyone under the same name. I corrected myself and decided that, I will work to assume everyone wanted an opportunity to change, with the understanding that if people still chose to do things in ways unacceptable to the “zero tolerance for corruption” then we will take decisive action.
To the best of my knowledge, that worked. For the first time in the history of FIRS, we had convictions for tax fraud. We also had the highest level of capacity building efforts targeted at getting everyone trained and retrained.
REFORM JOURNEY, IN TERMS OF THE CORPORATE PLAN/TAX REFORM ROAD MAP
In commencing the reform journey, we had a home-grown reform road map completely developed by the people of the service. Guided by my skills as a strategy consultant, we put up an internal team driven by an internal recruitment process that sought to identify the best persons in the service to work with as part of what we then called the “modernization” team.
I had decided in joining the service, to join alone, so as to assess first-hand the persons I would be working with. I was advised and I agreed, that starting with an external team would not enable me give those within a clear opportunity, and that it could colour my assessment of the team. I was glad that I took that counsel. It was one of the best decisions I took. Some members of that internally recruited team were with me through the first and second terms of my tenure. And are still with me till date and where necessary, as I work on different consulting assignments.
The Modernisation team worked with me to get wider ideas from all staff and having developed a plan, consulted widely with stakeholders. This plan was approved by the first ever dedicated Federal Executive Council Meeting on tax, by the then President Olusegun Obasanjo in October 2004. In developing this plan, we took advantage of three notable actions of my predecessors in office. One was the need to fund the FIRS to deliver expected service had been long realized.
A previous Minister of Finance, Chief Anthony Ani (in the period 1994-1998) had approved that staff be given a staff productivity bonus as an incentive for achievement of targets at the end of every year. While this was an addition to normal staff remuneration, it was not enough and did not also provide the needed funds for the Service.
Another Minister of Finance, Mallam Adamu Ciroma working with my immediate predecessor in office, Mallam Ballama Manu, initiated a one-year Study Group of the Nigeria Tax system under the Chairmanship of Professor Dotun Phillips, which concluded its work just before I resumed office. This study group examined various models of tax administrations around the world and made very cogent recommendations, part of which stressed the importance of funding as well as autonomy of the Service in building a modern tax administration.
The Minister of Finance at the commencement of my tenure then – Dr Ngozi Okonjo-Iweala, set up a Private Sector driven Working Group chaired by Oluseyi Bickersteth, then Managing Partner of KPMG and Head of its Tax Practice, to review the recommendations of the Study group for recommendations to Government. All these provided great research and fodder for developing the Strategic Plan.
Leveraging on the recommendations of the Study and Working Group, Mallam Ballama Manu, Dr Okonjo-Iweala and the then Special Adviser to the President/Director, Budget Office of the Federation –Bode Agusto, and members of the National Assembly, started the process of improving the funding to the Service by working on a concept of having the FIRS retain a percentage of their collection efforts (“cost of collection”) to secure its funding. These were the initiatives I met on ground on resumption of office and built upon.
I also took advantage of the support of donor agencies such as the World Bank, GIZ, DFID, and the International Monetary Fund.
In the absence of financial resources, WB, GIZ and DFID came in very useful in supporting the reform efforts. The IMF was particularly useful in technical consulting and resource support around tax administration and designing and aligning our organization to the way the FIRS should operate, bearing in mind our own society and context.
THE ROLE OF FUNDING AND AUTONOMY OF THE SERVICE IN THE REFORM PROCESS
IFUEKO: The funding/autonomy flank of the strategy was the main hub around which all other strategies revolved. Up till 2004, the FIRS relied substantially on monies from its Staff Productivity Bonus Fund (monies given to staff by government as a productivity incentive grant) to finance its operations. As part of our plan, ongoing initiatives to improve funding for the Service were placed at the centre of what we needed to achieve. We also combined the need for funding with the need for autonomy from the Civil Service as recommended by both the study and working groups.
The FIRS reckoned that it was necessary to have sufficient funds in a sustainable manner to enable the Service carry out the numerous activities it deemed essential for the turnaround of the tax system. Some of these activities included its ability to recruit competitively, pay reasonable wages and train and retrain staff. The Service needed to acquire modern offices and equipment. It was on account of this that the FIRS sought the approval of the 4% cost of collection to enable it to run its operations. The Federal Executive Council approved the operationalization of the cost of collection, and then submitted same to the National Assembly which approved same.
This new approach to funding the Service took effect from 2005. To entrench this approval and ensure it was institutionalized and difficult to change, a central part of the work from 2005 to 2007 was developing the legislation to give autonomy to the FIRS and make the “cost of collection” an integral source of funding the service. The Federal Inland Revenue Service Establishment Act (FIRSEA), which provided for these and other reforms was passed into law in 2007.
