Debtors Should Pay…But CBN is unfair- Jimoh Ibrahim, NICON Groups Boss


He is just 43 years old but his businesses cut across different sectors of the Nigeria’s economy. He is a lawyer, publisher, national award winner, oil magnet, hotelier and owns the major insurance company in the West Africa in addition to other investments in financial institutions and estates at home and abroad. He is Barrister Jimoh Ibrahim, the Chief Executive officer of Global Fleet group of Companies. After the recent directive of Central Bank of Nigeria (CBN) to major debtors in the Nigerian banks to offset their indebtedness on non-performing loans, Jimoh said that he was wrongly credited with inaccurate and bloated figure on the loan. In this interview he granted the Economic Confidential Jimoh voices out his mind on the new reform in the banking sector and the effect on the economy.

EC: How do you feel about the CBN publication of the list of debtors of the banks whose CEOs were removed
I feel very bad especially in the wrong figures attached to some of the debtors.  If accurate figures were published it would have been a different thing. For instance my bank wrote officially to us that we are owing them N8 billion, but the CBN claims we are owing N14 billion. I didn’t borrow from CBN nor do I have any contractual relationship with. But imagine the bank did not publish our huge deposits.  We have deposits in the bank and other banks. In that bank if you net our deposit from the actual figure of N8 billion which they communicated to us, it would definitely reduce our indebtedness drastically. If Nigerians ask me why I owe N8 billion, I will publish what I used the money to do, which is to create 15, 000 jobs and buy so many enterprises. Not too long ago, we wrote a cheque of N25 billion to the Federal Government for some of the enterprises it sold to us. People should also understand that every loan that we took is secured, properly collateralised. By CBN regulation, it should be 150 per cent collateralisation. So, if the bank had achieved that, then what is the problem about taking loans? They can foreclose on my collaterals. What I am not happy about is the inaccurate figures credited to me.
EC: Only few banks have so far been audited by CBN, what could have been the reason for the selective auditing?
It would be disastrous if he does not complete the auditing and publish the debtors of the remaining banks. There are many ways of going about it. Sanusi could have asked the CEOs to resign and report to the Economic and Financial Crimes Commission (EFCC) for investigation. He still could have achieved the same purpose. Then he would have got the time to go and do a thorough audit. You could do the audit and give them the report to defend themselves. If you are not satisfied, then you prosecute. But I want to say that anybody owing any bank and has been served a notice should pay back. I will not defend any loan defaulter. They should pay back and lodge their complaints later. To me, failure to repay money taken from the bank after appropriate notice had been served amounts to corruption. But CBN must follow the due process. I know the President to be painstaking person, who will not support a military approach. You don’t come on television to say, ‘I, by the power conferred on me,’ when you could have communicated the same message to the bank chief executives concerned by circular. Have you ever seen the President saying that, even when he sacked his ministers? But why should CBN  approve an account and immediately remove the managing director. What could be the effect of this on the economy?
EC: How does CBN determine loans that are performing or not performing?
They are not the judiciary. CBN would have had a fantastic argument if only it had exercised some patience in compiling the debtors’ list it published. The loan might not be performing in the opinion of the CBN, but it is the judiciary that can finally determine whether or not a loan is performing. There is no specific law in Nigeria that says a loan shall perform provided credit input every other day or whatever. The interpretation could be objective or subjective. In fact, there are three ways of interpreting the statutes. You have the literary rule, the golden rule and mischief rule. CBN could have relied on literary interpretation in determining which loan is performing or not. But CBN should read those Supreme Court judgments concerning the banking sector. That of Kutoye and Saraki is a very good example. A customer can sue CBN on the status of the loan and want the court to declare that his/her is performing, citing instances. For example, if a customer’s account is over-charged by a bank for almost N2 billion and the bank, by its own admission stated so in writing, the customer can suspend activities on that account until the account is audited. If at that time, CBN picks the account, it would not get the accurate information about the customer and the bank and terms it as a non-performing loan; that would be wrong. That was exactly what happened in my case, and I am sure CBN didn’t have this information.
EC: Are you saying the loans are performing?
Most painful facts is that they tagged the loans as non-performing when in actual fact they are performing as most of the published debtors have been paying money into their respective accounts, like in my own case with detailed bank drafts and the amounts on three different occasions, not on the same day, the bank is saying the they have been cleared and it is reflecting in the ledger. Remember I am landlord to Oceanic Bank in its 20 branches. I still wonder why the CBN is publishing people’s debts without publishing their deposits. You don’t look at accounting from the aspect of liability without looking at assets. It is an embarrassment of the highest order to take the balance sheet of a company and judge it only on the basis of liability without looking at assets and draw a conclusion. We must do this thing with good conscience. I don’t blame CBN for rescuing the financial sector, which I think was also destroyed by CBN itself, because it allowed people to withdraw what they didn’t have with it.
