Cost of governance in recession

With the country finding itself in another economic recession, KUNLE ODEREMI takes a look at the rising cost of governance in relation to the dividends of democracy in the land.

FROM Kano to Sokoto, down to Enugu, Port Harcourt and Lagos, majority of Nigerians are groaning under the fang of hunger, an excruciating pain occasioned by economic crisis. Severely weakened and impoverished by the elite, lots of the people are being driven to live by the day with access to the basic things of life getting curtailed, even with the avalanche of their elected representatives in place at all levels of government.

But the country never runs dry of ideas on the way to tackle the seeming frustration arising from a dysfunctional system. The leaders admit and talk about how their indiscretion and insensitivity, over the years, have continued to inflict untold hardship on the vast majority of the citizens. Issues such as diversification of the economy from a mono-culture, fiscal discipline and cutting the cost of governance have become repetitive. For instance, there was the Stephen Oronsaye panel report on the structure of government and how to make the system effective and efficient at a minimal cost. Among its recommendations were the scrapping of 38 federal agencies, merger of 52 others and return of 14 agencies to departments. The measure was projected to save the Federal Government more than N860 billion because as of that time, it spent about N1.8 trillion on wages, allowances and expenses on the civil service alone.

In August 2015, President Muhammadu Buhari issued a directive that the  Revenue Mobilisation, Allocation and Fiscal Commission (RMAFC) address public outcry over huge salaries and allowances of members of the National Assembly. The status quo has remained with some eminent scholars and other professionals, including a former governor of the Central bank (CBN), Alhaji Sanusi, way back in 2013 warning on the dire consequence of disproportionate allocation of resources to the parliament and critical needs in the areas of infrastructure and empowerment schemes. He had wondered why the country should commit three per cent of its annual budget to mere 496 parliamentarians; 30 per cent on civil servants. Therefore, he advocated that government prune its workforce by 30 per cent. The federal administration then promised a 25 percent slash in the basic salaries of workers after a partial removal fuel subsidy in the same year.

Having secured the mandate of Nigerians in 2015, President Buhari set up a Transition Committee led by an elder statesman, Ahmed Joda,  with the primary aim of fashioning the way to clean up the system and pave the way for good governance. Its report recommended the pruning of ministries by offering appointments to only 19 senior ministers and 17 ministers of state. Again, experts said the proposal could have saved the cost of governance by more than N1 billion during the first tenure of Mr President. The 1999 Constitution provides that at least one minister each must come from the 36 states, which apart from political consideration such as patronage after elections, manifest in previous administrations appointing 42 ministers, with many of them as senior ministers. then, the remuneration package for political, public and judicial office holders  prepared by Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) showed that the total salaries of 42 ministers in four years is N5.4 billion, a senior minister drawing not less than N129 million in four years while a minister for state will earn N124 million within the same period. This amount does not include the allocation of N30, 000 per night for duty tour and $900 (N207000) estacode per night as well as medical allowance for each minister. With 36 ministers proposed by the Joda committee, the new government will need to pay N4.5 billion in salaries and allowances and save more than 16 per cent of the budget for minister salaries. A World Bank report of 2013, had stated that it cost about $7000 to build a classroom in Africa; with N1 billion therefore, Nigeria could construct 621 new classrooms for students – an average of 17 classrooms per state. The same amount can procure more 600, 000 bags of 25kg fertilizers for farmers. The Joda report thus declared: “There is no direct relationship between the number of ministries and efficacy of service delivery. The U.S. with a population of 316 million and with GDP of $17,328 trillion (30 times Nigeria’s GDP) has 15 ministries. India has 24 ministries, while the UK has 17.”

