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Budget process must transform to ensure accountability, says Eyitayo

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Mrs. Comfort Eyitayo is the 57th President of the Institute of Chartered Accountants of Nigeria (ICAN). In this interview with OLAWUNMI OJO, she speaks on the economic development of the country, inflation, budget design and implementation, revenue generation, growing debt ratio, ongoing anti-graft war, and curbing public funds wastage.

Comfort Eyitayo


The challenges with budget design and implementation have remained a recurring issue. As an Institute, what do you think is the way forward, especially now that deficit financing appears to be the trend?
We need to appreciate the fact that times are changing and there is the need to deploy new approaches in our budget design and implementation. If well articulated, the country’s budget could become a strong strategic management tool for navigating the fiscal crisis in the country. It is fundamental that we come up with innovative ideas to fund the budget and significantly reduce expenditure, especially frivolous spending. The emerging new world has created both opportunities and threats. The budget process must be transformed in a way that would ensure that every Naira spent is accounted for and transparency is demanded from the operators of the economy. There is a need for performance-based budgeting in the country.
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Deficit financing is not bad in the short run, but the question we should ask ourselves as a nation is; what are our long-run objectives for the short-term borrowings? Have there been significant impacts from past borrowings? What horizon do we have as a nation to ensure we are self-sustaining financially, at least to a large degree? The budget process in the country must be data-driven to promote efficiency and effectiveness and not just a superficial annual ritual. There is a need for a robust and scientific way of tracking budget performance, especially by independent assessors. ICAN has bridged this gap of independent assessment of budget performance in the country through the novel ICAN Accountability Index (ICAN-AI). The Index is a tool for an annual assessment of the three tiers of the Nigerian government on their adherence to global best practices in Public Financial Management. Efficient management of the fiscal regime in the country would enable us to exploit the opportunities while poor management portends a great danger.

Is Nigeria’s problem more of spending than revenue generation, going by the kinds of interventions and expenditures by the Central Bank?
I would rather say it is both spending and revenue-generation problems. Targeted spending is good for the economy, but Nigeria has gained popularity for frivolous spending not directly targeted to projects that can aid growth and development. When such funds are claimed to be targeted at developmental projects, they are usually mismanaged or poorly utilised. It is crucial that we religiously commit to blocking all financial loopholes in the country as well as hold public office holders accountable for projects executed, in terms of expenditure incurred and the quality of output.

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As I earlier noted, performance-based tracking is critical and operators of the economy must be held accountable for every Naira spent. On the revenue side, we engage closely as an Institute with revenue-generating agencies like the Federal Inland Revenue Services (FIRS). The sole purpose is to ensure that we support the revenue drive of the country through our technical expertise as Chartered Accountants. We have advocated deliberate efforts to bring into the tax net the large number of commercial activities that are initiated and consummated in the cloud. Most of these business outfits do not have physical offices but they transact virtual businesses worth several millions of Naira. If we do not have the capacity to track these businesses, for tax purposes, for instance, we may be losing a gold mine.

Looking at the country’s debt ratio, do you see the current debt level and proposed borrowings as sustainable?
It is time we changed the discussion from the sustainability of the debt profile to its reasonability. Even if sustainable, is it a path to perpetually follow as a sovereign nation? If the borrowings are well-managed, they can be deployed into projects that positively impact the long-term development of the country. If this is achieved, then these borrowings should translate to a better economic outcome in the medium to long term, which would make borrowing unlikely in the future. But is this the case in the country? That is food for thought for us as a people.

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The present inflation appears to have defied all forms of interventions. As a professional, what measures do you suggest can be deployed to check the trend?
As I have always said, we should celebrate small wins of the various governments’ interventions on the economy. For three consecutive months now, the inflation rates have consistently declined to reach 17.75% in June 2021 against the 17.93% in May 2021. Imported inflation is one of the main reasons the various interventions to address the rising inflation in the country appear to have failed. Our primary reliance on foreign goods and services as well as raw materials with the depreciating value of Naira to Dollar makes mincemeat of any intervention on the inflation crisis. The country must make deliberate efforts at improving local industries and create an enabling environment for business growth. We must ingrain in the mindset of Nigerians the need to embrace local content by consuming locally produced goods and services. Another way to address inflation, especially food inflation, is to tackle the security challenges in the country, which have disrupted farming activities across major food-producing states.