CAPACITY BUILDING, IMPROVED STRUCTURE AND STAFFING UNDER THE REFORM AGENDA
IFUEKO: My philosophy for building capacity in the Service was a lot more than the traditional concept of providing training, or just sending a few people for some courses as may be recommended. My view of capacity building was to improve the capacity of the organization [in this case the Federal Inland Revenue Service] to execute on its performance goals.
Capacity building requires the collective and robust involvement of thinking through how to improve structure, people, systems and the work environment towards achieving performance through people. The legal framework and autonomy provided the trigger for a number of the changes that followed.
At the organization structure design level, a lot was done to align the structure to the achievement of strategies. We used the design of structure to attempt to achieve checks and balance in the division of responsibilities, striving to clarify the difference between Head office and field operations, and seeking to entrench taxpayer education and services as an integral part of tax administration.
We also aligned policies and processes with the structure such that we sought to de-centralize (FIRS is large and dispersed, in each of the 36 States of the Federation and the Federal Capital Territory) and empower while providing oversight to ensure effective oversight and control.
One of the major structural changes that was driven by the need to build capacity was the evolution of the one stop shop. At the beginning of the reform, FIRS was a myriad of different offices and units focused on different tax types. One has FIRS staff who had been in the service for over ten years and all they knew was just that one tax type. You could grow in the service from an officer to a Manager and even Director by administering just one tax type.
This also did not encourage cross-learning, and most importantly, did not favour the taxpayer. To pay taxes, a taxpayer could visit at least four offices to pay Income Tax, Withholding Tax (which strictly is not a tax, but the structure encouraged the thinking that it was), Value Added Tax and Stamp duties. And if you were to be audited, you go to the Special Tax Audit office. There was no Capital Gains Tax office. So, the concept of Capital Gains, or that it should be collected at all was not on the radar. Audits, rather than seen as a part of the tax administration process and part of what it entails to encourage voluntary compliance, was seen as punishment and as a means of enforcing tax collection. FIRS had tax collectors, rather than tax administrators, which was what the FIRS mandate required.
OTHER ASPECTS OF THE REFORMS UNDERTAKEN
As part of the reform agenda, we created one-stop tax offices which enabled everyone to understand the flow of taxes and build competencies across, preparing them not just for the FIRS but for life outside the FIRS. Regrettably, some of these concepts didn’t stick and remain elusive to the service to the present day.
We also used the design of structure to determine the additional staffing needs of the service leading to clarity around what positions were needed and what kind of staff was needed for recruitment to fill gaps identified. This influenced the massive recruitment that the Service embarked upon and advertised, starting first with internal recruitment to seek those within that meet those needs before opening it to the general public to plug skill gaps that were not available.
While the recruitment effort was largely successful, the principles behind the recruitment may also not have stuck as the employment crisis in Nigeria has made the FIRS a Mecca for persons seeking employment, even if there is no identified need being met or clarity around the exact positions being filled. All these notwithstanding, one thing this process reaffirmed in my mind is that the more there is order and discipline, the more opportunities for employment and growth are created in the real sense.
On the people end, the FIRSEA 2007 enabled a number of activities to take place. Compensation and benefits packages were enhanced. The training was aggressively done domestically and internationally, with everyone based on their functional need, given the opportunity to learn. Training and retraining of FIRS staff, the attraction of crucial skills into the system, and the retention of its good hands were seen as core to the FIRS bid to attain its set goals. The integration of offices and administration of different tax types from the same office also made it imperative to properly train staff as some of them had in all their years in the Service worked in only one or two offices and thus were conversant with only one or two tax types.
FIRS Management made it mandatory that all persons due for promotion and conversion/upgrading must have gone through either a special technical refresher programme for staff that had benefited from the training conducted over five years earlier, or Preliminary Inspectors Course, or Final Inspectors Course, or other programmes as may be relevant for the cadre/function.
By the end of 2006, barely two years after, more than 3,836 of the Service’s 7,200 staff had been exposed to one training or the other. About 142 of such training were international. In 2004, about 673 staff benefited from local training, while five went for international programmes. By 2005, local training figure rose to 980, with the international component rising to 35. In 2006, the number of staff trained rose to 2,041, with as many as 102 staff trained abroad. The work environment is typically not seen as part of capacity building, but it is. It helps improve the capacity to think and to get work done in a manner pleasing to heart, mind and body.