Those extra burden both the Osonsanye panel and the Joda committee were meant to address still dog the path of the organs of organs of government. Bloated bureaucracy evident in the retinue of aides to public officials, both elected and appointive. From the era of former President Olusegun Obasanjo to the present political dispensation, the number of presidential aides including special assistants, with duplicated responsibilities subsists even at the sub-government level, as well as the legislative arm of government from the centre to states and local councils. All this is in spite of the dwindling revenues of government and the worsening living condition of the average Nigerian. An outspoken Pastor Tunde Bakare, with the hindsight of history, was once quoted to have expressed concern on the systemic rot in the system. He queried: “How many politicians today can claim like Papa Ajasin that he entered Government House with the same sets of clothes and left with the same set of clothes or that he went in with the same assets that he left with?”

A lot of people have equally raised issues over what they perceive as the level of wastage, misplaced priorities from budgetary allocations, which are generally skewed against the schemes that have direct impact and relationship to the welfare of the average citizen.  These include matters on provision of potable water, electricity, and quality schools.  In particular year, the federal Government budget provided for N13 billion for local and international travels, N45 billion for stationery, magazines, newspapers; N17 billion for vehicle maintenance and furniture, N5 billion for training, N4 billion for generators, N9 billion for refreshment and meals.

 

Recession vs dividends of democracy

With the country yet entering economic recession, there is pervasive fear of the lots of the ordinary citizens getting worse. The country is still in the quagmire of the coronavirus epidemic, which has created varying degrees of distortions and dislocations in the economy. The plunge in fuel price triggered by the epidemic has led to the ruling political class scampering to lay hands on a straw in order to keep the country afloat.

This predicament is at variance to the abundance of human and natural resources of the country, which informed the outcry by a former member of the National Assembly, Senator Ben Murray Bruce that “Nigeria is too poor for our leaders to act like multi-billionaires, and Nigeria is too rich for the people to be so poor.” The narrative also underscores the concerned raised by the chairman of the Senate Committee on Army, Senator Ali Ndume, that high cost of governance was uncalled for because of the social-economic disequilibrium it had engendered in the country. The senator representing Borno South Senatorial District, noted: “The current cost of governance is too much in Nigeria, and the system is benefiting only a few people, which is not fair, if this country must move forward.” Ndume was worried that about three quarters of the annual federal budget ended up being used to cater for a minute percentage of the more than 200 million Nigerians. “You can imagine what we would have achieved as a government if 70 per cent of the resources we are currently spending in running the presidential democracy in Nigeria is appropriated every year for capital projects that would benefit the larger members of the society,” he stated.

 

Cost of governance

The general opinion is that rising cost of governance remains a major obstacle in the impact of government policies and programmes on the citizens. It is believed to be at the root of unbridled corruption in public places; as well as constitute the major catalyst for the high poverty index in the country.  An economist, Professor Ibidayo Ajayi, analysed how the ugly trend impacts on the system: “The amount of money Nigeria spends on governance is too much. The remuneration given to those in government as well as ex-governors is too much compared to the rest of the economy. Nigeria cannot sustain the high cost of governance and there is the need to bring a high-level of justice and equity in our payment system to reduce poverty.” the professor of economics said.  Similarly, an economics teacher at Covenant University, Ota, Ogun State, Adeolu Adewole, warned that when a large sum of money is deployed to the maintenance of government structures, it portends disaster. “When a rising proportion of government budget, at whatever level, is used to support the administrative structures of government, poverty is bound to be pervasive as economic growth slows down or even stagnates”, said the university don. He added: “If we assume that government is a firm with output measured in GPD, then, it would not be difficult to see why the cost of production (measured here as cost of governance) seems to have risen over time.”

The Executive Director, African Centre for Leadership and Strategy and Development, Dr Otive Igbuzor expatiated on other issues that compound the problem of the high cost of governance, especially as it affects budget. He is one of those who belong to that school of thought that the budget was not making much impact because most of the money was being spent on recurrent expenditures such salaries and overheads. “There are statutory allocations to the National Assembly, the judiciary, ecological fund, development of mineral resources that are not monitored. In fact, the 2012 audit of the Auditor General of the Federation stated clearly that there are some fraudulent practices going on with these funds. In terms of the content of the budget, the budgetary allocation to the social sectors; education, health and infrastructure which will directly impact on citizens is still low,’’ he said.