EC: So you are saying that the new CBN Governor is not fair…
I don’t have anything personal against Sanusi or his new reforms. He can publish the list of debtors, that is not my business but at least publish the exact debt with accurate figures that these people are owing as the regulator in this industry. I can say that there is nothing really bad in the new reform of CBN. The only problem is that the process or procedure is not right. For instance, under the Bank and Other Financial Institutions Act (BOFIA), which is what the CBN is relying largely on, it is not the duty of CBN to recover bank loans or publish debtors’ list. That is not within the BOFIA law. So where did they get the power to do what they did, since it is outside the law? That is if those views are canvassed in the court of law, for instance, CBN might find itself in a tight corner.
EC: There are various complaints on loan abuse in Nigeria, what can you say on that?
As a businessman, I have borrowed money from banks and fully repaid and most of them not only issued us discharge letters but also appreciated our prompt payment even when we have a lot of deposits in the banks. To me, it will show Nigerians that we are not fronting for people. We do our legitimate businesses, sometimes by borrowing from the banks and repaying. At the same time I agree with you there is loan abuse in Nigeria. There can be no defence for somebody who has taken loans not to pay back. I know some big businessmen who owe about N400 billion. In fact, I used to know two people that owed about N1 trillion. That is why I feel CBN would have made history if it had published exactly and correctly, what individuals owe the banks so that it wont be criticised of protecting some individuals. I know an individual that owes over $700 million in Nigeria, whose loans are said to be performing. Like I said reducing some people’s loan by margin of computer error is not the best for this country. I know somebody, who owes about N12billion in one transaction in Oceanic Bank, another N2 billion in another transaction, but where the name was published, the figure one was missing and it reflected just about N2 billion. How can that be? It is amazing and I don’t see how that can be correct. I strongly support the idea that debtors should pay back these loans, because if they don’t, it is difficult for the banks to lend to the young entrepreneurs, who probably have better ideas than the debtors in doing business. By God’s grace when our newspaper comes on stream, we will publish those figures that we know about, whether CBN likes it or not.
EC: Don’t you think publishing the list is to encourage the debtors to pay?
Paying by intimidation? If this happens in other countries of the world, where the major players in the economy … the employers of labour are indirectly indicted and discredited through unnecessary and inaccurate figures, it could really be dangerous to their economy. Such publications could make the banks to lose business and public confidence.  If for instance all the debtors felt threaten by that publication and they close their accounts and transfer their businesses abroad, the panic in the system and expected loss of jobs would be unbearable. There is nothing wrong in borrowing money to do business. Most of these billionaires are debtors, just like other countries are.  If there are non-performing loans, CBN could have directed Nigeria Deposit Insurance Corporation(NDIC)which has statutory responsibilities to ensure recovery of the debts.
EC: But can one do business without bank loans?
You can’t do a very big business at a high level without taking bank loans unless you are using government money or looted funds from somewhere that you are using. If you are working with free funds, then it is not your money. A business can’t succeed if it lacks the basic ethics expected to make things work. Like I keep on saying all over the world, businessmen go to the bank to borrow money to carry on their legitimate businesses. As businessmen, we see loan as extra gear in the motor vehicle that can take you to the smoothest and fastest possibility in your journey. People like us collateralised the loans. If I owe a bank N8 billion, it means that I have N12 billion worth of collateralisation with that bank. That is how this thing works. No bank will give you money if you don’t have enough collateral to back it. Anybody granted loan is of high integrity. It is people that do not have enough assets to secure a loan that the banks do not grant loans.
EC: Is easy to get loans from the banks?
In our own case, in a year, we reject about N70 billion worth of loans from different banks, because we are doing very well. That is the synergy between Oceanic Bank and us. Our only point of disagreement was the over-charging of our account to the tune of almost N2 billion in several transactions, and that is no small amount.
EC: Don’t you believe that some of the debtors cannot repay their loans?
