Revenue Leak: FAAC says N4.1trn missing in govt coffers

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The Federation Accounts Allocation Committee (FAAC) has raised an alarm over a staggering N4.1 trillion shortfall in government revenue. This alarming figure represents the cumulative sum that revenue-generating agencies have failed to remit to the federation account. The revelation comes despite claims of reconciliation and debt settlement by these agencies in recent months.

A breakdown of the data reveals a disturbing trend. The Nigerian National Petroleum Company Limited (NNPC) is the biggest culprit, owing a colossal N940.62 billion. The combined debt of the Nigerian Upstream Petroleum Regulatory Commission and the NNPC stands at a staggering $23.81 million and N1.94 trillion. Other significant defaulters include the Federal Inland Revenue Service (FIRS) and the Central Bank of Nigeria (CBN).

FAAC stated that this was despite the agencies’ reconciliation and payment of outstanding debts of N94.96bn in May 2024.

The unresolved amount is $165,067,714.53 (N178.52bn) and N3,917,340,180,696.84, compared to the initial amount of $36,329,376.24 (N51.88bn) and N2,977,561,881,021 recorded in May 2024.

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The latest development was disclosed in a report by the Federation Account Allocation Committee post-mortem sub-committee meeting and signed by the Chairman of Revenue Mobilisation, Allocation and Fiscal Commission, Mohammed Shehu.

The report read, “Outstanding Federation Account Revenue Arising from Inter-Agencies Reconciliation Meeting held in June 2024: The total unresolved amount due to the Federation Account from the reconciliation meeting held with the Revenue Generating Agencies in June 2024 was $165,067,714.53 and N3,917,340,180,696.84.

“Assessing the impact of the FAAC PMSC on outstanding arrears of revenue inflows due to the federation account.

“For May 2024, the PMSC would like to inform the plenary that as a result of reconciliation with Revenue Generating Agencies, a total sum of $64,073,123.40 equivalent to N94,964,537,885.84 was reconciled and confirmed paid to the CBN designated accounts,” the report added.

The document further explained that the government had recovered a cumulative outstanding of N537.35bn in five months.

“The cumulative outstanding arrears reconciled and paid to the Federation Account from January to May 2024 stood at N537,353,864,835.67.”

These figures paint a grim picture of the nation’s fiscal health. The missing funds represent a substantial chunk of the government’s revenue, which is crucial for providing essential public services such as education, healthcare, and infrastructure. The failure of these agencies to remit their earnings is a clear indication of systemic failures and a lack of accountability.

Implications for the Economy

The N4.1 trillion shortfall has far-reaching implications for the economy. It exacerbates the government’s revenue challenge, making it increasingly difficult to fund critical projects and meet its obligations. This could lead to a further deterioration of public services, increased borrowing, and potentially, inflationary pressures.

Moreover, the revelation underscores the urgent need for reforms in the management of government revenue. Stronger oversight mechanisms, transparent reporting, and strict sanctions for non-compliance are essential to prevent such massive leakages.

Calls for Accountability

Civil society organizations and financial experts have called for a thorough investigation into the matter. They are demanding that the government hold the defaulting agencies accountable and recover the lost funds. There is a growing consensus that stricter measures are needed to prevent a recurrence of this financial hemorrhage.

As the nation grapples with economic challenges, the N4.1 trillion shortfall serves as a stark reminder of the urgent need for fiscal discipline and transparency. It is imperative that the government takes decisive action to address this issue and restore public confidence in the management of public funds.

Tags: FAAC, Federation Accounts Allocation Committee, Nigeria, CBN, Bola Tinubu, Yemi Cardoso, Wale Edun