The issue of the cost of governance apparently pitted the vice president against Sanusi at a recent zoom conference. On the occasion, he was of the view that the structure of governance in the country was tailored towards bankruptcy, urging the Buhari administration to address the matter. Citing other lands, he remarked: “The greater Atlanta (in the United States) has a Gross Domestic Product that is higher than that of the Federal Republic of Nigeria, and Atlanta is not the richest city in the United States. I don’t want to be disrespectful, but the annual sales of Tesla exceed the budget size of our country, so should we not begin to cut our coat according to our cloth; should we not begin to look at all these costs and the constitution itself; maybe turn the legislators to part-time lawmakers, have a unicameral legislature instead of bicameral, have the local governments run by employees of the Ministry of Local Government Affairs? We just need to think out of the box to reduce structural cost and make government sustainable over the long term.”

That opinion contrasts sharply with the position of the National Assembly. In short, the spokesperson of the House of Representative, Benjamin Kalu claimed that Nigerians were being fed with falsehood on the earnings of the lawmakers. Though he agreed that the cost of governance was high, he said that the National Assembly budget was less than 1 per cent of the total budget of the country. He stated: “The 0.8 per cent of the national budget for the National Assembly is not enough to run the institution. If you want to cut salaries, expenses, cost of governance, start it from the executive.”

 

Ongoing debate

While he agreed with Sanusi on the imperative of restructuring the system, Vice-President Osinbanjo had advocated for a national debate on this issue because of the apparent beneficiaries of the current system. His proposition did not go than well with a section of the Nigerian society because of their belief that such debate was unnecessary. According to Osinbajo, “There is no question that we are dealing with a large and expensive government. But, given the current constitutional structure, those who would have to vote to reduce government, especially to become part-time legislators, are the very legislators themselves. So, you can imagine that we may not get very much traction if they are asked to vote themselves, as it were, out of their current relatively decent circumstances,” he said.

Dissatisfied with the status quo, the Centre for Social Justice (CSJ) canvassed for the pruning of the federal cabinet to a maxim of 15 members as well as reduction in of the number of advisers and assistants to the President to a reasonable figure. The Lead Director of CSJ, Eze Onyekpere, also suggested that all bills pending before the National Assembly seeking to set up new agencies of by should be reviewed for duplicity or overlap of functions and evaluation of the cost of implementation.

Whereas the president of the Senate, Ahmad Lawan has disputed the claim of a jumbo pay for members of the National Assembly, some critics have not relented in their campaign against perceived outrageous earnings of the parliamentarian. One of such critics is a Second Republic member of the House of Representatives, Dr Junaid Muhammed, who contended that the lawmakers ought to review downward their earnings in times of exigencies. He said: “What I expect from the senator is to set in motion the machinery for downward review of their salaries and their allowances. Anything short of that will portray them as greedy people who care less about the wellbeing of the country and the down trodden who bear the brunt of economic mismanagement and recklessness of the few who found themselves in leadership position.” Junaid said there should be a correlation between what other workers earn as salaries and that of the lawmakers.  “In a civilised and rational society, the nation pays the populace, including lawmakers based on the content of the service rendered and what the nation economy can afford. There is no justification for the outrageous salaries and allowances fixed by the lawmakers. When the economy nosedives, the normal thing to do is to cut down the expenses and plug all the leakages in the system so that the nation do not go bankrupt.

As a matter of policy, the salaries and allowances of the National Assembly members must relate to what is being paid to other workers in the economy in relation to what is obtained in advanced democracies like the United States of America, Britain, France, Germany, and Canada among others.”

