A renowned economist, Dr. Alex Otti, has blamed the consistent poverty line and wide range of unemployment in Nigeria to the exorbitant governance system and poor leadership style at all levels of government.
Dr. Otti, a philanthropist and former bank executive spoke as a guest lecturer at the 10th anniversary lecture of Adeleke University, Ede, Osun state on Tuesday, March 9, 2021.
He said though Nigeria is blessed with abundant natural and capital resources, their management approach has remained a source of concern with little to show in the overall development of the country.
According to Dr. Otti who was a two-time governorship candidate in Abia, “Nigeria, no doubt, is a rich country, at the minimum, potentially. I am among those who believe that God must have envisioned the recreation of paradise on earth and as such, went on to create the land we refer to as Nigeria today. How do you explain, in such proportion that could hardly be found elsewhere, the massive deposition of such natural resources as crude oil, zinc, gold, steel, rubber, palm, granite, rich and arable soil for the cultivation of different kinds of crops, abundant water bodies and above all, human resources, by way of talent, academic brilliance, and willingness to work? Suffice it to say that Nigeria has it all. But the irony here is that Nigeria is also a poor country. The World Poverty Clock reports that as at yesterday, Nigeria has 43% of its population or about 90million people living below the poverty line of less than $1.90 per day. Against the background of Nigeria’s much touted wealth, one is then compelled to ask: What could be the problem? Why are we the poor children of rich parents? Why are we the unfortunate dwellers in the hellhole of excruciating poverty while our parents live lavish in the paradise of excess wealth and affluence?
“It was Chinua Achebe who, in his 1984 pamphlet, The Trouble with Nigeria, stated that “the trouble with Nigeria is simply and squarely a failure of leadership”.It is on this note that, despite the availability of other factors that may be responsible for the Nigerian dilemma, we have chosen to dwell on the way Nigeria is governed. You will also agree with me, distinguished guests, that, the other factors, whatever they may be, are nearly insignificant, given that the Nigerian government is seemingly the alpha and omega of all the various activities that go on in the federation, thus, there can hardly be anything that goes on in this country without the express approval of the government, hence, we must begin with it.
“It is doubtful if there is any debate about the fact that we run a very wasteful and expensive system of government. People have argued that democracy the world over, is a very expensive form of government. While we do not disagree, we make bold to say that our own brand of democracy is numerous times more expensive than those of the people from whom we copied it. We shall demonstrate this fact in the course of this paper by laying bare, what it costs to run the three tiers of government.”
The economist turned politician advocated the need for Steve Orosanye’s report to be deployed in streamlining government agencies and affecting a cut down on cost of governance.
He said, “The most recent but more comprehensive effort on the issue of streamlining government agencies and cutting down on cost of governance is the Oronsaye report. This report recommended the pruning down of statutory agencies of government, from the current number of 263 to 161, that is a reduction of close to 40%. The report, an 800-page document, was submitted to the immediate past President, Goodluck Jonathan. It stated that the average cost of governance in Nigeria is amongst the highest in the world and went on to recommend that professional bodies/councils should be removed from the National budget and most importantly, that the National Budget should be linked to deliverables and performance. In addition, the report exposed the duplication of roles in government. Membership of governing boards, council of government agencies, parastatals and commissions are so many when there is no need for such large numbers, the report further exposed.
“Therefore, it is evident that our problem is not lack of ideas or not knowing what to do. On the contrary, we have had more than enough ideas about what to do. We had also made attempts to articulate them in a working document, available to any interested government or official to see. The sad reality is that we stop short after the expression of intentions. Many of the reports have not progressed to the stage where white papers are issued on them and even if they were issued, the will to implement them has always been missing. Departing from the norm, the Minister of Finance, not too long ago, announced government’s preparedness to implement the Oronsaye report as a way of saving money to finance the deficit in the budget. Even then, we are still waiting and we cannot say at this time, how far the government intends to go.”
The former Group Managing Director of Diamond bank also called on Nigerians to get involved in governance and demand that their leaders be accountable in the management of resources.
Read his full Paper presentation
MASSIVE GOVERNMENT, MISERABLE POPULACE: COST OF GOVERNANCE AS ECONOMIC GROWTH DECELERATOR
BEING A PAPER PRESENTED AT THE 10TH ANNIVERSARY LECTURE OF ADELEKE UNIVERSITY, EDE, NIGERIA ON TUESDAY MARCH 09, 2021 BY DR. ALEX OTTI, OFR.
