After a great turnaround of the Federal Inland Revenue Service from a pariah to a modern tax agency, Ifueko Omoigui Okauru, executive chairman and driver of the reform, bows out in a blaze of glory, creating a vacuum that will certainly pose a challenge to fill
When she came on board eight years ago, the Federal Inland Revenue Service, FIRS, was almost an unknown entity, but by the time Ifueko Omoigui Okauru was leaving the Revenue House last week, it has become the goose that lays the golden egg. That did not come easy, because within that period, the woman had to fight many battles. First she had a mandate to implement the reform that has brought a turnaround in the service. Then there were the issues of multiple taxation, tax evasion, leakages and non-remittance of tax deducted by government agencies and private concerns. The most daunting challenge was that the same staff she was expected to use for the reform were experiencing very low morale. In summary, they were not proud to be identified with their place of work, what with the decaying infrastructure, lack of training and absence of the necessary incentives for work. Omoigui Okauru was to change all that and then won the confidence of the workforce, which thereafter provided the army for her revolution.
At her exit last week, even President Goodluck Jonathan, lavished praises on a woman who brought pride to Nigeria, that the tax regime here becomes a model for other countries, particularly in Africa. Jonathan thanked her “for her dedication and exemplary service to the nation over the last eight years.”
Even in her humility, she could not but talk about the transformation during her tenure at the FIRS. Those who knew the state of the service when she came on board in 2004 attested to the fact that the place suffered neglect. One of such persons is Harrison Tettehio, chief executive officer, CEO, Veromikes Consulting, who recalls that, “before she came on board eight years ago, the situation was very bad. To do an assessment of her performance, we need to look at what she was able to put in place because they are the landmarks we can use.” That is a confirmation of the belief that the pre-Omoigui Okauru era was the dark days of tax administration in the country. Omoigui Okauru herself recalls that the most important of the situations she met on ground was that eagerness on the part of the staff for change. To illustrate how bad the situation was, she recalls with a measure of concern that she met a group of staff that was not happy with their development as individuals. “They were not happy with the neglect they had faced over time. I met an organisation that was waiting for funds to just work. For you to get the tax office going, you have to contribute your own personal fund. I met an organisation that you had staff who had not been trained throughout the time they were in the service yet they were given responsibilities to be tax controllers, to head organisations and to achieve targets. I met offices in disarray. I met files on the floor. I met roofs caving in into tax offices such that when it was raining the staff didn’t work that day because they shared the office with the rain. I wish I had started from day one cataloguing what we met.”
For her, the good thing was that the foundation for the reform was laid under Adamu Ciroma who was, before her coming, the finance minister. Her predecessor at FIRS had started talking with the minister and the study group on taxation. That study group on taxation later came up with a comprehensive report on the Nigerian tax system and made recommendations. When Ciroma was replaced with Ngozi Okonjo-Iweala, the new minister set up a working group to review the work of the study group. The working group endorsed the verdict of the study group by making similar recommendations. Against popular thinking that the report was one of such pipe dreams that never got actualised, Omoigui Okauru affirms that she was presented with the outcome of a very good work. She was then faced with the challenge of translating that work into the transformation of the institution.
Her most outstanding achievement is the fact that she turned the FIRS into a major revenue earner for the government. Prior to 2004, the agency could hardly generate N1 trillion, but its revenue profile in the Omoigui Okauru years shows a tremendous impact on the nation’s economy. At one of the events to mark the end of her tenure in FIRS, the tax Amazon disclosed with a deep sense of fulfilment that the agency realised N21.7 trillion from taxes over a period of 11 years. No doubt, she has, within the eight years of her administration at the agency, justified the confidence reposed in her by former president Olusegun Obasanjo who saw in her the rare qualities of a reformer by appointing her through a process that was devoid of bureaucratic bottlenecks and mundane issues like political affiliation and ethnic considerations. Obasanjo re-nominated her after her first term elapsed in 2007 and that was ratified by the late Umaru Yar’Adua administration.
As she takes a bow out of the tax office, her exit has certainly created a leadership vacuum that requires a concerted effort and hard political decision to fill. With the appointment of Kabir Mashi, coordinating director, Support Services Group of the agency, as chairman of the agency in acting capacity, there are already speculations that government may eventually settle for him as substantive director in spite of the fact that he is not the most senior director in the agency.
The concern however is how to sustain the legacies of the woman that turned around the fortunes of the agency. Perhaps, Mashi had the inkling or premonition that he was going to head the agency some day. Last year, he predicted the FIRS would be the best in Africa. “My projection for the future is that FIRS in the next five years should be the best tax administration, at least in Africa. We have the capacity to do it and we have the will to do it. God willing, we are going to do it,” he told the magazine. Mashi’s optimism was based on the success story of the Omoigui Okauru years at FIRS. Prior to his appointment, the Support Services Group under him comprised of human capital management, finance and accounts, safety and security, facilities management and tax revenue accounting departments.
