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Nigeria’s fiscal landscape could be undergoing a significant shift, as the Presidential Fiscal Policy and Tax Reforms Committee proposes a move from monthly to daily disbursement of funds from the Federation Account Allocation Committee (FAAC). This proposal has sparked discussions about potential benefits and drawbacks.
Modernization and Efficiency
The committee, chaired by Taiwo Oyedele, argues that the current system, dating back to 1814, is outdated. Daily disbursements, they believe, would modernize the FAAC and potentially enhance efficiency. Proponents suggest quicker access to funds could improve project planning and execution at all levels of government – federal, state, and local.
Under the proposed reform, FAAC will adopt a daily disbursement strategy, a departure from the traditional monthly allocation meetings.
“We believe the system can be configured to credit the accounts of local, state, and federal governments daily,” Oyedele stated.
He added, “If they are not set up to collect tax, they can’t be efficient and competent in doing it. Things will work better if everybody plays to their strength there’s a reason why every country has their revenue collection agency and not to replicate that function and be expecting that everything will be fine. A country like South Africa is under one per cent.”
Transparency and Accountability
A potential benefit of daily allocation could be increased transparency. With more frequent updates, governments might be held more accountable for managing their finances. This could foster better financial planning and potentially reduce instances of mismanagement.
Technical and Logistical Challenges
However, the proposal also raises concerns. Implementing a daily disbursement system could be technically challenging. Ensuring robust IT infrastructure and cybersecurity measures would be crucial to prevent disruptions or fraud. Additionally, logistical hurdles might arise, requiring adjustments in how governments handle and track their finances.
Impact on Planning and Budgeting
The shift from monthly to daily allocations could also impact how governments plan and budget. Adapting financial processes to a daily system might require changes in how budgets are formulated and monitored.
Uncertain Impact on States with Fluctuating Revenue
States with revenue sources prone to fluctuation, like those reliant on oil production, might face challenges adjusting to a daily system.
Public Reaction and Next Steps
The public’s reaction to this proposal remains to be seen. While some might welcome the potential for modernization and transparency, others might express concerns about logistical challenges or the impact on specific states.
The committee’s proposal is currently under review. The final decision on implementing daily FAAC disbursements will likely depend on further discussions, addressing technical concerns, and potential pilot programs to assess the feasibility of such a significant shift.
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