“The ability to extract maximum value from resources while creating minimum waste is a profitable skill to have.”
― Hendrith Vanlon Smith Jr, The Wealth Reference Guide: An American Classic”
“No man is rich, whose expenditure exceeds his means; and no one is poor whose Incomings exceed his outgoings” – Thomas Chandler Haliburton (1796-1865)
My Igbo origin avails me a plethora of philosophies, wise sayings, and moral values on the foolishness of having too many resources at your disposal while members of your immediate family or constituency suffer the anguish of systemic want. Hence, it is common to hear the Igbo say “onye nna ya no naalaezeanaghiagaokummuo”, loosely translated to mean that “one whose father is in heaven has no business with hell”, but that is as literal as it could get because a step across the surface of this saying would reveal the misnomer in being a millionaire father of a poor, hungry child. As a child, I grew up to the story of a man named Rufus who happened to be a roofer, that is, he was grounded in the art of fixing roofs. But the irony is that his family suffered whenever it rained because the roof of his own house was dilapidated.It is on that note that my kinsmen, while playing around the man’s name (Rufus) and that of his work (roofer), now designate any man of reasonable means but whose immediate family suffers from lack as “Roofusuloyanaehimmiri” (the roofer with a leaking roof). At other times, they will quip,how can you ‘Rufus’ when you can’t ‘roof’ yourself?
When you liken the above to a more recent and immediate reality,you’d see the Nigerian predicament laid bare, and that informs the reason I have chosen to share with you today, the topic: ‘Massive Government, Miserable Populace: Cost Of Governance As Economic Growth Decelerator ’. There is a sense in which this topic is dear to me; not just in its attempt to unravel the Nigerian governance mystic, but in the fact that followers of my Outside The Box column on the back page of ThisDay Newspaper every other Monday would readily attest that this line of discussion captures the very essence of most of my outings there. So, here I am today, standing in your midst, to give you firsthand, a message I shall never be tiredof spreading, so long as the endemic rot persists.
RICH DAD, POOR CHILDREN: NIGERIAN GOVERNMENT’S LEGACY OF IRONY
Nigeria, no doubt, is a rich country, at the minimum, potentially. I am among those who believe that God must have envisioned the recreation of paradise on earth and as such, went on to create the land we refer to as Nigeria today. How do you explain, in such proportion that could hardly be found elsewhere, the massive deposition of such natural resources as crude oil, zinc, gold, steel, rubber, palm, granite, rich and arable soil for the cultivation of different kinds of crops, abundant water bodies and above all, human resources, by way of talent, academic brilliance, and willingness to work? Suffice it to say that Nigeria has it all. But the irony here is that Nigeria is also a poor country. The World Poverty Clock reports that as at yesterday, Nigeria has 43% of its population or about 90million people living below the poverty line of less than $1.90 per day. Against the background of Nigeria’s much touted wealth, one is then compelled to ask: What could be the problem? Why are we the poor children of rich parents? Why are we the unfortunate dwellers in the hellhole of excruciating poverty while our parents live lavish in the paradise of excess wealth and affluence?
It was Chinua Achebe who, in his 1984 pamphlet, The Trouble with Nigeria, stated that “the trouble with Nigeria is simply and squarely a failure of leadership”.It is on this note that, despite the availability of other factors that may be responsible for the Nigerian dilemma, we have chosen to dwell on the way Nigeria is governed. You will also agree with me, distinguished guests, that, the other factors, whatever they may be, are nearly insignificant, given that the Nigerian government is seemingly the alpha and omega of all the various activities that go on in the federation, thus, there can hardly be anything that goes on in this country without the express approval of the government, hence, we must begin with it.
It is doubtful if there is any debate about the fact that we run a very wasteful and expensive system of government. People have argued that democracy the world over, is a very expensive form of government.
While we do not disagree, we make bold to say that our own brand of democracy is numerous times more expensive than those of the people from whom we copied it.We shall demonstrate this fact in the course of this paper by laying bare, what it costs to run the three tiers of government.