In understanding the position of the service and in developing the corporate plan, the Modernization team, including myself, visited the FIRS offices in 2004. The outcome of the visits led to a clear need to improve the office infrastructure and rebrand the service.
A taxpayer truly interested in service, would not visit the tax office or have respect for the tax officer. Taxpayer records were strewn on the floor. Most of the field tax offices were in a major state of disrepair.
In some instances, roofs had collapsed, and offices became fit for swimming pools any time it rained. Tax officers took tax files home to protect them as there was no place to keep the files. The pictures of the tax offices presented at the Federal Executive Council must have propelled them to approve the increased funding of the organization and a complete rebranding.
To set the rebranding focus, we advertised to choose a communications firm – LTC/JWT Consultants purely on merit. That firm led the changes that are still visible till today. On Thursday, 12 April 2007, the new logo was launched with a mission to re-orientate the populace and corporate entities alike towards their civic and legal obligations of tax payment. In my words at the launch…”any organization engaged in persuading other organizations and individuals to sustain the polity with a fraction of their resources may not ordinarily expect to win a popularity contest. With the greatest understanding of the issues involved in taxation, people would develop a feeling of ownership rather than “us-versus-them” attitude. The mass media has been playing, and should continue to play, an important role in taxpayer education.”
Going hand-in-hand with taxpayer education is the re-branding of the FIRS, the most visible aspect of which will be the launch of its new corporate logo. Rebranding and the campaign that will follow will demystify the issue of taxation and educate stakeholders.
The Service used the new logo to showcase its repositioning to be a more efficient organization, with professionalism as its driving force and where integrity would no longer be compromised. The two colours of grey and red, were adopted for their significance: –
Grey: Grey shows intelligence, conservatism (trust) and orientation on business. These primarily capture the essence of FIRS. Excess of gray may make you look boring and ordinary, we would supplement it with other accents. Red: Red is a very active colour, that’s why it can be effectively used for stimulating people, motivating them for action and achieving results. If you want people to admit your power, use red. It is as good for stimulation and motivation. In the spirit of inclusiveness, several logo versions were presented as options. The final choice was informed by the option chosen by a team of people including one of the staff in the Chairman’s Office – Mr. Daniel Kindai – who was then a driver but through hard work and opportunity given to him and many others, is currently a tax officer in the Service. This new logo informed massive infrastructural change throughout the Service. Offices were renovated and repainted with the new colours. As part of the rebranding, a new anthem for FIRS was also composed. All these added in no small way, to improving capacity to deliver service.
RE-ENGINEERING/AUTOMATION OF HUMAN RESOURCE PROCESSES/FINANCE AND PROCUREMENT PROCESSES
Strictly speaking, this strategy flank was part of capacity building, but separated because of the need to focus on ensuring this was taken as priority and done. A staff verification exercise was done in the early stages of the reforms to determine staff strength, profile and potentials. The exercise revealed a need for a complete overhaul of human resource capital. Overstaffing at junior staff level was clearly established, particularly in the Lagos region. There were also issues of age and medical discrepancies. Consequently, management felt it was important to do a serious overhaul and modernization of the human resource system. FIRS also, through a competitive process, introduced the use of SAP HR and Financial Software to drive the two functions. These are in the use to the present day.
We also audited the Oil and Gas/Large Sector taxpayers. At the time, the FIRS generated about 80 per cent of its revenue from the large tax payers. Another of the initiatives that started before I joined the Service, was the acceptance that Special unit/offices should be created to cater to the needs of large tax payers. The first Large Taxpayer Unit LTU, was created in Lagos by my predecessor.
To further improve on this new concept, the pre-existing Large Tax Unit in Lagos was split into two offices with one focusing on oil cases and the other on non–oil cases.
Now called Large Tax Offices (LTO) since 2004, an LTO was also opened in Abuja—to focus on ministries, parastatals and extra ministerial departments. Another LTO was created in Port Harcourt to monitor oil companies in the South-South and the South-East regions of the country, while the fifth LTO was located in Kano. Each of the LTOs had an audit unit attached to it. This strategy was to help ensure that even as we focused on reforming the Service, the expectation to meet the revenue needs of the Federation account was met.
We decided to focus on auditing the Oil and Gas and other Large Tax payers, and strengthen monitoring, compliance and verification. In strengthening the Service’s hold on the oil and gas sector and the productivity of its workforce, the FIRS trained 100 officers in oil and gas in conjunction with the Department for Petroleum Resources and the Nigerian Extractive Industries Transparency Initiative (NEITI).
