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Appraising cost of governance in Nigeria



THE titanic battle that raged between the Federal Ministry of Labour and the organized labour before the resolution of the new minimum wage of N30,000 has brought to the front burner the imperative of appraising the cost of governance at the federal and sub-national governments with a view to substantially reducing it.

It has become glaring that too much extravagance is observed in all the tiers of government and it is unfortunate that public officials apparently believe that there is nothing that could be done to reduce the ever ballooning cost of governance.

  The imperative need to appraise the ever increasing expenditures in all the three tiers of government has become inevitable in the face of paying the new minimum wage. The stark reality to improve the salaries and sundry emoluments of public servants is staring government officials in the face and even making them to have sleepless nights.

When he had the first meeting with the state governors immediately he was sworn into office in his first tenure, President Buhari expressed the horror on how the governors sleep when their workers are being owed many months of salaries.

The governors wringed their hands while giving reasons for their inability to meet the financial responsibilities to the workers, citing the ever dwindling revenue from the Federation Account. Consequently, the president, out of compassion for workers, had to approve “bail-out funds” to the governors to enable them offset the mounting arrears of unpaid salaries and harmonisation of pension from the proclamation of last minimum wage in May, 2011.

 Apart from the bailout funds which few governors did not take because of their regular payment of salaries, the president went to the debt profile records and refunded the excess Paris loans to the state governments. Thus the quantum funds were believed to have been used by the governors to meet their financial obligations to their workers.

But the problem was merely scratched in the surface as the governors never looked back in recruiting aides and given them preposterous assignments and names like “special assistant on fisheries”, yam production, etc, even when the Commissioner for Agriculture  could see to these areas in the ministry.

Memories of Nigerians are still fresh on the strident objection of the governors in the wake of negotiations between the federal government and the labour unions for the new minimum wage and the consequential salary adjustment of the new wage across the higher grade levels.

The Nigerian Governors’ Forum [NGF] were unanimous in telling the federal government that they were unable to pay the minimum wage because of the dwindling revenue profile.

They made a worthwhile suggestion to the president to put the necessary steps in motion to review the revenue allocation formular [which of course has become over-due for review] so that they would be in the financial position to pay, even as they really acknowledge the fact that the inflationary trend has made the salary of workers in all the grade levels unrealistic.

Curiously, there was ominous silence from the presidency on this realistic call. When the issue of consequential adjustment to the salaries of public servants on grade levels 07-17 arose, the governors were silent; supposedly distressed by the failure of the presidency to speak on their demand for a review of the statutory allocation formular.

It took the guts of the Governor of Ekiti State, who incidentally is the chairman of NGF, Dr. Kayode Fayemi, to open up in a press interview presumably on behalf of his colleagues to reiterate the forum’s earlier call for a review of the Federation Account’s sharing formular, going by the fury of the government workers.

The intellectually suave governor said: “We don’t want workers to down tools, but you will recall that the governors’ proposal in the course of the tripartite negotiation was N24,500. But, negotiation back and forth, we ended up with N30,000 and the governors in principle said ‘we will pay’.

However, in private discussions with the President, we made it clear that this is another recipe for future bailout. To be frank with you, I don’t even consider N30,000 a living wage in today’s Nigeria, but you cannot promise what you don’t have.

“It is a fundamental principle of labour relations because you get into trouble if you do that. So, we agreed N30,000 and we all agreed to look for ways to boost revenues going to the states and we are working on that…We don’t want workers to down tool, but we made it clear during the tripartite negotiation that an increase in the National Minimum Wage is not tantamount to a general wage review.

The economy is in doldrums. Whether we openly admit or not, everyone knows. If you have an economy that N2.4 trillion is for debt servicing, then what are we talking about. So, I hope good sense will prevail and that people will be able to convince labour that it is futile effort if they do so because Nigeria cannot pay what it doesn’t have”.

Realistically speaking, I am in all fours with the Governor of Ekiti State on the ground that there is a categorical imperative for a review of the statutory allocations sharing formular; even as the federal government is tottering on the brink of financial stringency.

Review of revenue allocation sharing formular has been long overdue but the tendency to impunity and brazen disregard for the rule of law and flagrant violation of the provisions of the constitution by the past and present leadership of the federal government has led to failure to accord top priority to review the sharing formular of the statutory allocation before dealing with the issue of salary review mistakenly called “Minimum Wage Review”.

