How to reduce cost of governance

How to reduce cost of governance

Many Nigerians have criticised the disproportionate allocations to capital and recurrent expenditures. They want governments across the three tiers to reduce the cost of governance so that more resources can be channeled towards development projects that will impact positively on the quality of living. Assistant Editor LEKE SALAUDEEN examines how high cost of governance has retarded development in the country.


Over the years, the cost of governance in Nigeria has become a vexed issue that has continued to dominate socio-economic discourse.

In a bid to overcome the challenges generated by this phenomenon, successive governments have continuously harped on the need to address it to make money available for development.

In the budget, much is voted for recurrent expenditure while insignificant percentage is set aside for infrastructure, health, education and other key areas that enhance the quality of life of the people.

Such spending pattern that is biased against capital projects is inimical to growth and development as they invariably promote or support wastages and inefficiency.

The suffocating impact of the high cost of governance on our national life has made it to assume a national emergency dimension.

There is need that to ensure that government resources are used in the most efficient manner so that citizens get value for money and that more funds are available for capital projects.

As a result of the high cost of maintaining the bureaucracy the International Monetary Fund (IMF) has always predicted low economic growth prospects for the Nigerian economy.

The Minister of Finance, Mrs Zainab Ahmed, cried out recently that insufficient revenue has been the major problem in the effective implementation of federal budgets.

The outbreak of coronavirus pandemic has compounded the financial woes of the country. Nigeria, dependence on crude oil revenue has made the country’s economy vulnerable to shocks in the internal oil markets.

The oil price has slumped to a ridiculous price of $10 per barrel at the international market. The 2020 budget was predicated on $57 per barrel.

The unexpected development has forced the Federal Government to seek for local and foreign loans to meet its obligation.

The impact of the recent collapse in crude oil prices on Nigeria’s External Reserves, the Naira Exchange rate and revenues are testament to the urgent need to review the manner in which increasingly limited government revenues are spent.

The call by the Speaker, House of Representatives, Femi Gbajabiamila, that COVID-19 should offer the country the opportunity to reduce cost of governance and diversify her economy is very apt.

He noted that the coronavirus has destroyed the nation’s economy, stressing that the only way out was for the economy to be reformed.

According to him, a drastic reduction in the cost of governance is the point to start the country’s economic recovery.

Gbajabiamila said: “The COVID-19 pandemic has devastated global economy at a time social welfare demands on the public purse were higher than they had ever been.

Nigeria’s present reality called for nothing short of a wholesale reform of its governance structures, systems and processes.

“Such efforts must of necessity, begin with drastic reductions in the cost of governance, coupled with determined efforts to drive economic diversity and innovation in the non-oil sector.

There are no longer any sacred cows, protected spaces or classes. Every area of our national health policy, economic policy, tax policy, education policy and security architecture are now on the table for reform.

“We must turn this moment of profound crises into an opportunity to make the hard choices we have too long deferred but can no longer avoid if we are to survive as a nation.

The House of Representatives is ready, and I trust that we will find allies in government and across our country who are prepared to make the challenges that our country needs to survive, recover and thrive.”

In line with Gbajabiamila’s proposal, the Centre for Social Justice (CSJ) has urged the Federal Government to reduce the size of the federal cabinet through amendment of the constitution to ensure the federal minsters do not exceed 15 and also limit the number of advisers and assistants to the President to a reasonable number.

The Lead Director of CSJ, Eze Onyekpere, suggested that all bills pending before the National Assembly seeking to set up new agencies of the Federal Government should be reviewed for duplicity or overlap of functions and evaluation of the cost of implementation.

Onyekpere also advised the Federal Government to “reduce the number of members on each of the governing boards or councils of all agencies, parastatals and commissions to not more than seven and that the membership and composition of boards and commissions should be based on merit and competence.

“A single seven-member board should be appointed to serve and oversee all the River Basin Development Authorities as against the current practice of one board per River Basin Development Authority.

Furthermore, the River Basins should be asked to render account of the use to wish they have put the tens of hectares of land placed at their disposal.

The River Basins should be revenue generating agencies instead of being mere cost centers that gulp large appropriations.

“The proliferation and duplication of research institutes and agencies should be redressed through the merger and the establishment of the National Research Development Fund and all research institutes should access competitive research funding from the fund.

“Petroleum and gas refunds through the passage of a progressive Petroleum Industry Bill; the legislative process on this bill should be expedited.

“Conduct staff and management audit in all tertiary institutions including teaching hospitals in the light of the administrative staff outrageously outnumbering the core staff of these institutions.”

He asked that the following agencies be merged: “the National Broadcasting Commission (NBC) and the Nigerian Communication Commission (NCC); the National Research Development (NASRDA) and the National Communication Satellite Ltd (NigComSat).

The Administrative Staff College of Nigeria (ASCON) and the Public Service Institute of Nigeria (PSIN); the Standards Organisation of Nigeria, the Consumers Protection Council and the Department of Weights and Measures.

The Nigerian Export Promotion Council and the Nigerian Investment promotion council then the Nigeria Export Processing Zone and the Onne Oil and Gas Free Zone Authority.”