In addition, an Oil and Gas Advisory team comprising staff of FIRS/Nigerian National Petroleum Corporation, NNPC and the Department of Petroleum Resources, was raised to foster inter-agency cooperation and build a robust data base. A full sector-wide audit of oil and gas companies commenced in April 2005. This strategy achieved the objective of enabling the FIRS focus on growing revenues even as the wholesale restructuring continued.
The fifth strategic flank seen as core to the reform efforts at the FIRS was Taxpayer Education and Services. Given the fact that tax is an unpopular subject and that taxpayers are not sufficiently aware of their tax obligation, the Service felt that there was a need for improved taxpayer education to help build a culture of voluntary compliance. This function is also a critical part of tax administration. FIRS Management introduced in every tax office a taxpayer services unit/Front desk, which relates with the taxpayer and provides needed education and services. To drive this, a new TPE division was created, with the mandate of setting standards for the tax offices to follow while educating the media, other stakeholders and general public about the services and activities of the FIRS. This was another of the concepts that was difficult to understand. Staff were more accustomed to raising assessments and collecting taxes due. Educating the taxpayer on a continuous basis as an integral part of the tax officer’s job was novel and remains work in progress.
We strengthened investigation and enforcement to entrench the spirit of voluntary compliance, maintain a separation between audit as an integral part of tax administration from investigation and enforcement to be triggered to contain tax evasion and avoidance which had become systemic. A new Investigation division was created to report directly to the Chairman.
As part of the efforts to further strengthen its investigative operations, the Service initiated collaboration on investigation, information sharing and joint monitoring with agencies like the Economic and Financial Crimes Commission (EFCC), Independent Corrupt Practices and Other Related Offences Commission (ICPC), Nigerian Financial Intelligence Unit (NFIU), Central Bank of Nigeria (CBN), Nigerian Immigration Services, (NIS), Nigeria Customs Services (NCS) as well as the Security and Exchange Commission (SEC).
To drive enforcement, the FIRS requested for the first time, and got the support of the Inspector General of Police to deploy a batch of policemen to the Service to support enforcement efforts. This approach continues to the present day.
To balance investigation and audit efforts, giving a voice to the taxpayer, the Federal Inland Revenue Service Establishment Act 2007 created a unified Tax Appeal Tribunal for all tax types across the country. With this new provision, the Value Added Tax Tribunals (for Value Added Tax) and Body of Appeal Commissioners (for Income Tax) no longer existed. The existence of this TAT did not replace the role of the Federal High Court. Rather it provided a civil process for making objections to assessments raised. As a quasi-judicial body, the TAT provided a cost-effective route for taxpayers while also acting on decisions that sent deterring signals to potential tax evaders and avoiders. This position remains till the present day.
One major area of weakness that was identified in the pre-existing operations of the FIRS was the collection system. The old manual collection system was error prone. Taxpayers were not easily determined/identified, while the collection systems used by banks were not standardized or integrated and were easily manipulated. There was a difference in timing between payment and remittance to FIRS, thereby making it difficult to track defaulters and offshore Tax Payments.
Consequently, the FIRS initiated an Inter-Agency/Joint Approach to conceptualize a solution to the problem. The effort resulted in an automated collection solution known by the acronym Project-FACT (Friendly, Accurate, Complete and Timely). This system made it possible to track online real time what tax was collected, who made the payment, where it was paid, when it was paid, who received the payment, how much was paid, and where the funds were.
The decision to start with the collection system even as one sought to ensure modalities to put in place an integrated tax administration system, wad driven by the need to first build credibility with the taxpayers. The message was simple – we know we need to collect more taxes from taxpayers; however, we also need to first assure those that were paying taxes, that the taxes were properly accounted for and reached the expected destination for the development of Nigeria. These led to identifying and working with Interswitch (now a major payment service provider) to develop a direct payment system to the banks to reduce payment leakages. FIRS is pleased to be instrumental to the growth of Interswitch and other like payment providers encouraged by Interswitch who are no all over the landscape.
To enable this, and in the absence of a unique identification code in the Country, FIRS introduced the Taxpayer identification Numbering (TIN) system, with a format that aligned with the standards of the Nigerian Identification Management Commission (NIMC) such that it would be ready for harmonization whenever required. We also started plan to align TIN with the Corporate Affairs Commission (CAC) and the Nigeria Customs Service (NCS). Just recently, I understand that alignment with CAC has been achieved and that of NCS is closer to being done.
We commenced the automation of the Tax Administration system with the search for the right Integrated Tax Administration System and set up the project team to drive its implementation. The installation of ITAS remains work in progress till this day.
