FRC: Improved Accountability Necessary for Nigeria to Attract More FDI
* Seeks common code of prudence, transparency, accountability in states
Ndubuisi Francis in Abuja
The Executive Chairman, Fiscal Responsibility Commission (FRC), Mr. Victor Muruako, has stated that Nigeria must prioritise transparency and accountability in public finance management (PFM) at all levels if it is to make a quantum leap in attracting foreign direct investment (FDI).
He also underscored the need for some common code of prudence, transparency and accountability across all tiers of government at the subnational level.
He also underscored the need for some form of fiscal cohesion and inter-governmental consistency in fiscal management.
Muruakor stated these in Abuja, Thursday at a two-day awareness and sensitisation programme on transparency and accountability for sub-nationals and North-central states of Nigeria.
According to him, the country’s ability to secure sustainable economic growth depends on creating an environment where investors can trust that their investments will be handled ethically and responsibly.
Muruako said: “We dwell so much on attracting FDI (foreign direct investment), but I want to say without any fear of contradiction that the easiest way to attract foreign direct investment, apart from ease of doing business, is when foreigners are very confident that they are operating in a very transparent environment and that they will also get justice, even if they have to resort to court processes.
“So do we have any option? The first step to attracting foreign direct investment is to proceed to operating a very transparent and accountable system. By increasing transparency and accountability, we can deter corruption. We can reduce and minimise the misuse of public funds.”
Muruako, who explained the importance of accountability at all levels of government, including state and local governments, which manage a significant portion of the country’s financial resources, observed that many state governments had failed to hold local governments accountable, thereby contributing to inefficiency and poor governance at the grassroots level.
The FRC chief executive stated that in recent years, Nigeria had made significant strides in its democratic journey, adding however, that challenges such as corruption, inefficiency, and lack of accountability continue to hinder its progress in the area of democratising fiscal processes.
“To address these challenges, it is imperative that we prioritise transparency and accountability in public finance management,” he said.
On the role of subnational governments, he said it goes without saying that they are very important in Nigeria’s fiscal responsibility architecture, being closer to the people and have a better understanding of local needs and priorities.
“It is important to note that they receive roughly half of the federation’s shareable revenue, while they respectively, at the same time, enjoy the full discretion to appropriate and spend 100% of this statutory allocation as well as their own internally generated revenue as they please.
“More importantly, states in the Nigerian federation and local governments enjoy the constitutional freedom to make their own fiscal decisions, even when such decisions may unduly burden the general economy’s macroeconomic indicators such as economic growth, per capita income, interest rates, exchange rates, balance of payments, inflation rate, productivity, unemployment rate, etc.
“In a sense, being a subnational in Nigeria’s fiscal federalism is akin to enjoying the perks of being a Prince without caring about the responsibilities of the larger kingdom. It is doubtful if such a system is sustainable.
“At the very least, there is a strong need for some form of fiscal cohesion and intergovernmental consistency in fiscal management.
“For purposes of balancing the argument, it needs to be stated that subnational governments also face significant challenges in fiscal management such as limited resources, capacity constraints, political pressures, etc.
“This underlies the need for some common code of prudence, transparency and accountability across tiers of governments. The most reliable code, I dare say, is the prioritization of transparency and accountability; and that is where the Fiscal Responsibility Commission comes in,” he said.