THE FEDERAL GOVERNMENT (EXECUTIVE)
In the past, various federal government administrations had made reasonable attempts to rationalise government agencies ostensibly to bring down cost of governance. TheAllison Ayida Committee of 1995 was one of the recent attempts to reorganise the executive arm of the federal government. This demonstrates that this issue of executive profligacy predates the fourth republic. One of the main arguments made by the Ayida report was that Ministers should not act as Chairmen of government owned agencies, which it also recommended should be pruned down.
Subsequently, entered the Ahmed Joda Committee of 1999, which, amongst other issues, contended that “ministerial interference and bureaucratic control needed to be eliminated to strengthen public service delivery. This committee had very strong words against the incompetence in government parastatals and boards. It also came down very hard on the sheer size of the boards of parastatals which, according to it, is a complete waste of resources of government.
The most recent but more comprehensive effort on the issue of streamlining government agencies and cutting down on cost of governance, is the Oronsaye report. This report recommended the pruning down of statutory agencies of government, from the current number of 263 to 161, that is a reduction of close to 40%. The report,an 800-page document, was submitted to the immediate past President, Goodluck Jonathan. It stated that the average cost of governance in Nigeria is amongst the highest in the world and went on to recommend that professional bodies/councils should be removed from the National budget and most importantly, that the National Budget should be linked to deliverables and performance. In addition, the report exposed the duplication of roles in government. Membership of governing boards, council of government agencies, parastatals and commissions are so many when there is no need for such large numbers, the report further exposed.
Therefore, it is evident that our problem is not lack of ideas or not knowing what to do. On the contrary, we have had more than enough ideas about what to do. We had also made attempts to articulate them in a working document, available to any interested government or official to see. The sad reality is that we stop short after the expression of intentions. Many of the reports have not progressed to the stage where white papers are issued on them and even if they were issued, the will to implement them has always been missing. Departing from the norm, the Minister of Finance, not too long ago, announced government’s preparedness to implement the Oronsaye report as a way of saving money to finance the deficit in the budget. Even then, we are still waiting and we cannot say at this time, how far the government intends to go.
Departing from government agencies, let us now focus on other parts of the executive arm, starting from the Presidency itself. While one may not claim to be an expert in this area, there is no doubt that the Presidency gulps a large chunk of our annual revenue. All sorts of agencies and positions hide under this big monster, ‘The Presidency’. There is a retinue of aides, ranging from Special Advisers to Senior Special Assistants to Special Assistants to both the President, Vice President, and other senior government officials. In the spirit of cutting down on cost of governance, can we not also ask that we cut the Presidency down by about 40%, using the same logic introduced by the Oronsaye report? This could be implemented across board and should include the Presidential fleet, more so, since traveling may not be a very frequent phenomenon any time soon.
Closely following the Presidency is the Cabinet. Presently, we have 43 ministers each with its retinue of aides and special assistants. Even in stable times, this is not only unwieldy and inefficient, but very expensive. Do we really need that number or are we simply pandering to what the Americans call ‘pork barrel politics’? Is this not just a very shameless way of finding work and relevance ‘for the boys’? The constitution recommends that there should be a minister per state. Some of us believe that that part of our constitution should be amended quickly. Is it not possible to cut this number by the same 40%, wind up with no more than 17 ministers and still run these ministries efficiently?
When one compares our numbers with those of the US and other leading democracies across the world, one would notice that we didn’t copy well at all. The US has 15 Secretaries (Ministers) as members of Cabinet, and it has 50 States. The United Kingdom has just 21 ministers. Interestingly, in the UK, Cabinet Ministers are also members of Parliament, House of Lords and House of Commons. 5 more members of Parliament are ‘in attendance’ at cabinet meetings. India, with a population approaching 1.4 billion people, has only 19 ministers in her cabinet and presided over by the Prime Minister. Even though there are several other assistants or deputies, they are not members of Cabinet. Germany also has 15 cabinet ministers and just literally at our backyard, Ghana’s constitution allows for a minimum of 10 cabinet ministers and a maximum of 19. What all these numbers show us is that we can afford to run our federal executive arm of government efficiently with the recommended 17 or even 15 ministers. Bear in mind that some of the countries we highlighted here are unitary governments while in our case we still have these roles duplicated in the 36 states by commissioners.
