FEC Approves Immediate Implementation of the Stephen Orosanye Report

Stephen Oronsaye: Image Credit: vanguardngr.com

February 28, 2024/CSL Research

News reports say the Federal Executive Council (FEC) has approved the immediate implementation of the Orosanye report. The Information and National Orientation Minister, Mohammed Idris who made the announcement after the FEC meeting, noted that the adoption of the report, which was submitted to the Federal Government in 2012, means that some agencies, commissions, and departments of government have been scrapped, merged, subsumed under some others and others moved to new ministries where they are supposed to perform better. Stephen Oronsaye’s report recommended that some MDAs be merged to eradicate the existing duplication of functions, create synergies, and consequently reduce the cost of governance.

Specifically, it recommended the consolidation of the Economic and Financial Crimes Commission (EFCC), Independent Corrupt Practices & Other Related Offences Commission (ICPC) and the Code of Conduct Bureau (CCB). It also recommended the amendment of the Revenue Mobilization, Allocation and Fiscal Commission (RMAFC) to accommodate the functions of the Financial Reporting Council (FRC) as well as those of the National Salaries, Income and Wages Commission (NSIWC).

The Infrastructure Concession and Regulatory Commission (ICRC) is also to be subsumed in the Bureau of Public Enterprises (BPE) while the Nigerian Investment Promotion Commission (NIPC) is to be merged with the Nigerian Export Promotion Council (NEPC). The Public Complaints Commission (PCC) is to be abolished and the Border Communities Development Agency’s (BCDA) functions are to revert to the National Boundary Commission, under which it was a department before its establishment, amongst others.

We believe this is a step in the right direction. The country’s fiscal space remains constrained. The government expenditure for 2024 was estimated at an all-time high of N28.77 trillion. Revenue projection of N19.60trn will likely underperform the estimate. Debt servicing cost continues to rise, partly due to the weaker currency on external debt financing and the still elevated interest rate environment.

On the revenue front, the government is pushing for higher oil revenue, with the budget premised on a 1.78mbpd oil output and oil price benchmark of US$77.96/barrel. We believe the oil estimate is ambitious, given that oil production remains constrained by theft and Nigeria might not be able to pump oil beyond 1.56mbpd in 2024.

While we are optimistic on taxes, aided by buoyant economic momentum, increasing tax mobilization initiatives, clamp down on tax evasion, and enhanced transparency in the tax system, we expect other revenues (independent revenue, dividends, share of minerals & mining, and other sources of financing) to come in lower than the government expectations based on historical data. In the absence of any immediate solution to the low crude oil production and already stretched non-oil tax rates, embarking on aggressive cost savings becomes expedient.

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