As Nigeria’s president-elect, Muhammadu Buhari, prepares to take over power on May 29, one key challenge that stares him in the face is the high cost of running Africa’s largest democracy.
Based on the 2015 budget before the National Assembly, Buhari will inherit a N1.8 trillion wage bill for government ministries, departments and agencies (MDAs), in addition to a N120 billion statutory transfer to fund the National Assembly, among other costs this year.
Analysts have raised concerns that much of government expenditure goes into over-bloated salaries and other emoluments for a legion of assistants and advisers attached to the government, at the expense of capital projects in infrastructure, health, education and other sectors that would improve the quality of life in Africa’s largest economy.
“In Nigeria, the cost associated with the running of government has increased considerably over the years and has significantly increased recurrent expenditure of the government, thereby decreasing the government expenditure on public project in vital sectors of the economy,” said Bassey Edem, acting national president, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), while presenting a review of the economy at a recent event.
According to Remi Bello, president, Lagos Chamber of Commerce and Industry (LCCI), “despite infrastructure gaps and finance needs of the country, recurrent spending has continued to rise to about 85 percent in 2015 budget, with serious implications on infrastructure and investment.”
BusinessDay reported last week that the House of Representatives passed the sum of N4.493 trillion budget for the 2015 fiscal year, with an 88 percent recurrent component (including debt repayments) versus 12 percent capital spend.
What needs to be done is clear – reduce the cost of governance. However, the political will to get this done will be a litmus test for the incoming administration.
Kayode Fayemi,f ormer Ekiti State Governor and Director of Policy for the All Progressive Congress (APC), recently commented on the Buhari government’s operational model.
It will be “…largely in line with the Steve Oronsaye presidential committee report,” Fayemi said, citing an 800-page report, which prescribed the scrapping of several duplicated government parastatals.
For instance, the report recommends merging the Economic and Financial Crimes Commission (EFCC), the Independent Corrupt Practices and other Related Offences Commission (ICPC); one to which Fayemi agreed in his presentation of the Buhari-agenda to CEOs at the Lagos Business School earlier this month.
Buhari may also look to persuade the incoming National Assembly (with the benefit of an APC-majority) to take a bigger haircut on its N150 billion annual spending plan, which only fell to N120 billion in the 2015 budget on account of lower oil revenues.
BusinessDay reported in December 2014, that Nigerian senators earned about $2.1 million per annum, compared to legislators in the USA ($174,000), Brazil ($157,600), South Africa ($104,000), Kenya ($74,500) and Ghana ($46,500).
This is in spite of the fact that the legislators passed only 104 out of the 1,063 bills before them since inauguration, according to Business Day’s analysis of bill progression data from the Policy and Legal Advocacy Centre (PLAC) an Abuja based non-partisan, non-profit firm.
“What has the National Assembly said or done about the recent slide in crude oil prices?” asked Ayo Teriba, economist and CEO of research firm, Economic Associates, at the Business Day energy conference held recently, a sign that the 469-member parliament has been somewhat detached from the economic realities affecting the 170 million citizens they are elected to represent.
Fayemi advised CEOs at the LBS meeting to read the APC manifesto and the Steve Oronsaye report, perhaps hinting that the incoming Buhari-government would strongly consider downsizing the public service to reduce the cost of governance in the short term.
But how ‘long’ is short enough? Nigerians would start counting from May 29.
Akin-Olusoji Akinyele & Odinaka Anudu