The question of who succeeds her appears to be one of Omoigui Okauru’s concerns not just in the near future but also long after she had gone. Her prayer is that successor after successor would continue to build on what had already been achieved. The successor of her dream must be multi-skilled and not just one that is knowledgeable in tax matters. Under Omoigui Okauru, FIRS was consistent in surpassing its own targets. Its tax collection schedule shows that over a period of seven years, the agency’s revenue either equalled or surpassed the nation’s budget. In 2004 for instance, FIRS made a total collection of N1.19 trillion while the budget was N1.18 trillion. The figure increased to N1.74 trillion in 2005 while the budget was N1.61 trillion. In 2006, FIRS collected N1.86 trillion as against a budget of N1.188 trillion. And in 2007, it made N1.84 trillion as against a budget of N2.3 trillion. Economic experts are quick to observe that the year’s budget exceeded revenue from FIRS due to the fact that it was an election year and government had reasons to run such a huge budget. In accordance with that, the following year saw a situation where the revenue rose to N2.97 trillion while the year’s budget was N2.45 trillion. In 2009 when it made revenue of N2.19 trillion, the federal budget was N2.87 trillion. Whereas the FIRS collected revenue of N2.83 trillion in 2010 the federal budget was jacked up to N4.6 trillion preparatory to another election year. But in 2011, the agency realised N4.62 trillion from taxes while the budget stood at N4.9 trillion. With a consistent stream of income that was growing at a steady progression, funding of the agency and its operation was no longer an issue. The top management of the agency confirmed that they are now focused on their work rather than worry about where the funding of the organisation will come from. But at the initial stage, getting the top management level to accept modernisation did not come easy, yet she weathered the storm.
One of the greatest setbacks suffered by the FIRS before the reform began was the fact that even though taxes were being paid through banks, the system was remarkably less than transparent. The system was riddled with all forms of manipulations. Cases of diversion and conversion of cheques meant for the agency were rampant. Authorities at the Revenue House confided in the magazine that the few taxpayers that existed at the time were not convinced that their taxes were being remitted to the government and that banks were, indeed, not remitting the collections they were making to government coffers. When, therefore, the reform began, one of the challenges was how to block the leakages. To safeguard government revenue, the FIRS, under Omoigui Okauru, introduced what it tagged project FACT, an acronym for Friendly, Accurate, Complete and Timely, a system that guaranteed steady flow of revenue and eliminated likely diversions by collectors who may want to trade with or divert the money.
At a stakeholders’ consultative meeting with heads of finance and accounts of ministries, departments and agencies, MDAs, held in Abuja in August 2010, she complained through Samuel Ogungbesan, coordinating director, Tax Operation Group, FIRS, that “ministries, departments and agencies build VAT into contracts but they don’t pay the VAT to government, which means they are short-changing the government.” Then, she had said that unremitted taxes of agencies had hit the N200 billion mark. Having taken steps to block the leakages, the FIRS, as part of the reform agenda, began the process of building a reliable tax database for the country. That entailed an enumeration of taxpayers across the country to identify taxpayers. That resulted in a major operational development where the agency for the first time in its history had dependable information on who its taxpayers are. Before then, there was a conflict of figures as there was never a time the FIRS could give a definite figure.
With all that, she has accomplished much and as fulfilled as she tends to be, Omoigui Okauru says the FIRS of her dream remains work in progress. What that translates to is that successive heads of the agency are expected to build on what she has achieved. From people of diverse backgrounds, she has earned herself well-deserved commendations. To Akintunde Maberu, a finance and investment consultant, Omoigui Okauru is an achiever. According to him, “By the time the woman started, no one expected that she would go the entire hug to bring a kind of reform we are seeing today.” He further observed that “she revolutionised the tax system in Nigeria and thereby increased tremendously the revenue accruable to the country through tax. Indeed, she has popularised the idea in such a way that it has attracted many Nigerians to willingly want to pay their taxes. Her first and second tenure were full of achievements. She was able to do that because she introduced reforms in the entire system. For instance, if you look at the staff working with her, she was able to motivate them to key into the reform. Most of the principal staff were promoted rapidly in a way to ensure that they are richly rewarded like their counterparts working in the oil industry. These include those working within the FIRS at the state level. It is to her credit that all these innovations were introduced. Just the other day, we saw the President launching the new tax system. That is another feather to her cap. Now that she has taken a bow, she would be remembered for the revolutionary impact that her reforms have brought to Nigeria and Nigerians as a whole.”
For Sam Ohuabunwa, former chairman, Nigerian Economic Summit Group, NESG, “Ifueko (Omoigui Okauru) did an excellent job. She brought industry, efficiency, vision and all that the private sector is known for [into the workings of FIRS]. She brought skill and we are proud of her.” Tettehio shares no different view. According to him, “She did something about the Personal Income Tax, giving a relief of about N200,000 for every worker so that the tax net can now spread, such that every person can have some form of relief; it has never been done in this country.” The consultant also says she was able to improve on the Petroleum Tax and undertake a review of the Company Income Tax by putting all the companies into the net. She also came up with the unprecedented Tax Identity Number scheme. And to build on that feat, she put in place a good database to keep adequate records and monitor tax issues.
