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High recurrent expenditure, a disservice to Nigeria –Jaiyeola, ICAN President

High recurrent expenditure, a disservice to Nigeria –Jaiyeola, ICAN President

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In this interview with JESUSEGUN ALAGBE, the President of the Institute of Chartered Accountants of Nigeria, Alhaji Razak Jaiyeola, shares his thoughts on the Federal Government’s anti-corruption war, among other things

In June, you were installed as the 54th President of the Institute of Chartered Accountants of Nigeria. Did you see it coming or was it something you didn’t expect?

Well, I saw it coming. I have been on the council since 2005, serving in various committees and contributing my quota to the development of the institute and the profession. When I was elected by my colleagues as the 2nd Deputy Vice-President in 2015, it started to dawn on me that I might soon become the ICAN President. To God be the glory who made it happen.

During leadership change in some professional bodies, there are sometimes incidents of rancour and fighting. Was that something you experienced when you were selected?

ICAN is one of the greatest professional accounting organisations currently walking across the pages of history due to its pedigree in all areas of professional activities, especially in the core area of transition from one presidential year to the other. The model of the transition in ICAN was instituted right from the inception of the institute. It is seamless, rancour-free and worthy of emulation. One ‘grows’ into it as he or she matures as a council member and so, the process is predictable. It has worked, is working and will continue to work.

What impact do you hope to make during your tenure?

If one does not know where he is going, everywhere looks the same. Usually during investiture, the new president delivers an inaugural speech where they address what they intend to do in their presidential year. At ICAN, we don’t have abandoned projects, so we try to carry over all the laudable projects that our predecessors started but couldn’t complete. For instance, we have projects such as the Accountability Index; the e-Learning initiative; and Computer-based Tests for our students. All these projects have been carried over and we want to ensure there are no hitches in carrying them out. However, asides these projects, I also have some projects for this presidential year. Top on the agenda is the enhancement of Information Technology skills of our members. As you know, there are a lot of technology disruptions going on, including artificial intelligence, robotics, blockchain and the Internet of Things. All these would have impact on the work of accountants in the future, so it is very important that our members are enhanced with the skills to cope with the changing dynamics of business transactions in the society, otherwise, we would be left behind and have ourselves to blame. There are other skills that we need but it’s going to be a gradual process. We also have the issue of unemployment among our members because we produce them in huge numbers. Though there is unemployment generally, however we want to address it among our members and one of the solutions we are considering is entrepreneurship training. To that end, we are collaborating with various government agencies to ensure our members embrace entrepreneurship. We have set aside about N1m in our budget to enable us to collaborate with some government agencies, some of which have agreed to provide matching grants in this area. We will use the agencies’ structures to make sure our members comply and we will also use ICAN’s structure to ensure our members in the various districts, which are about 50 across the country, are able to key into this programme, depending on the peculiarity of their various states. We also want to promote quality financial reporting in the country. It is very key and, in this regard, we will engage the various regulatory agencies, such as the Nigeria Deposit Insurance Corporation, Central Bank of Nigeria, Nigerian Stock Exchange, Securities and Exchange Commission and Financial Reporting Council. We will harness our resources together and take relevant actions. We will also continue to support the government with respect to the anti-corruption crusade. We have already keyed into NOCLAR (Non-compliance with Laws and Regulations), which is a programme initiated by our international mother body, International Federation of Accountants. With respect to this, we expect our members not to look the other way when they find out organisations are not compliant with rules and regulations, but to bring the errant organisation’s attention to it. Where such organisations refuse to comply, our members should report them to the regulatory agencies. Otherwise, if such members look the other way, they would be sued alongside the errant organisation. Our Accountability Index programme is also a tool that is used for assessment of public finances and we are deploying it across the country. It is in place at the federal, state and local government levels. The index has been run in such a way that we would know which particular government agency is doing well in managing public funds. In the process, it would help fight corruption. We also have the Whistle-blower’s Fund. It is a N50m fund introduced in 2015 and is basically to reward our members who are instrumental in uncovering fraudulent practices. We are also very supportive of the Treasury Single Account, which has gone a long way in checking wastage by government agencies.

You have just a year to lead the institute, how do you hope to achieve all these programmes within the period?

Like I said before, we always build on the works of our predecessors and besides that, some of the programmes I mentioned have already been initiated. I will build on those that can be built within the current presidential period and hand over the rest to my successor. However, I would focus more on the entrepreneurship programme and IT training for our members. They are very important and I’m going to devote a lot of energy to these areas.

You said the institute is in support of the Federal Government’s Treasury Single Account. Do you think the gains have surpassed the shortcomings?