It is not possible for a bank to give a loan without collateral. Our loans are adequately secured because if they are not secured then there is nothing to fall back on. For instance my companies can clear our indebtedness with our 480 million units of oceanic Bank shares and deposits in the bank apart from our collaterals. If a customer took a loan and had been faithful in repayment within the agreement, or defaulted only once, how easy is it to repay the entire loan in just one week? Like I said, there are no defaulting clauses in most of these loan agreements. Secondly, CBN does not understand the components of the loan given to us. Some were given loans in form of overdraft to be used for day-to-day business activities. That can never be non-performing. For example, I collect money/sales from my over 200 filling stations across the country every day, which is paid into my account with the some bank, so, how can my loan be non-performing? Some people’s loan is for a five-year term, which may not have expired. So, how does that become a non-performing loan? In some people’s cases, there is two-year honourarium, although I don’t know how the banks came about that or how a customer can enjoy honourarium for two years without paying principal and interest back. It is amazing.
EC: How much was the original facility you had with Oceanic Bank?
We have almost N 100 billion turn over in the bank every other two years because it is a large account.  As far as I am concerned, I am passionate about my business… creating jobs to Nigerians.  We have about 15,000 in our employment.  We pay more than N500 million per month for the entire conglomerate, that is about N 6 billion a year. In our business relation with Oceanic Bank, between December last year and May this year, we repaid over N4 billion, which was acknowledged by the bank, after the over-charge issue had been resolved. Since CBN published the list, we have repaid over N3 billion. And you say the loan is not performing; in the same bank where I have some shares and I am landlord to its 20 branches and have a deposit of over N2 billion? If the over N4 billion we paid earlier was not reflected in the account in the report to CBN, then something was wrong somewhere. For me, my loan was performing, because I paid in over N4 billion by May.
EC: What do you expect the CBN to have done?
The new CBN is seemed to be so much in a hurry when it could have held meetings with the affected banks and probably with the highest debtors to determine the real positions on the ground before the publication. These debtors are also the largest depositors of cash in the banks.  There was no need to be in a hurry.  What are you in hurry…hurry for.  Nobody is going to run away from Nigeria. My point is that if CBN had realised that some of the banks were not doing the right thing, the best thing to do is to go check thoroughly before accusing customers of defaulting in loan repayment, because it is possible for them to have wrong returns. Some banks could keep three accounts- one for the customer, one for CBN and one for the management. In that case, if CBN relies on the one given to it, there is no binding contract with the one they gave to the customer. So, there is a problem there. That is why we think that the principle of total disclosure, as canvassed by Sanusi, would have received the highest level of commendation, if there were patience in ascertaining what actually happened. But people are saying, ‘oh, it is a marginal error.’ How can it be a marginal error? A small error can make a plane to crash.
EC: Have you complained to CBN?
I don’t have a contractual agreement with the CBN… I don’t bank with CBN and I didn’t borrow from the CBN and CBN is not my regulator.  They are regulating the bank so they should collect their information from the bank. You should also note that we have a global recession and in developed nations, they are careful and they cannot publish list of debtors. The richest man, Bill Gates  is a debtor but no one published his name because in a recession most big businesses lose their money. When the other time I said that these were these bad, some people said Jimoh Ibrahim had come again. They insisted that we were not in a recession; that recession is technical. Now, we are taking almost half a trillion naira from the national treasury to rescue banks problems. Are we not in recession? Most of those that borrowed money to finance their oil businesses actually lost a lot when the Naira depreciates against the dollar and the prices of the oil crashed. The money was wisely invested but the economic meltdown affected the business and expected profit but a debtor must find a way to pay back to the bank.
EC: Do you read ethnic or sectional sentiments to all these?
It depends on what unfolds in the agenda of the CBN. For now, I believe regulation is for corrective measures and punitive. Even in the office, we cannot sack somebody without hearing his own side and based on the response/defence, you decide what actions to take against the person. There are a lot of punishments that CBN knows. CBN says the banks were at the grave stage, but why were they there? After all, somebody had been approving their accounts all these years. Where did things go wrong? CBN management is a continuous one. I know one thing that will come out of this: if the entire exercise is based on illegality, for any reason and cannot be supported with cogent facts, the President Umaru Musa Yar’Adua I know will reverse it. So, don’t let anybody use any wrong information to achieve his/her desire today, because he/her will lose it tomorrow. I strongly believe that if the President had been around when all these things were happening, considering the consequences and all that, maybe he would have asked them to use another means or method. He will have reviewed the strategy.
EC: How do you view the rush by debtors to pay back?