How was the former FIRS boss able to achieve all this with the same staff that she inherited? Tettehio provides an insight: “Because of the improvement she has made of tax revenue, she was allowed some percentage for the use of FIRS. Because of this, she was able to improve the welfare of the staff of the agency, and this has helped to boost their morale. The workers’ salary is very good.”
Whereas Adebisi Balogun, managing director, Pegasus Investment Company Limited, believes Omoigui Okauru did a good job during her tenure, he said there were some gray areas in terms of the operations of the service, which her successor should address. He said FIRS officials often breached the standard accounting practice known as allowable and disallowable charges. For example, he said accounting makes provisions for public relations expenses to be removed from taxable income, yet FIRS insists on charging taxes on such income. “Often they don’t give any explanation on why some taxes have to be paid, and when there is a dispute, they don’t go to arbitration. They just go ahead and lock up offices,” explained Balogun. This, in his opinion, gives a negative impression about FIRS and may ultimately affect its revenue. According to him, “The FIRS does not need to be draconian in a civilised and democratic environment.”
At the time she was appointed chief executive of FIRS, the tax system was burdened by obsolete and, in some cases, inadequate laws to drive the reform. Certain pieces of legislation were required to make the system functional. In July 2005, therefore, the FIRS under Omoigui Okauru, in collaboration with stakeholders in the tax system, presented nine bills to the National Assembly. Five of the bills were passed into law in subsequent years, thereby paving the way for a new regime of tax administration in the country. The bills include the Petroleum Industry Tax, which was replaced with Petroleum Industry Bill to which FIRS contributed immensely; and the Personal Income Tax Amendment Bill among others. In the course of the reform, the FIRS management also put Nigeria in the centre stage of taxation at the global level. A greater part of the reform was made possible by the enactment of the FIRS Establishment Act of 2007. The Act gave the agency financial and administrative autonomy.
Prior to 2004, Nigeria was like an outlaw in the global tax community. It was not involved in signing tax treaty agreements. All that changed, as Nigeria became a member of the African Tax Administration Forum and a member of its council. Nigeria was one of the founding members of the forum. The idea, according to Omoigui Okauru, was to ensure that when Africa has regional problems, it could seek regional solutions. Nigeria also became a member of the United Nations, UN, Committee on Tax and International Cooperation. Omoigui Okauru also became a member of that committee and also a chairperson of the sub-committee on capacity building responsible for looking at capacity building issues for all UN countries on international cooperation on tax.
Certainly, the automation of the tax collection process and the fact that a taxpayer could go to the web portal and do several things are one milestone that gladdens Omoigui Okauru’s heart. With that system now in place, the management of the agency can tell at the end of each day which agent bank collected taxes on its behalf and how much they collected. Seven years ago, that was a near impossibility. From its web portal, the agency can also tell the number of taxpayers in its net. Now, the FIRS can carry out a preliminary check on an organisation or an individual resident in Nigeria by going on their web portal. Such information was not available at the beginning of the reform. The rebranding of the service is equally an outstanding achievement.
The agency today has a much more positive image than it had eight years ago. In those days, staff of FIRS would not want to tell people they worked with the agency. Now the reverse is the case as the demand for jobs in the agency has risen astronomically over the years. As she quits the stage, Omoigui Okauru recounts that over 6,000 staff of the agency under her benefitted from multi-coated training programmes, most of them in more developed tax administrations. But for the reform that has taken place, none of the staff could have claimed to be an expert in any area of taxation. As she quits the stage with a sense of fulfilment, she is quick to point out thus: “If there is any major achievement that I think I have made, it is that when I took over here, we had staff who didn’t want to be identified with FIRS. They were hiding their ID cards. But now, our phones don’t rest; everybody wants to work here. That means something has changed. The movement from hiding to active display of staff identities, to me, is symbolic.”
In what seems to be a report card endorsed by her, Omoigui Okauru sums up the turnaround thus: “We covered a lot of ground in terms of visioning for the tax system, planning, tax policy formulation and so on. We have put in place relevant legislation and regulations, and we’ll continue to work on improving the laws and putting in place new regulations. We’ve covered the whole span of administration, structure, staffing, processes, systems and technology. We have raised awareness on taxation. We have grown revenue because ultimately that’s the hallmark of whether anything we are doing is even working. More importantly, I think we have started the journey to make people recognise that paying taxes is a civic responsibility, and that it’s something one should do.”
Although she would not say for sure where she is heading to after FIRS, Omoigui Okauru is, in the interim, most likely to face her flourishing consulting business. Before she was appointed executive chairman of FIRS, she was the CEO and founder of Lagos-based Restral Consulting. But with the superlative performance she is seen to have put up at the government agency, she stands a good chance of being called upon to serve again even in a higher capacity. The thinking in some quarters is that she could be an asset to the Economic Management Team in the administration of President Jonathan, who affirmed that his government was particularly honoured to have had her “distinguished service and as you conclude your tenure, we wish you unqualified success in all your future endeavours. It is my hope that you will be ready and willing to avail the nation of your committed service should occasions demand.” That was an honour well deserved, and an indication that we may not have seen the last of Omoigui Okauru in public service.
Additional reports by SALIF ATOJOKO, HELEN ENI and RAYMOND MORDI