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🇳🇬 Nigeria /Economy & Trade

World Bank urges strict enforcement of Executive Order

From The Punch · (12h ago) English

Summarized and contextualized by DistantNews.

TLDR

  • The World Bank urges Nigeria to strictly enforce Executive Order 9, which mandates ending revenue deductions at source and migrating MDAs to budgetary funding.
  • The order aims to strengthen fiscal discipline and improve transparency in public finances, and has already shown improvements in revenue transparency.
  • However, the bank notes that some agencies still operate outside the order's spirit by retaining fixed percentages of gross revenues, hindering full implementation.

The World Bank has issued a strong call for Nigeria to rigorously enforce Executive Order 9, a directive aimed at reforming the nation's revenue management system. In its latest Nigeria Development Update, the bank emphasizes that while the order has initiated positive changes, particularly in revenue transparency, its full potential can only be realized through stricter and more explicit enforcement across all government institutions.

The core of Executive Order 9 lies in its mandate to centralize revenue collection into the Federation Account and to cease discretionary deductions at source. This is crucial for enhancing fiscal discipline and ensuring that public finances are managed with greater transparency and accountability. The World Bank's analysis highlights that the order has already begun to yield results, evidenced by a significant surge in oil and gas royalty collections following its implementation. This demonstrates the tangible benefits of consolidating revenue streams and curbing leakages.

Further consolidation of recent gains of Executive Order 9 will require rationalizing remaining cost-of-collection arrangements and transitioning MDA financing to transparent budget appropriations.

— World BankRecommending steps for effective implementation of the executive order.

Despite these gains, the World Bank points out a persistent challenge: several Ministries, Departments, and Agencies (MDAs) continue to operate under old 'cost-of-collection' arrangements. These arrangements, where agencies retain fixed percentages of gross revenues, directly contradict the reform's objective of transparent budgetary funding. The bank's recommendation for rationalizing these arrangements and transitioning MDA financing to clear budget appropriations is vital for Nigeria to truly consolidate its recent fiscal gains and build a more robust and efficient public financial management system. Adherence to these reforms is not just about improving revenue figures; it's about building a sustainable economic future for Nigeria.

Several MDAs continue to be financed through fixed percentages of gross revenues, such as 4 per cent to NRS from non-oil revenues and royalties, 7 per cent to NCS from customs revenues, 0.5 per cent to RMAFC from non-oil revenues, and 3 per cent to NEDC from VAT, rates that are high comp

— World BankIdentifying specific agencies still operating outside the spirit of the reform.
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Originally published by The Punch. Summarized and contextualized by our editorial team with added local perspective. Read our editorial standards.

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