FG Disburses N471.9bn World Bank Grant To States

Federal Government has disbursed N471.9 billion as grant to States under the $1.5 billion World Bank-Assisted States Fiscal Transparency Accountability and Sustainability (SFTAS) Programme for the results achieved following various annual assessments carried out by the Independent Verification Agents.

The Minister of Finance, Budget and National Planning, Dr Zainab Ahmed, who disclosed this in Abuja during the launch of States Charter to sustain Fiscal Transparency, Accountability and Sustainability Reforms (SFTAS), described the initiative as a milestone in the implementation and sustenance of reforms in Public Finance Management in Nigeria.

The Minister who noted that the implementation of fiscal transparency and accountability reforms in the conduct of Government business became necessary, commended the State Governments for the demonstrable high level of ownership, active peer learning and peer competition which culminated in very strong performance by most States in all the Key Results Areas of the SFTAS Programme which include increasing fiscal transparency and accountability; strengthening domestic revenue mobilisation; increasing efficiency in public expenditure and strengthening debt transparency and sustainability. Indeed, the very high level of political visibility and implementation structures created across the 36 states contributed largely to the successful implementation of the Programme over the period 2018 to 2022.

“As we gather this afternoon for the launch of the Charter, we are pleased to note that the Programme has achieved its objectives and made the following impactful deliverables: instilled a common set of fiscal behaviour and standards and facilitated the widespread adoption of good practices in fiscal and public financial management across the States while respecting their fiscal autonomy through preparation of Citizen -based Budgets, timely preparation and publication of Annual Budget and Audited Financial Statement as well as adoption of National Charts of Account.

“To date, 28 States have passed their Audit Law in line with internationally acceptable standards and all the 36 States have passed their 2020 Audited Financial Statements before 31 July, 2021.

“Also, 32 States prepared and published Local Governments’ Audited Financial Statements (AFSS) for FY2018, FY2019 and FY2020 including all allocations and actual receipts of State-Local Government Joint Account Allocation Committee (SLJAAC) transfers for each LG.

“It has strengthened fiscal transparency by improving overall budget transparency and accountability to help build trust in government, enhance the monitoring of fiscal risks and improve accountability in public resource management. All the 36 States prepared Year 2022 budget in line with the National Charts of Account.

“Improved accountability through the deployment of measures such as BVN in the Payroll Systems and implementation of Treasury Single Accounts to minimise leakages in the system and promote efficiency in resource management.

“To date, 31 States have linked BVN to payroll while 13 have adopted the Treasury Single Account. Also, 30 States had conducted biometric registration of at least 90% of their civil servants and pensioners on the payroll and addressed identified payroll fraud.

“Also, many states have been able to increase their IGR significantly by reducing IGR leakages through the implementation of State-level Treasury Single Account (TSA), and intensifying efforts in IGR collection.

“Twenty-seven States passed their Consolidated State Revenue Code (CSRC) by 2020 and 18 States were able to record a nominal IGR collection in 2020 that was equal to or higher than their 2019 nominal IGR collection. In addition, 20 States have shown very strong commitment in establishing institutional arrangements focussed on laying foundation for State Property taxation which is a significant potential revenue source.

“To date, 29 States have passed Public Procurement Laws and all 36 went ‘live’ on an e-procurement platform by 31 December 2021. This will improve procurement practices to enhance value for money and reduce opportunities for corruption and misuse of public resources, thereby increasing efficiency of public expenditure.

“It has strengthened fiscal sustainability through increased efficiency in spending, and debt sustainability to prevent further fiscal crises and enhance the fiscal space for productive spending aimed at supporting growth and public service delivery. Currently, 33 States have passed State Debt Laws.

“The implementation of COVID-19 responsive indicators freed resources for effective response to COVID-19 at the peak of the Pandemic. All the 36 States had passed credible, fiscally responsible, COVID-19 responsive Amended 2020 State Budgets which significantly revised revenues in line with realistic projections, reduce non-essential overhead and capital expenditures with a view to protecting social expenditures. This significantly strengthened national response to COVID-19 and aligned efforts at both federal and State levels.

“It successfully encouraged peer learning and competition amongst States and further enhanced delivery of good governance.

I am pleased to state that a total sum of N471.9 billion has so far been disbursed by the Federal Government as grant to States under the $1.5 billion World Bank-Assisted States Fiscal Transparency Accountability and Sustainability (SFTAS) Programme for the results achieved following various annual assessments carried out by the Independent Verification Agents.

“It is gratifying to note that beyond benefitting from the grants, all the 36 states in the Federation have fully domesticated the fiscal reforms in their public financial management system through the adoption of appropriate processes and practices as well as legal and regulatory frameworks which are already yielding positive outcomes.

Speaking during a media chat, Director General of Debt Management Office (DMO), Ms Patience Oniha, observed that the Federal and State Governments collectively adopted the fiscal sustainability framework for subnationals with a view to introduce a number of measures and undertake some activities that will improve public financial management.