From information available to the public, our federal legislators are amongst the highest paid in the world. Specifically, a study shows that they are the second to the highest earning worldwide. The only country that beats us is Singapore, a city-state that has one of the highest levels of income per capita, in the world. The reason for the high pay in Singapore is said to be to encourage professionals to participate in legislative functions. Everyone familiar with the matter agrees that the Singaporean civil service is arguably the most professionally run in the world.
Again, America the model of our own democratic experiment, does not occupy a pride of place in countries with jumbo pay for their legislators. Before now, the compensation package of our National Assembly members was not in the public domain. There was not much to really depend upon except some veiled references to jumbo packages being enjoyed by members. The first authoritative source of information on this matter came from Senator Shehu Sani, the outspoken Senator, who represented Kaduna Central in the 8th Senate. Senator Sani had revealed that Senators went home with a monthly salary of N750,000.00 in addition to allowances of N13.5m per month. This represents a total package of N14.25m per month. He had also said that they were entitled to constituency projects of N200m per year which was domiciled in different ministries. Theoretically, the way constituency projects work is that Senators are expected to liaise with the ministries to get projects worth N200m done in their different constituencies in a year. In practice, we know that this works differently as the funding for such constituency projects sometimes find their way into the pockets of the politicians.
Also not captured by Senator Sani are a few other allowances, which include furniture, car and severance packages for non-returning senators. Translating the numbers into dollars for purposes of comparison, our senators earn about $450,000 per annum. This is over two and half times the $174,000.00 per annum that their counterparts earn in the United States of America. Meanwhile, there are 3 senators per state and one for Abuja, totalling 109. The 109 senators have a combined staff of 829 aides on payroll and a retinue of support staff who are also paid by the National Assembly.
The House of Representatives, in its own case, has 360 members from the different constituencies in the federation. Together, they are entitled to 1,880 legislative aides amongst other support and personal staff.
The compensation package for House members is a minimum of N600,000.00 per month or N7.2m per annum. In addition, they receive N12m monthly for ‘running costs’, bringing the total to about N151.2m per annum. The dollar equivalent of this package would be about $398, 000.00 per annum. Interestingly, the package for House of Representative members in the US is the same with that of the Senate at $174,000.00 per annum. The average House of Representative member in Nigeria earns a clear $224,000.00 more than his counterpart in the United States. The US has 435 house of representative members and 100 senators for a country of 50 states and population of more than 330million people. When one puts the GDP of the USA alongside that of Nigeria and what their respective legislators earn, one begins to appreciate the lopsided state of things.
Nevertheless, the issue of the size of the economy and general wellbeing of the populace viz a viz the size of the legislature and welfare of legislators, is not within the scope of this discourse. The relative productivity of the National Assembly of both countries is also not within the contemplation of my presentation today. We are also not going to pay much attention to the fact that our National Assembly is expected to sit for 180 days in a year and be on holidays and recess for the remaining 185 days in the year. We will also ignore the allegation made recently by Prof. Attahiru Jega, the former INEC Chairman, that legislative committee work and oversight functions have been turned into bribe taking and bribe giving pursuits.
What concerns us today is how the National Assembly can help Nigeria to reduce her cost of governance. How can the legislature contribute towards saving our democracy and preserving our economy? We strongly believe that this may not be out of altruism but out of self-interest and self-preservation. The budget allocations to the National Assembly have hovered between N125b and N150b annually. In absolute numbers, this may not be a lot of money, except that it is over 15% of the annual combined budgets for education and health for 200m Nigerians.
Again, looking at our peculiar circumstances, where close to half of our population livesin povertyand in the face of the pandemic that has grounded the world economy, ours included, this amount becomes an issue that deserves closer scrutiny and calls for immediate redress. Furthermore, spending on social services and infrastructure, which affects most of the people, continues to decline, while that of the legislators remains at high levels. While the number of legislators remains steady at 469, the general population of Nigeria keeps growing and about 6 Nigerians drop into poverty every minute. It would not be out of place to ask how fair this arrangement is and even if not important, whether it is really sustainable.
Given all these considerations, we had in the past, pleaded with the National Assembly to consider some suggestions we had made to reduce cost of governance and make democracy work for the rest of the country. We chose to address the National Assembly members directly because they are the law makers and amending the constitution falls squarely within their purview.