The idea of TSA in Nigeria was first mooted in 2004 but its full implementation started in September 2015. It is one of the strategic measures introduced by the government to mop up all its resources from Ministries, Departments and Agencies. Prior to its introduction, many MDAs had various accounts in banks with huge funds. Since they are arms of the government, their funds rightly belonged to the government. However, due to dearth of information about these hidden resources, the government was actually borrowing its own money in the banking system. These interest incomes on revenues collected were often used by the MDAs without recourse to budgetary allocations. With the TSA, all revenues are mopped up in real time. At any point in time, usually at the end of the day, the government knows how much it has in its account.

As of August, 2018, it was estimated that total revenue collection into TSA was N11tn and that N42bn had been saved monthly on ‘ways and means’ charges in the last two years. To put it simply, ‘ways and means’ is an overdraft by the CBN extended to the government to bridge temporary cash shortfalls.

However, the government and various stakeholders should address some challenges currently being faced in the implementation of this laudable initiative.

What do you think are the challenges facing the effectiveness of the TSA?

Some of the challenges include poor awareness. There is the need to educate the public and bring on board all critical stakeholders in the implementation process. It is equally important to increase the deployment of more local technological content in the implementation of the TSA. Presently, only one out of the four technological systems supporting TSA is local. The only indigenous system is Remita, on which 600 MDAs are enrolled. The Real Time Gross Settlement, which manages commercial bank accounts and interbank settlement, is a Swedish firm. Temenos 24, which manages government accounts and acts as CBN banking solution, while the Government Integrated Financial Management Information System, which connects over 700 MDAs for budgeting, transaction initiation and financial reporting, is from Estonia.

While we cannot replace these firms with indigenous ones overnight, ICAN is very much interested in the Federal Government fully deploying locally-developed technology platforms for the TSA initiative. In addition to the fact that these foreign applications consume huge foreign exchange resources at the moment, deploying indigenous technology would also create employment in the IT sector.

Some other challenges in the TSA implementation include delay in paying IT vendors and banks, which has been lingering for one and half years and the bottlenecks created in the release of funds to finance critical developmental projects, such as accessing of research grants to fund research activities in tertiary institutions and other academic institutions.

You once asked the Federal Government to sell off its idle assets across the country, but some people have argued against this. Why do you support the sale of government assets?

I am not asking government to sell off its idle assets but to relocate assets of little commercial value in choice places to other locations. For instance, the Ikoyi Prison and Maryland Barracks in Lagos State are adorning choice places that can be utilised for more productive ventures. These are just few examples of such across the country. The government should take inventory of all such assets and relocate them to more appropriate places. In addition, the non-utilisation or under-utilisation of government assets in choice places should be addressed. A case in point is the Federal Secretariat complex in Ikoyi, Lagos State. We are of the opinion that this idle asset should be released to the Lagos State Government and we are sure that our member, Governor Akinwunmi Ambode, will turn it around for more productive uses.

Apart from the government under-utilising some assets, are there some sources of public funds wastage that you’ve identified with the present government?

The size of the government is too large. Why should the country have 36 ministers, 109 senators and 360 House of Representatives members? The Oronsaye report noted there are at least 49 agencies that perform functions similar to other agencies. What are they doing? Each year, we spend 70 per cent of the budget on recurrent expenditure. Consumption does not lead to development, only capital budgeting can. The Oronsaye Commission’s report recommended the abolition of 38 agencies and merger of 52 other agencies. If this report had been implemented, the country would have saved over N862bn between 2012 and 2015. However, the report has not been implemented while more agencies seem to have been created.

Also, there are some poorly articulated and ill-advised policies and programmes through which public funds are unnecessarily drained. These can be found in a number of abandoned projects in all nooks and crannies of the country. Cases of overpriced contracts cannot be ruled out also as a source of leakage of public funds. We have seen a number of ex-political office holders being brought before the court of law by the Economic and Financial Crimes Commission and some have even been convicted on account of misappropriation and misapplication of public funds.

Some members of the institute still seek to get certifications from foreign accounting bodies such as the Association of Chartered Certified Accountants in the United Kingdom, especially when they seek to work abroad. Does it mean ICAN’s certificate is inferior to its foreign counterparts’?

This comes under what we call reciprocity. It is very normal that some people would want to relocate from Nigeria, especially to areas where there are high-profile jobs. Because we are members of IFAC, our examinations are of high standards, to the extent that we are now having handshakes with other professional bodies abroad like in England and Wales. We have exchanged syllabi with these bodies and our members are being accepted into such foreign bodies. It is not about inferiority, but it is about reciprocity to enable our members to have access to high-profile jobs abroad.