At the end of my tenure on April 9, 2012, my achievements included the establishment of the belief in the value of the tax administrator and proactive stakeholder management; strategic Management as a critical first step to change; rebranding and Communication about a new order, and the need for citizenship participation in governance.
Also, we achieved the National Tax Policy by the Federal Inland Revenue Service Establishment Act 2007 and other legislations; Securing a place on the International Tax map; Setting the pace for automated tax payments for improved accountability; Introducing the unique Taxpayer Identification Number, and other technology initiatives to drive revenue growth and accountability, and growing revenues for the development of Nigeria.
The belief in the value of the tax administrator was one of the fundamental principles that influenced decisions taken.
One of the transitional provisions of the FIRSEA2007 Act was that entry to the new FIRS was not automatic. This was done to ensure a minimum standard of qualification as an entry criterion. Recognizing however that quite a significant number of staff did not have this qualification, the Service recognized this as a capacity-building challenge and provided an opportunity to those without qualifications to go back to school to earn the required qualifications, funded by the Service. The ability to transform lives and give people hope was for me one of my most personal accomplishments.
The Service placed significant emphasis on capacity building. We improved the quality of staff, through training, and retraining of our staff, internally and externally, with both local and foreign training. Over 5,000 staff have benefited from such programmes. After establishing our manpower needs and securing approval to fill vacancies and skill gaps, we recruited a significant number (nearly half of the current staff strength) from within the private and public sectors to beef up our manpower needs working in close collaboration with the Federal Character Commission (FCC). In the Joint Tax Board, we worked together with the States, to underscore the need for strong, independent, and adequately funded State Boards of Internal Revenue (SBIR) as a springboard for improved Internally Generated Revenue for States.
We worked together with all the 36 Governors in the States through the National Economic Council (NEC), the Nigeria Governors’ Forum (NGF), SBIR, RMAFC, and several other bodies to improve revenue. Some of the areas of collaboration include the various statutory amendments in the Personal Income Tax Amendment Act, 2011 aimed at improving personal income tax administration.
We continued the process of promoting a bond in the FIRS family through a variety of initiatives: encouragement of cooperative societies, FIRS Family Day, Town Hall Meetings, marking of birthdays and other social events. We started work on the Tax museum as part of the process of making tax education start at childhood. We also had an initiative to set up professorial chairs in Universities on Taxation. These particular initiatives never got concluded and remain work in progress.
A critical first step to change was our introduction of strategic management techniques from day one. This helped to align people, even if not immediately, to understand the direction the Service was proceeding along. This, together with its communication and execution thereof, helped in no small means to creating a lingering understanding of the changes that happened.
We managed the Service with corporate wide medium-term and group annual plans, working with Key Performance Indicators (KPIs) at the group, department and individual levels to instill a strong result orientation.
Beyond agreeing goals, we placed emphasis on ensuring that we had the right structure to drive the strategies and goals agreed upon. This was quite fundamental. We re-organized the Service introducing new functions and structures aimed at building and institutionalizing a modern revenue authority with focus on meeting the needs of the different segments of the tax paying public.
In this regard, we amongst others, created the “One stop” integrated tax offices (hitherto we had stamp duty, value-added tax, withholding tax and income tax offices that required the taxpayer to hop from one tax office to another, simply to pay taxes; departments with increased focus around the various taxpayer market segments, including Large taxpayers – oil and gas; Large taxpayers – non-oil; Medium taxpayers and Micro and Small taxpayers; Individual and Enterprise Income as ell as Model structure for tax offices encompassing all tax administration functions like registration, returns and payment processing, risk profiling, audit, filing and debt enforcement and taxpayer services.
There was also the Standards and Compliance Group to ensure standards, processes and systems are in place to guide tax administration with focus on the functional areas like Registration, Returns and Payment Processing, Risk-based Tax Audit, Taxpayer Education and Services, Debt Management and Enforcement, the Tax Policy & Legislation Department to continue the process of reviewing, tax policy and legislation on a continuing basis, the position of nationwide taxpayer advocate to provide an avenue for channeling taxpayer complaints and acting as an advocate on behalf of the taxpayer.
Departments were also designed to provide the enabling environment to support tax administration; Facility, Security and Safety Management; Communications and Liaison; Revenue Accounting; Tax Investigation and Special Enforcement; Procurement; Appointed a Risk Management Expert to assist the Service in setting up a Risk Management Department. We rebranded the FIRS and evolved a new logo for the Service. This informed massive infrastructural change throughout the Service. Offices were renovated and repainted with the new colours. As part of the rebranding, a new anthem for FIRS was also composed.