It may ultimately lead to unemployment, because most of those paying back are doing so from their working capital. And when you don’t have enough working capital, you begin to right size. But that should not be a defence not to pay back your loan, because if you show the capacity to pay back, you can get bonds to do your business. It is also a bad business habit to borrow and not want to pay back. And if people refuse to pay back, there are procedures the law enforcement agencies can use, like what the EFCC has done. Some people took the loans to execute even government projects that may not have matured which they should have envisaged when they took the loans. In any case, a loan has duration; it is not granted perpetually. The loan is guaranteed. If you default, the bank can foreclose on the guarantee.
EC: Have you been to EFCC?
Yes when they requested for some documentation about the payments which I did. We also want to reconcile the accounts, which the bank has agreed. In one of the accounts, I have discovered a charge of 33 per cent interest rate, which is not what we agreed on with the bank. But that is not what I am contesting. The general loan can be published as a figure, while I can then go to the bank to reconcile some of these other issues.
EC: Can you tell our readers the level of your indebtedness to Nigerians banks?
It may interest you to note that my companies have offset most of our indebtedness with Nigerian banks and which they acknowledged and in several occasions they wrote us letters of appreciation. For instance Oceanic Bank wrote to acknowledge receipt of value of N3bn on our outstanding facilities with the bank as at May 18, 2009 before the additional N3bn we paid in August; Union Bank sent a letter conveying management decision to allow our fixed deposit of 126mn pound sterling to run at 5% interest after I rejected 0.75% per annum. The deposit in Naira value is over N35bn in cash as at August 3, 2009. We also received a letter of non-indebtedness from various banks that we have dealt with which shows our unblemished records in financial probity. Skye Bank sent us a letter of appreciation upon payment of N3.7bn to clear our indebtedness; Intercontinental Bank too issued us a letter of non-indebtedness upon payment of N9.5bn as at February 2009; FCMB too on payment of over 2.2bn in April 2008. So far we are not indebted to 21 banks, while the outstanding indebtedness in the remaining 3 banks are performing loans.
EC: Your final words
We thank the general public for their concern over the misinformation that was circulated by the CBN. We have also instituted a case against the CBN to seek redress over the wrong publication and the incalculable damage the said publication has done to our company’s integrity. In future we advise the CBN to follow the President Umaru Musa YarÁdua’s desire for due process in its quest to reform the banking sector. One of the 7-Point agenda of the Federal Government is wealth creation and the only legitimate way to accelerate this is to make use of bank financing. At Global fleet, we have taken advantage of this method to grow our business and have been paying the banks’ funds as and when due. And before we approach a bank for funding, we make sure that we have 150% security for the loan in the bank.
Thank you

Economic Confidential, November, 2009
Exclusive Interview
No more Needless Borrowing in Public Offices
– Aliyu Yelwa, Chairman Fiscal Responsibility Commission
Born more than 60 years ago in Kebbi  State, the new Chairman of Fiscal Responsibility Commission Alhaji Aliyu Jibril Yelwa (Sardaunar Yauri) attended Barewa College, Zaria and  Achimota College, in the then Gold Coast (Ghana) where he cut his teeth in the Accountancy practice with the ACCA.  He also attended the Scottish College of Commerce, Glasgow and Strathclyde University, United Kingdom in 1962.  He had also worked in various capacities in private and public sectors. He started his accounting career with an accountancy firm known as Crawdsol  and Hardy in 1959. He later worked in as Revenue Officer in the Northern Regional Ministry of Finance and as Deputy Bursar of Ahmadu Bello University, Zaria before he was appointed Commissioner for Finance and Economic Development, and that of Establishment and Service Matters in Sokoto State.
A former Executive Director at the Central Bank of Nigeria, Alhaji Yelwa  was Auditor of the defunct National Republican Congress and a Delegate to the 1994/95 Constitutional Conference before he was appointed Minister of Water Resources and Rural Development during the administration of Gen. Sani Abacha. In this Interview granted to the Economic Confidential magazine, Alhaji Yelwa says it all on the mandates of the new agency. Excerpts….
EC: What could have been the reason for the establishment of FRC?
It is well known that Nigeria is one of the world’s largest producers of oil; therefore we should not have business with poverty. One may ask; what have we done with our oil revenue? What happens to the revenue generated from taxation, customs duty, agriculture and the like? The answer is simple; mismanagement of funds by successive administrations. That is why the administration of President Umar Musa Yar’Adua has decided to fight this scourge with all the weapons at its disposal, hence the establishment of the Fiscal Responsibility Commission backed by the Fiscal Responsibility Act 2007. If the Fiscal Responsibility Commission had been established before now, Nigeria would have long achieved its vision 20:2020, let me take you through memory lane, in 1962 Nigeria experimented with the National Economic Planning, but due to administrative and political imbalances the National Economic Planning was abandoned, but this commission is poised to take Nigeria to greater economic heights.
