e-Payment and the search for prudent management of public funds

Chairman, Federal Inland Revenue Service , Mrs. Ifueko Omogui-Okauru
One year after the introduction of e-Payment into the country, experts believe that the system needs to be fine tuned.

When the Federal Government mooted the idea of introducing the electronic-payment system in 2008, the decision was greeted by mixed reactions from experts in both the public and private sectors of the economy.

The system was officially introduced into the public sector in January 2009 to facilitate payment for goods and services, as well as minimise the level of interactions between contractors and government officials thus eliminating corrupt tendencies.

It was also meant to eliminate the use of cash to facilitate speedy payments of all transactions, fast-track the implementation of government policies through the elimination of delays in government’s payment system, enhanced real time reporting and improved quality of financial reporting system in the public sector, as well as elimination of risks associated with carrying large cash.

But one year after the flag off of the system, experts say a lot of improvement still needs to be done to enable the programme to achieve the desired objective.
The Federal Government was not unmindful of these facts when it organised a two day workshop on e-payment for Accountants-General and Auditors-General from the three tiers of government.

Speaking at the event, the Permanent Secretary, Ministry of Finance, Mr. Achi Achinuvu, admitted that there was still more work to be done to make the system achieve the desired result.

For instance, he said that as part of its ongoing reforms in the public sector, the Federal Government would from next year begin the implementation of an Integrated Financial Management Information System for the public sector.
The GIFMIS, which would be fully operational by 2011, would facilitate the end-to-end processing of the e-payment initiative.

The end-to-end e-payment initiative implies that all ministries, departments and agencies of government will be making e-payment directly to the beneficiaries from the infrastructure installed in their offices.

Already, the Office of the Accountant General of the Federation has been repositioned for the effective implementation of the system through the GIFMIS.
The move is coming on the heels of a series of complaints by contractors handling projects in remote areas over the difficulties associated with the e-payment model.
For instance, some contractors had in the past raised the alarm over information security, lack of regulatory framework, as well as infrastructural limitations associated with the payment mode.

But Achinuvu said that despite the bottlenecks associated with the mode of payment, the scheme had recorded huge success.

He said that the e-payment system, which was introduced a year ago, had helped to minimise the interaction between contractors and government officials thus eliminating corrupt tendencies.

To ensure an uninterrupted connectivity of the system, the Central Bank of Nigeria has been requested to champion the implementation of a national switch, which will serve as a platform to provide seamless interconnectivity for all banks.

He said that the workshop, with the theme, ”e-payment system and public financial management reporting system as tools for achieving transparency in government,” was coming at a time when the government budgeting process was undergoing phenomenal transformation.

He emphasised the need to kick-start the process, adding that the system would aid the computerisation of public financial management processes, from budget preparation and execution to accounting and reporting, with the help of an integrated system for financial management of line ministries, spending agencies and other public sector operations.

According to him, ”As the world moves in a direction of a global village, we cannot remain isolated within the mundane systems and practices of public sector accounting. We must keep pace with emerging trends in technological advancement.

”The present administration has continued to place emphasis on transparency, probity and accountability as a means of ensuring prudent and judicious utilisation of resources. While the commercial entities across the world are moving towards International Financial Reporting Standards, governments are harmonising with International Public Sector Accounting Standard. The Federal Government would be implementing the GIFMIS by next year.”

Speaking in the same vein, the Accountant-General of the Federation, Mr. Ibrahim Dankwaabo, urged the FG to approve the adoption of IPSAS as a form of reporting in the public sector.

”Adoption of a uniform global standard would ensure understandability of the financial statements on the part of international investors. In other words, adoption of IPSAS would increase the acceptability of accounts of Nigeria, internationally, ”he added.

But the Chairman of the Federal Inland Revenue Service, Mrs. Ifueko Omogui-Okauru said that sharp practices among Deposit Money Banks, as well as problems from switches in effecting transfers from one bank to another were major reasons why the Federal Government is yet to reaped the benefits of the e-payment system.
The FIRS boss, who spoke at the workshop, noted there was need to improve the system to enhance accountability and transparency

She said the diversion of some of the e-payment accounts, as well as the banks‘ inability to quickly reconcile the accounts when the need arose, were responsible for the complaints

According to her, ”Some of the problems we faced with e-payment at the FIRS, among others, have to do with reconciliation; being able to reconcile what is paid, what the banks received and ultimate basic account. The complaints and constraints facing accountants in FIRS are also the fact that e-payment has not been as fast as it should be.

”In fact, it‘s like we are doing the e-payment on the manual system; we have not seen the full benefits of e-payment. Another problem is the diversion of e-payment of taxes to accounts other than those designated at the banks. We noted that in some banks, this e-payment does not get to the designated accounts, but are posted to some accounts, even when we thought that e-payment should go direct.”

Speaking in a similar vein, the Director, Consolidated Accounts, Office of the Accountant General of the Federation, Mr. Oludare Osibote, also said that late returns in respect of unapplied funds, use of different Information Technology platforms by different banks, which had caused problems of interconnectivity, non uniformity of accounts numbers, since banks use different number of digits, as well as lack of regulatory framework on e-payment were other factors affecting the success of the scheme