Another eminent citizen miffed by the huge cost of governance in the country is Professor Anya O Anya. a national merit award winner, Professor Anya, who was the first Director General of Nigeria Economic Summit Group (NESR) said both the federal and state governments ought to jointly address the critical problem of overblown bureaucracy and the vastly increased cost of running the bureaucracy  that gulped as much as 80 per cent of their resources. He said “the practical result of this huge cost of governance is that only an average of 20 per cent of the nation’s total financial resources is spent on capital projects. The capital projects are thus, poorly funded. In most cases, they are abandoned or uncompleted due to paucity of funds.” The submission of the Executive Director, African Centre for leadership, Strategy and Development, Dr Otive Igbuzor on the high cost of governance, which he said was impeding economic growth in the country was that most of the expenditures were recurrent expenses on salaries and overheads. He noted that “In terms of the content of the budget, the budgetary allocation to the social sectors, education, health and infrastructure which will directly impact on the citizens is very low,” with negative impact on the welfare of the citizens.

A lecturer at the Covenant University, Ota, Ogun State, Adeolu Adewole, observed that it was unhealthy to commit a large sum of money to maintain government structures at the expense of the vast majority of the citizens.  “When a rising proportion of government budget, at whatever level, is used to support the administrative structures of government, poverty is bound to be pervasive as economic growth slows down or even stagnates,” he said. He added: “In fact, the Revenue Mobilisation and Fiscal Commission had been overwhelmed by the mounting allowances of public officers across the three arms of government at the state, federal and local levels. Apart from basic salaries, allowances cover details such as accommodation, furniture, overseas trips, motor vehicle loan, car fuelling, medicals, special assistance, domestic staff, entertainment, leave, and severance gratuity.”

 

Solution

In the 2020 budget, a total of N4.9 trillion out of N10.8 trillion was allocated to recurrent expenditure; the capital vote was mere N2.4trillion, while debt servicing received N2.09 trillion. In 2019, out of the N8.91 trillion budget, the recurrent expenditure received N4.05 trillion, while capital expenditure was N2.09 trillion. A legal practitioner/rights activist, Mr Jiti Ogunye, said it was necessary to redress the trend so that the vast majority of the citizens could enjoy the benefits of civil rule.  “The need to cut down the crushing and prohibitive cost of governance in Nigeria has been on the national agenda for years. Successive governments, including the present one, have been paying lip service to it. They talk about it but don’t do anything about it,” he claimed.

In his recommendation, an expert, Osmond Chigozie Agu of the National Institute for Social Research (NISER), University of Ibadan, in his work titled: Democracy and Cost of Governance in Nigeria, advocated a holistic restructuring from the centre to other levels of government. He said that the number of commissioners in the States Executive Councils, as well as, special advisers and personal assistants to the governors should be streamlined to optimum. “Similarly, none of these appointed officials should have more than one official vehicle. he added that regulatory agencies and authorities should ensure that “all salaries and allowances of civil servants, public servants including political office holders conform to due process, constitutional provisions and existing financial rules and regulations. This will no doubt reduce friction and instability within the entire system.”  Besides, he said that efforts should be made “to ensure fiscal discipline through effective public policy formulation and implementation aimed at reducing re-current expenditure and budget deficits.” According to him, one of the major costs of governance is the larger than optimal size of the executive cabinet. Therefore, he said it “was possible to reduce the cost of governance by ensuring an optimal size of cabinet, where merit and core competence are the primary reasons for appointment to serve in public offices.”

Another expert, Stephen Ejuvbekpokpo, argues that a rise in the “level of governance cost hampers the pace of economic growth and development in the country. According to him, “the rising cost of governance reduces the availability of public funds for development projects. In order to reduce cost of governance, there is the need to place institutional constraints on public office holders and technocrats in a way that minimises the extraction of rent from the state. This is the better path to follow if the cost of governance is to be drastically reduced in Nigeria. Also, public funds should be judiciously utilised. In other words, every naira of public funds showed be spent to maximise social welfare.”

With the return of economic recession in the economy, whatever have been benefits of the people under civil rule are threatened. How the main political actors and gladiators respond to the situation will be determined by time.

 

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