EC: How is the membership composition like?
The Commission is made up of 11 Members of which seven, who represent the six geopolitical zones and the chairman are permanent members, while four are non-permanent members representing the organized private sector, Labour, Civil Society Groups and the Federal Ministry of Finance.
EC: What are the mandates of Fiscal Responsibility Commission as a new agency of government?  
Look, we are reformers; we are unlike other agencies like EFCC and ICPC that run after the nation’s economic criminals. We do not run after economic and financial criminals, we try to make sure that these economic crimes are not committed especially within the government sector. Our major responsibility is to implement the Fiscal Responsibility Act 2007. We need to bring orderliness in handling the economic and financial resources of this country; it is the lack of orderliness in economic and financial resources of this country that brought about poverty. Like I said earlier, we do not chase the criminals rather we work with the operators – Ministries, Departments and Agencies of Government so as to avoid mismanagement of funds. We monitor their budget implementation to ensure that they are doing what the budgets were approved for. If proper monitoring is done at the budget implementation level, there won’t be need to chase economic and financial criminals. For instance, if budget is approved for building a hospital, it is our duty to monitor and ensure that the hospital is built according to specification and no fund is mismanaged.
EC: In essence what do all these mandates translate to?
Key features of the laws which the Commission will superintend include the conduction of budgeting with the Medium Term Expenditure framework with more than one year in mind.  This process reconciles needs with available resources, and gives agencies a more consistent source of funding.  It also ensures allocation of money to strategic priorities. The Commission will have to ensure effective collection and remittance of all statutorily levied taxes as well as creating new revenue bases. It will also set rational and prudent guidelines for incurring expenditures and curtailing commitments when necessary. The commission will also monitor and guard against borrowing and ensure that new debts be based on cost benefit analysis and hinged on growth and development of the economy.  While entrenching accountability in the utilization of borrowed monies, the commission is expected to guarantee access to information of public debt. The commission is expected to subject medium-term economic plans and budgets of each tier of government to debate in public hearings,  prepare and appraise budgets in accordance with International Standards, publish budget implementation reports and provide audited statements  of accounts to its legislative arm.
EC: Is Nigeria the first country to adopt this type of legal framework on fiscal responsibility?
No. Brazil also has one. For instance, before the passage of fiscal responsibility law in Brazil in 2000, there was chaotic fiscal planning and widespread corruption. With the passage of the law, which included minimum standards on state budgeting and debt management, Brazil’s economy has begun improving. In India, the world’s biggest democracy, a Fiscal Responsibility and Budget Management Bill was signed into law in 2003. The law requires that revenue deficit be eliminated by 2010. It obliges the government to present its medium term fiscal policy, strategy and macro-economic framework before both houses of parliament. This is another goal of the Fiscal Responsibility Bill 2004. In 2004, California (the world’s sixth largest economy) passed Proposition 58, the California Balanced Budget Act, which requires the Governor and legislators of the state to pass a balanced budget. The Act has called for the creation of a special "Rainy Day" reserve that will protect California in case of financial trouble, an account similar in nature to the commodity/natural resource price envisaged by the Nigerian Fiscal Responsibility Law.
EC: How do you hope to achieve this enormous task?
In order for us to achieve results, we draw up plans that will enable us achieve success, for instance we have long term, medium term and short term plans, note that these terms are renewable. For instance we could have a plan for the next three years 2010 – 2013, when we breakdown the period into short terms, it becomes easier to monitor. Within this three years period, we produce reports for every quota on budget implementation, in this budget implementation report we will state our findings and what actions we have taken regarding our findings, also, this report should be published for the public to see. Consultation is another tool that we apply in order to achieve results. We ensure that everyone is carried along in our plans, whether long, medium or short terms; we begin by consulting with all the stakeholders – Federal, State and Local Government and the general public on a particular project. We do this to avoid a situation where some people will come up tomorrow and say that they were not aware. We ensure that all parties involved are happy. We also regulate borrowing, a ceiling has been set for borrowing, and this commission will not allow any institution to borrow beyond the set ceiling. We keep track of every institution when it comes to borrowing; if you are borrowing we would like to know the purpose for which you are borrowing, when you would likely pay back and your pay back plans. It becomes an offence if any institution decides to borrow beyond the set ceiling. Note that this commission is not a political office, it is a national office, and the nation has empowered me to go and monitor it, and I will ensure I do my job.