The first issue we considered is the whole concept of operating a bicameral legislature. The pivotal questions are: Is it necessary? Is it desirable? Is it sustainable? Our belief is that we should do away with the bicameral system and maintain a single National Assembly structure. This simple step will immediately save the country a lot of money. If we must be honest, we would agree that many times, there is a duplication of functions in the National Assembly. While we admit the argument about two pairs of eyes seeing better, we quickly add that it depends on how clear the vision is. A clear pair of eyes would definitely see better than ten bad pairs of eyes. Not too long ago, Senegal dumped its 100-member senate, maintaining a single National Assembly of just150 members. The net effect of this action is that the poor West African country is saving about $15m annually from its budget.
Our second recommendation deals with the size of the National Assembly. This, we would refer to as right sizing. So, what is the ideal size of the legislature for a country like Nigeria with all its multifarious economic problems? America’s 535 legislators for a country of 330m people translates to one legislator to every 618,000 people. India with a population of 1.38billion people has a parliamentary size of 790 people.This means one legislator to 1.7m people. Even the European Union, with a population of 446m people, has a parliamentary size of 751, giving a ratio of 1 to 600,000. Nigeria with an estimated population of 200m and National Assembly size of 469 works out at 1 legislator to just 426,000 people. One may not say for sure what the ideal number should be but from the numbers thrown up here, we have fewer people per legislator than the countries considered here and one of them is the model of our democracy. Given our peculiar circumstances, if we take a cue from India, we should be looking at about a National Assembly size of about 117 people. This number will be justified shortly in this discourse.
Our third issue of focus is on the compensation package for members. There is no doubt that the National Assembly members take more than their fair share of the national cake. We should remove all perks and pay only sitting allowances to members. This means that they only get paid when they sit. Again, the legislative function should be part-time. That is the standard practice for board members of institutions and companies. When this is done it will help to ensure the success of the next suggestion.
The fourth issue is in the quality of people who would be fit to serve as National Assembly members. The minimum standard should be people who have succeeded in their chosen fields of endeavour and are not merely in search of jobs or relevance. If corporate organisations and multinational institutions would insist that to qualify to be a board member, one must attain a minimum level of experience and achievement, amongst others, we believe that for a country like Nigeria, we should collectively define high standards. We should also take away the pecuniary benefits which seem to be the major attraction for many people. Call it an elitist club if you will and you won’t be wrong. We, like Singapore, should be represented by the best amongst us.
The fifth suggestion is in the structure and mode of sitting. The Pandemic has forced us to devise alternatives to physical meetings. Today, many meetings are held virtually including the Federal Executive Council. Events like weddings, birthday celebrations, burials and graduations are attended virtually, through such applications as Zoom and Skype. In like manner, we should adopt virtual meetings for the National Assembly.
Members should live and remain in their locations and hold meetings for which they would earn allowances each time they sit. We would therefore save on travels, accommodation and other inconvenience allowances. Physical meetings should be held, say, quarterly if and where necessary.
Finally, there is the long pending issue of the constitution. When we hear people refer to the constitution, there is this impression created that our constitution is flawless and sacrosanct. We all know that this is not true. For starters, the 1999 constitution was foisted on us by the military. The flaws are so glaring that there is no gainsaying the fact that it is one of the major factors holding the country down. We have tried to work with it in the past twenty years and should boldly change part of it that doesn’t work for us, if not the entire document, if we so choose. This is where the National Assembly comes into focus again. The National Assembly should help us save our fragile economy, and indeed democracy, by legislating out, any pressure on us. We are aware that some of the recommendations made in this presentationcannot be implemented without amending the constitution. In addition, to achieve the optimum number of legislative seats recommended earlier, the National Assembly should pass a law requiring that each of the 6 geopolitical zones elect only 20 members to the National Assembly from 2023. It can even go the whole hog and legislate away the state structure in favour of the 6 regional structure to help us rein in the persisting high cost of governance.