“At the subnational level, as we call it, public financial financial management would involve budgeting, reporting, accounting, procurement, and all the likes supported by Legislators, officials to improve that process, because government at whatever level is serving people.

“So government should not only deliver but the transparent and compliant in the manner in which is delivered to services. Check Governors, check country controllers. How is that going to be? Okay, I think there are two parts to that. So one of which is that the States as you know, at the federal level, we do have some laws that govern what we do.

“So we have a Public Procurement Act, as you heard that concise procurement, which is expenditure, a major part of expenditure. We know now that the states and in effect those laws as well, so there is compliance that goes to the state, specific country, as well as the state assembly as required.

“So those laws are there. They’ve also establish if I may speak in return today, more of them have enacted their own. Some colleagues, public finance, management, know some public debt management, business, we have a different.

“So there are things that business goes through a process, not one person. Finance I think we, we should admit, as we all know, that fiscal position at all levels can be better, it’s not as robust as you want it to be.

“So it’s not what is or is not because there are no processes or laws. And I think that’s the first thing is very relevant for the fact that the state governments, part of the component of sifters is to generate revenue, they generate sufficient revenue, that will only be complimentary just to be able to meet the expenditures, including salary.

She expressed optimism with the enactment of those laws by the States, the onus is on State Executive Councils and State Houses of Assembly to ensure compliance.

“So those laws are there. They’ve also establish if I may speak, in relation to debt, more of them have enacted their own, some call it public finance management law, some public debt management, just as we have at the federal level. So there are things that need to go through a process, not one person or two.”

While responding to on the complaints on the inability of some States to pay salaries, the DMO Accounting Officer said: “I think we should admit, as we all know, that fiscal position at all levels can be better, it’s not as robust as you want it to be.

“So what is affecting the State is not because there are no processes or laws. And I think that the question you asked is very relevant for the fact that the state governments, part of the component of SDTAS is to generate revenue, they generate sufficient revenue, then FAAC will only be complimentary just like a few states have done and then they will be able to meet the expenditures, including salary.”

While responding to question on how SFTAS has helped State Governments in terms of payment of salaries, Permanent Secretary, Federal Ministry of Finance, Budget and National Planning, Mr Aliyu Ahmed said: “If you remember the history of how even SFTAS was introduced in 2015, is because State Government had difficulties paying salaries.

“So Federal Government had to step in again and again, to bail them out. But at the time, the Federal Government stepped back, you couldn’t be giving out these interventions, helping the States without making them go through some disciplinary procedure, in terms of how they are going to manage their finances, or they are going to make their states viable.

“That was how we contacted the World Bank. And then we packaged the SFTAS programme in such a way that it will reward good behaviour.

“And what do I mean by good behavior, putting in place good systems in terms of fiscal transparency, in terms of procurement management, in terms of trying to increase the IGR. So that going forward, at the end of the interventions, the States on their own will become sustainable.

“And that’s the whole essence of this meeting. The meeting we just had right now, the Governors launched their charter, which is a commitment to ensure that they become fiscally sustainable at the end of this intervention.

“And with what I’ve seen in terms of the fiscal anchors they have put in place, I think we are on the road to to having that.”

On his part, World Bank Country Director for Nigeria, Shubham Chaudhuri, affirmed that the implementation of SFTAS at the State level over the past three years.

“I think you have to think about the impact of the last two, three years. And really the most important impact is the one that we hope will happen going forward.

“So the impact of the last three years is just having the States be much more open and transparent about their budgets, about what they are spending on and on raising more internally generated revenue (IGR), so that they can keep the State Governments functioning, delivering to the citizens of the state.

“I think going forward, we will see these Governors, the excellencies have just made a commitment to maintaining a lot of the same practices, to being held accountable, to having been transparent about how they’re spending, about procurement, relying on e-Procurement systems, publishing all of this information.

“But this will require the media, other stakeholders, civil society, to this give, really have this be a collective effort to ensure that SFTAS has started continues.”

While speaking on the assessment of states’ compliance in line with World Bank’s programmes, he said: “The thing about this programme, it was very straight-forward.

“There were a set of things that we agreed to, actually was the Federal Government agreed to with the States saying these are the things we call them disbursement linked results.

“If you do this, by this time, this will be the financing that will come forward. Some States met those deadlines and received the financing other states did not. But eventually and this was true initially.

“But by the end of the programme, almost all states were meeting all the results. All of the details are available, you can go to the NGF site.

“They are all there in terms of what specifically were the results, and which states achieve them, which states didn’t. You have heard the Honourable Minister of Finance, you will also every six months or so, once we do the verification, she will also announce the results.

“So it’s been I think, initially it was a bit slow. But now by the end of the program, I think a lot of the States have learned from each other. The trick now will be ensuring that this continues.”