EC: What are your challenges?
Our major challenge is seeing that the law is implemented. It is a very difficult task, but we have to do it, especially now that Nigerians are not operationally familiar with the Fiscal Responsibility Act of 2007. As a new organization, there was the problem of facilities, as you may be aware we recently moved in to this place. You cannot begin to employ people if the facilities are not there, and this commission is a highly professional one in the sense that we work with professionals like accountants, lawyers, engineers and project managers, you have to have knowledge on economics, finance, law and other related disciplines in order to be able to achieve results. If we are not well grounded in the related fields the operators which we are expected to monitor will escape our grip, hence we need regular update in our knowledge. There are 28 ministries, 36 states, 774 local government areas and 31 agencies; they are the main operators that we superintend, so you can now see how large our responsibility is, it therefore means that we require huge resources to be able to carry out our job successfully.
EC: You said operationally the act is not known by many Nigerians, how do you intend to change this?
Yes, operationally the law is about 10 months old and the law is operationally not known by many Nigerians, so what we are doing is to organize stakeholders forums at various levels – Federal, State and Local government levels, the general public, Non Governmental Organisations and the media are obviously very important in our effort at sensitizing Nigerians of the Fiscal Responsibility Act of 2007, therefore they must be involved in our awareness plan. For instance we have organized such forum with the Centre for Social Justice. We will also give our own interpretation of this law to Nigerians.
EC: How far have you gone in your mandate?
We have the right to request information from the operators; we have the willingness and courage to confront them. Recently, we have requested that all the ministries, departments and agencies of government send us their report on expenditures, look, what do we have here? (Pointing to the stack of files on his table), these files we sent in from various ministries, this is a good starting point. For the fact that they sent in their expenditure reports shows that something is happening at the commission. We will analyze these reports for ourselves and take actions based on our findings. Every agency is expected to publish its annual reports, but some of them do not bother to put such report together and nobody questions them for failing to make such report available. Now here I am with files containing their reports.
EC: How is the quality of submissions so far from some of the agencies?
Well, I must express our dissatisfaction with the submissions of most agencies of government to the commission. Though 75 percent of scheduled corporations responded to the commission’s enquiries by submitting their annual reports, approved budgets and audited accounts for verification, a good number of such reports were not satisfactory. Most of the fiscal performance report submitted by the agencies were riddled with material inconsistencies, over spending, under spending , under utilisation of funds, misapplication of funds, revenue sub-optimality, outright revenue leakages, etc. Their reports, in short, fell short of the standard and world best practices in financial and accountings reporting system.
EC: So what are you doing to address that?
Having observed some lapses in the 1st quarter Budget Implementation Report, 2009, we designed a format, which we forwarded to the appropriate quarters, before we under take on- the-spot visits to physically verify and confirm actual existence of projects.
EC: Are you receiving supports from states and Local Government Councils on the Act?
It is unfortunate that states and local governments are yet to fully buy themselves into the Fiscal Responsibility Act. Most stakeholders tend to think that the Act is only applicable to the Federal Government alone even sSome state governments kicked against the law on the grounds that it is against the principle of fiscal federalism practiced in Nigeria. The novelty of the Act makes the implementation of the Fiscal Responsibility legislation at the states and local government daunting, especially as the state and local governments lacked technical capacity and legal framework for fiscal discipline. Presently they do not have the existing models and templates, records, processes or examples on which to build. We as a commission are willing to guide and assist operators of public financial management on their responsibility as provided for under 54 of the Act. State governments are all bound by the provisions for the preparation of the medium term expenditure framework, savings and assets management and the excess crude account, debt and indebtedness and borrowing as they benefit from 48 per cent of the nationally shared resources..
EC: Any penalty for breaching the law?
Any breach of the provisions of the Fiscal Responsibility Act is liable to prosecution. The Act criminalises all acts of slothfulness in the course of budget preparation, implementation, monitoring, and reporting.  Essentially, the Fiscal Management Commission will be responsible for monitoring and enforcement.   It will investigate and forward violations to the Attorney – General for prosecution. There is a one year imprisonment and N500,000 fine stipulated for officers who fail to perform obligations or make false statements and 3 years minimum jail sentence for contraventions. In fact Ministers and Commissioners, as the case may be, would be held liable for institutional breaches and subject to punishment.


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