THE STATE AND THE LOCAL GOVERNMENTS
We will look at the states as that arm of government which constitutes the bulk of the waste of scarce resources in the public sector. Every month, the Federal Allocation Committee meets in Abuja to share money to the component parts of government. According to the approved formula for sharing, 56% of funds goes to the Federal Government, while the remaining 44% is shared by the states. Of this amount, 20% should theoretically go to the local governments through the Joint Local Government Account (JAAC), a body that in all practical terms, is also controlled by the states. This is because the local governments are accountable to the state governments. In most cases, in order to control the funds in the JAAC account, states refuse to conduct local government elections, preferring the subterfuge of appointing ‘Transitional’ Council Chairmen and officers, who are completely accountable to the governors. For some state Governors, they simply continue to renew the appointment of the transitional councils ad infinitum to ensure that democratically elected officers do not emerge. Even when the pressure becomes too much, they would simply organise a selection exercise that would guarantee that only their loyalists emerge at the end of such processes. It was all these that led the National Assembly to pass a law recently, aimed at guaranteeing the autonomy of local governments.
Nigeria’s political structure currently comprises 36 states, along with 774 local governments. The jury is still out as to whether these are very large numbers or not, when considered alongside the economic situation of our country. Could we have done with fewer states and local governments? We shall attempt to provide answers to these posers during this discourse. The thirty-six-state structure in the country implies that we have 36 governors and 36 Deputy Governors. For each of these states, there is a state House of Assembly charged with promulgating laws for the state. All the Houses of Assembly for the 36 states of the federation put together, have a total of 1,022 members. Now, one must bear in mind that each of the members of the State House is entitled to a number of aides and personal staff who get paid ‘somehow’ by the states. The remaining members of the executive in the states equally have their own retinue of advisers, special assistants and senior special assistants. These also come along with a retinue of other personal aides. Each of the 36 states has commissioners (which we have estimated at twenty per state,
Notwithstanding that there are states with more than that). These invariably also function along with their own army of staff and aides. The local governments on their own, have Chairmen, Deputy Chairmen and Councilors, who also have their own aides and personal staff.
In its report titled “State of the States 2019 Edition”, Budgit, a public and civic organisation, revealed that out of the 36 states in Nigeria, only three, viz, Lagos, Rivers and Kano, are fiscally sustainable. Budgit defines fiscal sustainability as a state being able to raise enough Internally Generated Revenue, IGR, to defray its recurrent expenditure. In applying this definition, Budgit assumes that most states would continue to rely on external sources like federal allocation and other exogenous inflows, to fund their capital expenditure. Had the report on the other hand, made the assumption that states would fund their total expenditure from internally generated revenue, the picture would have been markedly, and disappointingly, different. From a purely economic point of view, most of the states in the country are not viable. Like we have seen lately, with the advent of the pandemic and the massive drop in oil prices, the Nigerian economy, just like many others in the world, went into a tailspin.
Even before the pandemic took effect, recent happenings in the technology space, leading to the discovery of alternative energy sources, which are cleaner and renewable, had put our oil-based economy in a precarious situation. The successful attempt to phase out hydrocarbon-fired vehicles for electric cars, which will become the standard in the next few years in Europe, North America and parts of Asia, has further dampened the hope for a recovery in oil prices.
Before the pandemic, majority of the states had been unable to successfully deal with their cash flow challenges. Some State Governors have even been unable to pay the basic salaries of civil servants and other government employees till date. Many of them have already sunk their states into unsustainable debt. According to the DebtManagementOffice (DMO), out of the total national debt overhang of $84.6b, the states and FCT account for $11b or about 13% of the total, as at the end of September, 2020. Some of the states have had to depend on non-guaranteed sources of funds like Paris Club refunds, budget support funds and bailouts from the federal government, and outright loans and advances from Commercial Banks. It must be pointed out that these sources of funds are neither regular nor sustainable. The result is that many states have not been able to render the much-needed services to the people, a mandate which is the fundamental reason for the creation of such states in the first place. One area where most of them have failed woefully is education.
Many of the states have virtually abandoned their role of providing qualitative and affordable education for the youth. While the local governments have the responsibility of providing education at the primary level, the states are saddled with the responsibility of providing education at the secondary level. These responsibilities have long been abandoned in many states, leading not only to low enrolment but also poor output.
Healthcare delivery in most of the states is in a state of neglect. The outbreak of Covid has further exposed the decrepit state of health care in many states except maybe in the states mentioned earlier, others have no standard hospital that can attend to victims of the coronavirus pandemic. Studies have shown that whatever metric one chooses to use, many of our states fall below acceptable standards. Infant mortality remains very high, maternal mortality, access to drugs, access to medical personnel and doctor patient ratio remain in the very poor quadrant.