Beyond the logo and anthem, communication was placed on the front burner, given the need to truly provide service. I met, continued with and improved on the “Tax Matters” TV programme and also introduced the FIRS tax radio. We improved intra-FIRS Communication as well as overall communication with taxpayers. We also progressed on all other projects designed to secure an improved working environment for all our staff and taxpayers. We commenced work on our new Corporate Headquarters building with the approval of a winning design through a competitive design process. This building was to be one of the symbols of the new FIRS.
On the National Tax Policy, Federal Inland Revenue Service Establishment Act 2007 and other legislations, we recognized the importance of tax policy to drive legislation. We worked with the Ministry of Finance to draft, obtain approval for and launch of the first National Tax Policy, the first of its kind in the history of Nigeria. Nigeria now has a second version of the National Tax Policy.
The passage of the Federal Inland Revenue Service Establishment Act 2007 was a watershed in the reform efforts as it provided the foundation to build on achievements made. This piece of legislation gave the FIRS autonomy from the Federal Civil Service and the ability to recruit, reward and discipline its own staff. It also setup a Board, which for the first time had six representatives of the geographic zones of Nigeria, together with representatives of key government agencies, with a view to providing oversight on the administrative activities of the Federal Inland Revenue Service as it transited from the Federal Civil Service Commission that had been playing that role.
Recognizing the role of the Board to set the reform on the right path, the then President Olusegun Obasanjo, requested me to forward names to enable him decide members of the inaugural Board. The Service was blessed with a dispassionate set of board members who committed time and resources to making the changes in the FIRS happen. Other activities now empowered by legislation included clarifying the roles and responsibilities of the service, and the laws it had responsibility for; entrenching the new funding model of the Service based on cost of collection to enable the various activities required for reform to be adequately funded; entrenching the powers that enable the Service have “teeth” in ensuring voluntary compliance; replaced the erstwhile Body of Appeal Commissioners and Value Added Tax Tribunals with the Tax Appeal Tribunals for appeals of all tax disputes, nationwide. (in eight locations); provided the transitional provisions that ensured a smooth transition from the “old” to the “new” Service; enabling new remuneration structures, welfare packages and career development practices and clearance of the backlog of promotion cycles.
Apart from the FIRSEA 2007, other legislative amendments achieved, and the highlights of the changes thereof included Value Added Tax (Amendment) Act 2007; Companies Income Tax (Amendment) Act 2007; National Automotive Council (Amendment) Act 2007; and the Personal Income Tax (Amendment) Act, 2011.
We participated actively in the development of the Petroleum Industry Bill in collaboration with other government agencies; development of a new Value Added Tax Act to repeal the existing Act; development of a Tax Administration Code; development of a comprehensive and consolidated Income Tax Act; and amendment of the Taxes and Levies (approved list for collection), Stamp Duties and Capital Gains Tax Acts. Most of these remain work in progress.
In like vein, we developed and worked with the Federal Ministry of Justice to gazette the regulations clarifying companies eligible for tax deductible donations, the Self-Assessment Regulations, the Presidential and Ministerial orders granting exemption for investments on bonds and related instruments, regulations for incentives to Nigerian companies which provide employment and infrastructure, amongst others.
We also worked on gazetting regulations guiding Transfer Pricing and for the use and issuance of the Taxpayer Identification Number (TIN). We made progress in the development of regulations on International Financial Reporting Standards (IFRS), Non-Interest Banking amongst others, and issued several technical circulars, the most recent of which was that for Banks interested in Holding Company structure arrangements. We re-invigorated the need for continuous dissemination of technical circulars to the general public, aimed at improving better understanding and application of the law.
On a place on the International Taxation Map internationally, we improved the profile and reach of the FIRS and Nigeria on tax matters. We created strategic relationships, which we must continue to leverage on for the benefit of the Nigerian tax system. We engaged in discussions aimed at ensuring an increased focus on domestic resource mobilization for sustainable development.
We contributed to the development of a new United Nations Model Convention for Avoidance of Double Taxation between Developed and Developing countries. We contributed to discussions aimed at improving the methods for transfer pricing and the exchange of information between countries. We negotiated and signed a number of Agreements for the Avoidance of Double Taxation and
Prevention of Fiscal Evasion with other countries. Nigeria was on the front row with other African countries in the establishment of the African Tax Administration Forum, (ATAF) and the West African Tax Administration Forum (WATAF). Nigeria represents the West African Region in the ATAF Council and Chairs its Finance and Audit Committee. Nigeria Chairs WATAF, whilst also acting as its Secretariat. Nigeria was invited and joined the Organisation for Economic Cooperation and Development (OECD), Global Forum on Transparency and Exchange of Information for Tax Purposes in 2010.