Meanwhile, embracing foreign certifications also has to do with Nigerians’ fondness for foreign goods and services even when there are better local alternatives. As you know, this is not peculiar to our profession but it cuts across all sectors, products and services. The desire for the UK counterpart of ICAN certificate has little or nothing to do with standards. Indeed, our syllabus aligns with the requirements of the International Educational Standards and Guidelines issued by the International Accounting Education Standards Board. This is however without prejudice to the peculiarities of the Nigerian business landscape.

In addition, ICAN joined 11 other professional bodies to found the International Federation of Accountants, the body that regulates accountancy profession in 125 countries of the world. Our standards and practices are benchmarked on IFAC’s standards and guidelines. Our standards are therefore comparable with those of our peers anywhere in the world. We operate in a global environment and so Nigerian youths also desire to have a flavour of what happens out there. We do not begrudge them because we currently conduct examinations in the UK and Cameroon and have district societies in Canada, United States, Malaysia, UK and Cameroon. It is a global world of competition and we are up to the task.

There have been some misgivings about the Federal Government’s approach to fighting corruption, especially as some believe it’s one-sided. As an institute, what do you think about the anti-graft war?

The anti-corruption war is not something that should be restricted to the government to fight, it is a battle for everybody and we cannot be talking of a one-sided anti-corruption war when we’ve had a particular set of people in charge of the treasury. However, there is the need to strengthen the machinery of the government in fighting corruption. Lots of high-profile cases have been lost due to non-diligent prosecution. ICAN would want to collaborate with the government in capacity building, particularly in the area of forensic investigation. The government has tried to put some initiatives in place, but with the cooperation of some bodies like the Nigerian Bar Association, there will be speedy execution of cases. More importantly, in the political terrain, we have a lot of people who are genuine in serving the people, so if we can all work together in bringing people who are genuinely interested in saving this country, the better it will be for all of us.

As a country, we’ve always had problems with budget design and implementation. What do you think is the way forward?

The challenge in Nigeria is not lack of knowledge or skill required for budget preparation. What is usually of concern is the human factor in preparing budgets and implementing same in the public interest. The way budgets are prepared and implemented in Nigeria leaves much to be desired. A lot of improvements are needed to bring the budgeting process in line with best global practices by eliminating all fundamental challenges currently being experienced. For instance, the budget preparation and scrutiny are always late. This makes it difficult for stakeholders to plan appropriately. There is also the issue of assumptions underlying the budget estimates which are often over-ambitious. We need to begin to learn from previous budgets in preparing current ones. We do not have to impress anybody with high sounding but unrealistic assumption, especially in the area of crude oil production. The budget is also usually skewed in favour of recurrent expenditure. This is a disservice and an aberration to the nation. We equate budget performance in Nigeria with the release of funds such that nobody actually critically examines whether the budget is performing based on the parameters set in the budget or not. This is even compounded by the erratic release of budgeted funds to the respective agencies and units that need funds to execute projects and programmes. Unless and until all these fundamental challenges are dealt with sincerely and timely, the budgeting process in Nigeria would continue to be at variance with global best practices. We need to change our mentality as a nation that the national budget is not and should not be designed for people to balance their personal budget at the expense of the masses.

President Muhammadu Buhari has refused to sign the African Continental Free Trade Agreement. Do you think he’s right?

That’s a very dicey situation, in the sense that there are pros and cons of signing the agreement. Out of about 55 African Union member countries, 44 have signed, but the critical issue here has to do with the movement of goods and services. The cost of movement of goods into Nigeria is high because of poor infrastructure, so for us to benefit from the agreement, there is the need to revisit our decaying infrastructure and also provide an enabling environment for manufacturing. These would bolster our manufacturing base and improve the country’s balance of trade to attract forex into the economy. But in terms of providing services, we are highly capable, which I still think is enough for us to sign the agreement.

There has been a sort of rivalry between ICAN and the Association of National Accountants of Nigeria. What is the institute doing to resolve it?

There used to be rivalry but now we are brothers. We even sponsored them to IFAC and we now work together.

How do you address the issue of professional misconduct among your members?

There is a laid-down process for dealing with professional misconduct among our members. Once a complaint is received against any member, the Accountants’ Investigating Panel will swing into action to authenticate the details of the alleged infraction. Once a prima facie case is established, the matter is referred to the Accountants’ Disciplinary Tribunal for adjudication. If found guilty, the member will be sanctioned as provided in the ICAN Act.

Despite the fact that the Federal Government said the country had come out of economic recession, do you agree with that position, especially when you look at economic indices like high unemployment rate, rise in food prices, among others?

Yes, we have come out of recession. But it takes time for manifestation and I think the government has been trying to diversify the economy. However, we can do better to improve the economy.

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