Analysts say the jumbo salaries and emoluments of lawmakers should be drastically reduced to save cost of governance in the country.

They described the situation whereby a senator goes home every month with a whopping sum of N13.5 million as running cost apart N750,000 monthly salary as outrageous and a painful picture of the gross inequality that pervades Nigeria’s payment structure.

A Second Republic politician, Dr Junaid Muhammed, castigated members of the National Assembly for what he described as insensitivity to the general feelings of the populace to their opulence lifestyle which is at variance with the economic situation in the country.

He said: “In a civilized and rational society, the nation pays the populace including law makers, 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 law makers. When the economy nosedive, 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.

Paying Nigerians senators salaries higher than what American president earns is senseless. The United States is the most powerful country and the largest economy in the world.”

The Kano-born politician 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.”

He lamented that the 1979 and 1999 constitutions made provisions for the members of national assemblies to fix their salaries and their allowances.

“It was a mistake that the 1979 and 1999 constitutions empowered the law makers to fix their salaries and their allowances. In a normal society or a mature democracy, you don’t allow members of legislature to fix their salaries.”

Former vice chairman of the Nigerian Bar Association (NBA) Monday Ubani was furious that the ninth National Assembly is adamant on the outrageous salaries and allowances being drawn by the lawmakers.

He said: “I would have expected the members of the National Assembly that are dominated by the All Progressive Congress (APC) to reduce the fabulous pay.

But they refused to carry out the wish of the people. They are selfish; they are not interested in the wellbeing of the nation and the people.”

Ubani said the total cost on legislative is alarming: it constitutes a drain pipe on the nation’s economy. It is a big mistake that the constitution allows the law makers to fix their salaries and allowances.

He suggested that there should be an arrangement to make the national assembly and other elective positions less attractive to maintain modesty in salaries and allowances.

We have states that cannot pay salaries and the lawmakers in the National Assembly want to live fat at the expense of the masses, Ubani added.

A stalwart of the People’s Democratic Party (PDP), Alhaji Shehu Dangiwa, suggested part time legislature for Nigeria. According to him, the crop of legislators both the National and State Houses Assembly are already working pastime.

He said they sit for two or three days a week, and go on recess for several weeks in a year. He said “What do you call that? It is part time but they are only wasting public funds on the preference that they are doing full time legislative business.

“I have been an advocate of part time legislature since 1999. This was because in all developed countries Nigeria was trying to emulate, members of the legislature have their professions and they don’t resign their appointments to become lawmakers.

Part time legislature would be good if the federal government wants to attract high caliber people to politics. The part time legislature will draw sitting allowances instead of jumbo salaries and allowances being drawn by the present legislatures. This was the practice in the first and second republics.

There is nothing stopping an accountant, lecturer, or banker from venturing into politics and do it part time. This will enable them to still hold on to their jobs and do politics.

It will be beneficial because all these people are coming with skills and experiences from their own professions. So, why can’t we use these skills and experiences in shaping our country?

He said: “The United States, the most powerful and richest country in the world has a comparatively slimmer and more cost effective bureaucracy than Nigeria. It has less than 20 federal ministries and secretaries of state (equivalent to our own ministers).

The British cabinet is smaller than that of Nigeria. Spending on the public service in Britain is undergoing review to reduce cost of running the country.”

On his part Professor Anya O Anya said as a result of high cost of governance, the Federal Government has embarked on borrowing to maintain its vast bureaucracy. This, according to him, requires huge billions of naira debt-servicing cost every year.

The pioneer Director General of Nigeria Economic Summit Group (NESR) said this is not how to run a country or any economic enterprise for that matter. If anything, it is a prescription for financial disaster and national bankruptcy.

The federal government and state government must jointly address the critical problem of overblown bureaucracy at the three tiers of government, and the vastly increased cost of running such a huge bureaucracy on which they are spending up to 80 percent of their total resources.

He said “the practical result of this huge cost of governance is that only an average of 20 percent 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.”

As part of the cost cutting measure, He said the country should retain by camera legislature but reduce the number of representative by half and the senators to two per state.

It is time to make necessary amendment to the constitution to save Nigeria from eventual financial disaster and possible national bankruptcy, He added.

The Executive Director, African Centre for leadership, Strategy and Development, Dr Otive Igbuzor said that the high cost of governance had impeded economic growth in the country stressing that budget was not making much impact because most of the money was spent on recurrent expenditures like salaries and overheads.

Igbuzor said: “There are statutory allocations to the National Assembly, the judiciary, ecological fund, development of mineral resources that are not monitored.

The Auditor General of the Federation has stated 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 the citizens is very low”.

For better budget performance, he advised the federal government to review its budgetary process to include community participation.

He said that international best practice showed that every community should have a say in the nation’s budget if it’s to lead to economic growth.

In order to eradicate poverty, he said it was necessary that high and sustained growth that generates productive jobs and brings benefits across society are put in place.

This, he said, would boost productivity within the existing sectors as well as rebalancing economies towards more productive sectors like agriculture and manufacturing.

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