Apart from the government under-utilising some assets, are there sources of public funds wastage that you have identified within this administration that needs to be plugged?
It is not about this administration but there is the need for a new governance orientation across all tiers. We should further entrench probity and transparency in the management of public financial resources as well as other assets of the country. 

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What is your appraisal of this administration’s anti-graft war?
We cannot deny the progress that has been made in the anti-graft war but we should not rest on our oars until we rid the country of the cankerworm of endemic corruption. In fact, a lot more needs to be done in this direction.

The Federal Government said the country had come out of economic recession, do you agree with that position, especially when you look at economic indices like high unemployment rate and the rise in food prices, among others?
Based on the data available to us, Nigeria has exited recession and nobody can debate that. However, we must understand the exact indices captured in the calculation of a country’s Gross Domestic Product (GDP), which is used to define whether an economy is in recession or not. The GDP is an aggregate value of goods and services produced in an economy over a period of time. The debate is ongoing whether GDP growth naturally translates to improved welfare or the equitable distribution of economic resources in an economy. Nigeria has exited recession but the truth is that we still have a lot of grounds to cover in translating GDP growth to economic welfare for an average citizen.

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You were recently elected President of the Institute of Chartered Accountants of Nigeria (ICAN). What are the programmes that ICAN, under your leadership, intends to achieve?
The Institute is built on a legacy of continuity and, in this Presidential Year, we are determined to tread this well-entrenched path. The agenda for the year is in line with the overall mandate of the Institute to continuously produce future-ready Chartered Accountants who act in public interest. Although the overall objective is to sustain ICAN as a truly global professional body, the changing market dynamics would require that we revisit the approach with which we pursue the vision. Hence, it is imperative that we establish an Entrepreneurship Centre/Fund to produce Chartered Accountants who would be job creators and not just job seekers; strengthening of the Research and Technical Directorate of the Institute would be prioritised so that it can emerge as a veritable and authoritative source of information, intelligent analysis and dissemination of news in respect of accounting, economic and financial issues at the sub-national, national and International space; we would re-strategise and champion the rebirth of the Accountancy Profession through adequate investment in time and material resources, and we would enhance the learning content of the Institute’s Mandatory Continuing Professional Development programme as well as comprehensively review the syllabi of the various Faculties’ certification programmes. We are rebranding the Institute to create the image of ICAN as a leading Professional Accountancy Organisation (PAO) in Africa.

In this light, we would sign more Reciprocity Agreements with renowned PAOs across the globe; and the continued mentoring of fledgling PAOs in the African sub-region to raise the standard of accountancy practise worldwide would be one of the top agendas for the Presidential Year.

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There have been concerns about the length of the tenures of ICAN Presidents. With just a year to lead the Institute, how do you want to achieve the identified programmes within the period?
The one-year tenure of each President of the Institute is not a concern. ICAN has a rolling plan and a well-established continuity process. The structure of the Institute devolves power to its different Committees that comprise experienced members of the Institute, with each of the Committees chaired by a Council Member. This affords us the opportunity to seamlessly run the Institute, build on past legacies, and chart a new course for the future.
 
Also, the nimble ICAN Secretariat, comprising experts in the relevant areas of our operations, implements our various programmes and initiatives. In summary, ICAN’s organisational structure allows for the smooth functioning of the Institute in order to achieve its mandate.  

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The preference for certifications from foreign accounting bodies such as the Association of Chartered Certified Accountants (ACCA) in the United Kingdom appears to be overwhelming. Does it mean ICAN’s certificate is inferior to its foreign counterparts’ or not internationally recognised?
This has been an age-long question but we need to get things straight. The increasing desire for foreign certification is not peculiar to ICAN certificates but an indication of the uncontrolled national desire to consume foreign goods and services. A quick check on the various accounting and finance-related job advertisements in the country would reveal the premium employers place on ICAN certificates. The highly-rated ICAN certificate is usually a precondition for securing such jobs. The ICAN certificate is not only acceptable in the country, its international relevance is confirmed by the various renowned Professional Accountancy Organisations (PAOs) that have signed Reciprocity Agreements with the Institute. Let me reiterate that we have subsisting agreements with the Institute of Chartered Accountants in England and Wales (ICAEW) and the Chartered Institute of Management Accountants (CIMA). With this, our members can be inducted as members of ICAEW and CIMA without going through the entire examination processes of these bodies. Arrangements have also reached advanced stages to sign more Reciprocity Agreements with other PAOs. It may also interest you to know that, nationally, ICAN’s seal is one of the few seals acceptable on financial reports and filing of tax returns, among others.

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