FG to penalise MDAs that fail to meet revenue targets

The Federal Government has announced plans to sanction ministries, departments and agencies (MDA) who fail to meet their revenue targets. This is coming as the federal government has limited the expenditure of Government-Owned Enterprises (GOEs) at a maximum of 50% of the revenue they generate.

The pronouncement is coming against the backdrop of serious concerns over revenue crisis experienced by government, leading to frequent borrowing in order to meet up with some of its obligations.

This was disclosed by the Minister of Finance, Budget and National Planning, Zainab Ahmed at the Public Presentation and Breakdown of the Highlights of the 2022 Appropriation Bill in Abuja on Friday.

What the Minister of Finance is saying

Ahmed said that the introduction of the measure is an attempt to boost the revenue performance and remittance of government-owned enterprises.

She said, “We are working to ensure that MDAs appropriately account for and remit their internally generated revenues.

“GOEs’ revenue performance / remittance will be enhanced through effective implementation of the enhanced performance management framework, including possible sanctions should they default on their targets; tighter expenditure control including enforcing of Finance Act 2020 provision limiting GOEs cost-to-revenue ratio to maximum of 50 per cent; and regular independent monitoring and reporting of revenue and expenditure performance of GOEs by both the Budget Office of the Federation and the Office of the Accountant General of the Federation.

“These agencies cannot spend more than 50 per cent of what they generate. And this is one major revenue that would be coming into the government’s treasury.’’

Going further, the minister revealed that the federal government has put in place a robust monitoring mechanism to help assess the performance of agencies. She said the new plan to sanction them for revenue target failure would be included in the Finance Act 2021 or as a directive from President Muhammadu Buhari.

She said, “We have some provisions that we hope to make in the Finance Act that we are currently working on. But in addition to that, we also have a robust monitoring mechanism that is regular and continuous and tracking the performance and alerting these agencies where they are already falling short.

“It did not used to happen. A long time ago, people just worked and tracking was not done. By the time you make an assessment and underperformance is reported, it is already late.”

She added that continuous monthly reconciliation was being done with the revenue generating agencies.

What you should know

The Federal Government has constantly been expressing worry over revenue shortfalls from MDAs, especially those primarily involved in revenue generation. They had constantly accused them of poor performance amid alleged revenue diversion.

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