The current reality in the financial position of the country is that there is dearth of funds to execute the 2020 budget proposals. It does not pay the public functionaries to indulge in hypocrisy or playing diplomacy when confronted by the press. Ordinarily, the press is at home with the sectors of the economy and their present condition.

That is why it is preposterous for the Finance Minister to admit that the country is at the tenterhooks financially but at the same time, saying that there is no cause for alarm on the execution of the next year’s budget.

Responding to the barrage of questions from the press recently on the state of the economy vis-à-vis the payment of the minimum wage and the execution of next year’s budget with heavy debt overhang, she said:

 “The country could only realise 58 per cent target in revenue generation as at June this year. Poor revenue drive is a major problem for the federal government. We have designed this Strategic Revenue Growth Initiative this year which has three thematic areas.

“One is to achieve sustainability in revenue generation. Two is to identify new and existing revenue streams and three is to achieve cohesion. Nigeria as a country must mobilise significant domestic resources to be able to make necessary investment in human capital as well as in physical infrastructure.

Given the low revenue to GDP ratio currently at 8 per cent, we must optimize revenue generation…our total borrowing rate is just under 50 per cent of our GDP, while the multilateral institutions project for a country to borrow from 55 per cent of GDP”.

The inescapable fact is that Nigeria is in financial doldrums and one fears that the minimum wage may not be implemented by more than 10 state governments. Recall that many state governments have not come out of the arrears of salaries and pensions; including pension harmonisation from 2011.

There is no way most state governments can implement the minimum wage if the federal government will stuck to its gun of not reviewing the statutory allocations sharing formular. The governors merely agreed “in principle” to pay but in actuality, it is a pipe dream destined to be unrealised.

As things stand, one would ask: where do the three levels of government go from here even as the federal government is not in the position to pay the new salary proposals. Forget about the shenanigans of the Finance Minister which is mere wishful thinking.

 Federal workers whom I have interacted with on financial matters lament that their sundry allowances incurred in the course of carrying out their official businesses have not been paid for over two years.  They revealed that there is delayed salary payment for many federal institutions, agencies and parastatals.

The probable route is to drastically appraise the cost of governance by all the three tiers of government with a view to drastic reduction where necessary. Dwelling in his ‘Jumbo governance cost’, Ray Ekpu contended thus:

“A number of factors have conspired to put the issue of the jumbo cost of running Nigeria on the front burner. It is alleged that we spend about 25% of our federal resources on debt servicing. In the face of declining revenue, this means that our decayed or dead infrastructure will not be resurrected any time soon.

“Meanwhile, the federal government has gone cap in hand to plead with the World Bank to lend it $3 billion for its power sector. This means pilling up more problems for the country”.

Nigerian governments cannot shy away from drastically reducing the cost of running governance. Since the present leadership is jittery about restructuring the country to return it to realistic practice of federal system of government, it has become pertinent to brew a home-grown governance paradigm.

For instance, let there be one national parliament instead of the bicameral legislature which eat deep into the annual budget.

A situation where legislators are the largest paid in the world [a senator goes home with over N13 million every month] is baffling going by the comatose financial situation in the country and ever increasing debt overhang.

Salaries and allowances of the legislators in the three tiers of government should be drastically reduced and legislation should be on a part-time basis.

There should be a unicameral legislature made up of three members from each state of the federation. The Orosanye Committee Report on the merging and abolition of agencies and parastatals should be implemented.

The lip service or hypocrisy on the economic restructuring should be stopped. There is discrimination in the mining of mineral deposits as Zamfara State is allowed to mine mineral resources of gold, even as the federal government issue license to foreign miners while other states are not given the license.

The law barring the state governments from exploring and exploiting mineral resources should be abrogated and that is economic restructuring. When this is done, the states will be in the position to negotiate living wages for their workers and create employment for the teeming unemployed youths which constitutes a time bomb.

In an editorial on cutting the cost of governance, a national daily contended as follows: “The time for a drastic cut in the cost of governance is now because the economy can no longer support the opulence of our political office holders and other appointments. The nation’s dwindling oil revenue can hardly carry the heavy financial burden.

“It is contradictory that while the cost of governance is becoming expensive, many Nigerians are groaning under the weight of extreme poverty. The nation is grappling with dilapidated infrastructure, rising debt servicing and increasing amount for debt servicing. At the same time, the standard of living of most Nigerians is nothing to write home about”.     

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