In this regard, Nigeria was assessed and ranked in 2013 for its compliance with global standards for transparency and exchange of information Nigeria’s membership and participation in these international organizations and activities have begun to lay the foundation for improved cross border learning, capacity building, peer review, exchange of information and best practices.
Nigeria actively participated in the Commonwealth Association of Tax Administrators (CATA) activities. During the period, we resumed the process of sending staff on an annual basis to its Commonwealth Tax inspectors Course (CTIC) and its Advanced Management Programme (AMP) with Nigeria representing the largest delegation to these programmes. Nigeria hosted the Annual Technical Conference of CATA in 2010 (for the second time in the Association’s 34-year history), in Abuja. Nigeria also held the position of North African Regional Director of CATA and has in consecutive years been a member of the CATA Management Council. The Value Added Tax Administrators in Africa (VADA) Conference (where value-added tax administrators from across Africa gather to discuss issues relating to VAT administration and practices) was hosted by Nigeria twice, in 2004 and in 2010.
We also held the Chairmanship of this Association twice. We held a Tax Treaty Strategy Workshop involving international speakers working with FIRS to develop a clear strategy for the negotiation of avoidance of double taxation treaties/exchange of information agreements with other countries Our other achievements included setting the pace for automated tax payments for improved accountability, Introducing the unique Taxpayer Identification Number, and other technology initiatives to drive revenue growth and Accountability.
We automated our bank-based collection operations with improved tracking abilities to improve accountability for taxes collected. With this, we encouraged the wave of such companies like Interswitch which were just coming into the business and provided the foundation that led to their growth, success and replication of similar like entities. The unique Taxpayer Identification Number was introduced as one of the outcomes of the technical assistance missions received from the International Monetary Fund (IMF). The value was immeasurable, providing the anchor for building an integrated data base for tax administration. The purpose of having a unique TIN was clear, aggregating all necessary data around one single point of contact to provide a more holistic perspective of economic activities for assessment. In our view, it was also to provide a basis for estimating revenue accruable with a view to ultimately affecting tax policy and legislative changes.
All the States of the Federation and the Federal Government (represented by the FIRS) worked together on the unique nationwide Taxpayer Identification Number (TIN), which was launched by Mr. President on April 5, 2011. The TIN project aimed at developing for the very first time a national database of all taxpayers and it is anchored by the Joint Tax Board (JTB). TIN continues to this day in an enhanced format.
We commenced and continued to work on several modernization projects. These include the Records Management and Data tracking project, Human Resource, Finance and Accounts Reengineering project, the unique Taxpayer Identification Number project implementation (in concert with the Joint Tax Board), the Integrated Tax Administration System (ITAS) project implementation, and the self–assessment project implementation.
Other projects conceptualized and in progress include data integration with the Nigeria Customs Service, Corporate Affairs Commission et al, various Information and Communications Technology projects, VAT Collection Automation, Contact Management Centre, ISO Certification, Internal Management Document System and the Business Process Reengineering of Tax and Non-tax processes. Process manuals were developed for various tax administration functions in the Service. We provided, with room for continuous improvement, Service-wide technology backbone for communication.
On growing revenues for development, which is part of our core mandate of tax collection, tax revenue grew astronomically from slightly below N1.2 trillion (about $7.9bn) in 2004, to over N4.6 trillion (over $30bn) in 2011 (over four times the collection figure of 2004). Within the period, FIRS consistently surpassed the revenue targets set for the Service.
FIRS REMAINS WORK IN PROGRESS
What I would say is that FIRS remains work in progress. We still need to achieve one singular and most fundamental area to drive the revenue service whether at the Federal, State or Local Government level as a critical tool of development. This is a mindset shift in the role of revenue administration in development. We have made a lot of progress since 2004 when I started my journey, but a lot still needs to be done. We need to move the thinking from what appears to be seeing revenue administrators as just sources of cash for the budget or individual pockets, to enablers of true and lasting development. Signs that show we have turned the curve, primarily revolve around building the revenue administration institution as one of the pivots of government.
In this regard, we need to have an understanding of the role of legislation in driving change. Legislative changes take too long – A number of legislative reviews still remain outstanding since 2012 – VAT review; Tax Revenue Code; Petroleum Industry Bill, reducing tax rates etc. One welcome development recently, was the passage of the Finance Act, 2019 and the Companies and Allied Matters Act 2020 – the revision of the 1990 law was one of the legislative changes we were involved in as a service when I was in government.
All Revenue Authorities also need a Revenue Administration Code to drive understanding and expectation of every function in Revenue Administration.
Having a truly Integrated Tax Administration System that is powered by technology and is underpinned by a unified and harmonized tax identification number that collectively pulls data across all government services, vertically within and horizontally across the different arms of government. We started work in this area, with a selection of the software and training of the team involved, but this remains work in progress.
Elimination of the use of external tax consultants to do the work of government, or to leverage the inaction of government, and instead continuously improve internal processes that will improve the institutions’ revenue generation ability; elevate the role of Risk based Tax Audit as one of several functions within a standard tax office; recognize the true place of structure, transparency, merit, fairness and inclusivity in such critical Human Resource functional areas as recruitment, staff deployment, performance management, reward and discipline, d) Placing focus on internal skills and character development – people can only give what they have; understanding the separation between field and headquarters in the organisation structure of a revenue administration institution; and the need for separation of powers, checks and balances.
Wincluded elements of this in the FIRSEA Act 2007 but perhaps didn’t go far enough and remains a major area of disconnect. It was also the reason why my second term confirmation process lasted nearly a year. I was made to understand that a major tax consultant, worked with some members of the national assembly to abort my reappointment for a second term. This is a major revenue earner for those involved and would need another round of strategic thinking to determine how best to achieve this.
Recognising the importance of having a credible brand as a tax institution. When taxpayers trust you, your job is a lot easier. Trust comes with having regular communication and also showing empathy. Trust also comes with the entire Government and not just the FIRS, recognizing the importance of the taxpayer, their role, rights and responsibilities; and a need for professionals (not just anyone interested in making a buck) to drive tax administration. For example, a focus on widening the tax net rather than just introducing different ways to collect taxpayers’ monies, supports the ability of companies and individuals to run viable businesses that will pay the taxes necessary for development. It also comes with having a zero tolerance for corrupt practices and showing visible actions meant to address this. The tax officer interfacing with the taxpayer, is the face of the organization. How he or she interacts with the taxpayer ultimately creates the brand regardless of how many times adverts are placed. If in the hospital, you are not convinced that the Doctor possess the right qualifications and experience, would you allow just anyone to operate on you? Why do so with revenue administration?
The other point is ingraining tax payments in the mindset of the Nigerian from cradle to grave; and as a critical part of citizenship. A number of initiatives were executed, but didn’t quite achieve the desired impact. We reached out to our future taxpayers through the Student Taxpayer Advocacy Initiative (STAI) and instituted the process of Professorial Chairs in Taxation in 13 Nigerian universities evenly distributed throughout the country in every zone. We also worked with the Federal Ministry of Education to make Taxation part of the civic studies curriculum in our secondary schools. This STAI initiative which was run for a time was dismantled after my tenure; the provision of funds for professorial chairs in Taxation in the Universities across the country, for which funds were set aside, eventually never took off the ground. We also had a tax museum planned for Abuja and Lagos, as well as other on-going documentation initiatives to represent our efforts at documenting all we do for posterity. It was also to provide a show case for school children of nursery, primary and secondary school age, a place to understand taxation from infancy in a most creative way. The team set up to take custody of all materials used in tax administration over time, did some work but eventually also got disbanded.
Entrenching merit as a way of life in the way work is done – Merit is critical in everything we do. Perhaps because of the previous years, where persons were not given opportunity, there is a rush times, to feel that any opportunity given to you, should be to settle personal scores and bridge gaps that speak to personal concerns of injustice or lack of opportunity. Much as this may be difficult to comprehend, giving people an opportunity to display their best truly works. That way we leverage on and develop the best skills required to build a continuous generation of internally bred tax administrators. Merit also goes hand in hand with achieving diversity in the workplace. Diversity in thought processes at the management and board level helps in ensuring that in defining merit, we recognize that understanding geographic and cultural differences are skills in themselves.
While we built in some level of succession planning in the structure setup, ultimately no matter the best plan, once a process is politicized, succession plans may not work. Continuity from one administration to another is critical in ensuring there are minimum setbacks and the overall trajectory is that of retaining the principles that drive growth and continuous improvement. After the first board completed its first term under the FIRS Establishment Act 2007 in July 2012, the next Board was inaugurated in December 2019. That created a lacuna that should not have been.
Lastly, in celebrating the heroes of tax reform, one of the works I planned to do was to publish the heroes of the reform work done during the period from 2004 to 2012. A lot was done and accomplished through different institutions and individuals across governments, within FIRS and in the general public. The more we celebrate those that contributed, the more we encourage those that seek to venture into uncharted waters. This is my personal work in progress, to get this done. I use this opportunity to say thank you for contributing to all the work done to build the FIRS institution.
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