A look at the state of infrastructure reveals the alarming level of decay in most states of the federation. Roads have completely collapsed, housing is not even being mentioned in some states and drainages, water, electricity and transport systems have practically decayed. All these come as no surprise because most of the states have found themselves in the same problem that the federal government has been, as more than 70% of their annual budget goes to recurrent spending while a meagre 30%, is allocated to capital expenditure.
WHERE DO WE GO FROM HERE?
The urgent question that needs to be addressed now is whether we should continue to keep our existing unviable governance structure even when we are convinced that it is a drain on the nation’s scare resources. I have heard some commentators say that if we saved money that were hitherto stolen from the coffers of government, then the cost of governance would pale into insignificance. While we may not completely discountenance this line of argument, we must quickly add that stopping the leakages is not mutually exclusive with controlling our cost of governance. We therefore argue that indeed, we can and should do both, as we can put a stop to looting and‘relooting’ funds and also cut the cost of governance.
There is also no doubt that some people would be thumping the unemployment card at us on this rationalisation recommendation. The truth is that there is no way a reorganisation of this nature would happen without people losing their jobs. It is also true that government’s role is not to be the biggest employer of labour. Even with the best of intentions, government does not have the capacity to maintain many people on its payroll, rather, it should focus on its proper role of creating the enabling environment for a strong and virile private sector driven economy that would create jobs for people. By releasing the funds used to run government and channelling same to building infrastructure in a massive manner, government would be able to reduce cost of doing business and help the private sector create jobs.
We contend that the advent of Covid -19 has made it impossible for us to continue doing things the way we had been in the last few years. It would take a long time for things to return to normalcy, that is if they will ever do. There are opportunities open to us in the emerging post-Covid-19 era. Evidently, oil has become a more endangered species. Nigeria has borrowed up to her neck given that she now owes close to $85 billion and still counting. We are using 85% of our revenue just to service our debt, leaving us with so precious little to do other things. We are clearly running a huge deficit budget and we are seriously in trouble, a twin trouble of dwindling revenue and mounting debtwhich shows that we have a serious economic crisis in our hands, though some people still livein denial as if by so doing, it will cease to exist.
In the medium term, we want to recommend that our government needs to understand the enormity of the problem. Our concern is that leadership at different levels in the federation don’t seem to be conscious of the fact that there is a problem. This is a major issue because a problem that is not acknowledged cannot be solved. Even when states cannot pay salaries one sees that leadership seems not to bother and continues with the lifestyle that prevailed when we were operating a hundred-dollar-per-barrel-oil economy, when in fact we are struggling to earn half of that amount in the current dispensation. There is this attitude that the cost of running government is a first line charge and must be considered despite the parlous state of revenue. We all know that this is untenable, yet we continue to operate like the proverbial fellow who, while his house is on fire, is preoccupied with hunting rats in the same house.
We also advocate drastic reductionist actions to control costs and be able to carry out the required spending on critical infrastructure for the populace to grow and also enhance internally generated revenue. We may not be in a position to recommend the numbers that would be required in different states, but we believe that if leadership is sincere, it will work towards optimising the numbers both at the level of commissioners, and that of the aides also. Just like we posited at the federal level, we make bold to state that the compensation packages for the leadership at the state and local government levels do not reflect the state of their respective economies.
They will need to make sacrifices for the benefit of their states and local governments.
Closely related to the suggestion of cutting costs is the issue of internally generated revenue in the states and local governments. Governments at these levels should understand that going to share money in Abuja, though had been done for a long time is not a sustainable way to run government. While they could continue to enjoy this for as long as it lasts, they should immediately start thinking of when there is no more money to share in Abuja. Like we had demonstrated above, the time for this to happen does not seem farfetched anymore. To generate revenue locally, governments must invest in creating the enabling environment for businesses to thrive and share in the prosperity it has created.
Frankly speaking, they must give scope for the private sector to lead economic activities in the states.
Expecting that it is possible to collect taxes without making the state and local governments competitive is like attempting to squeeze water out of a rock. Therefore, our governments should do away with the primitive mindset that investing in infrastructure for the populace must be centred on political patronage. Some very viable towns and cities have been allowed to decay by successivegovernments on account of this kind. What those who indulge in this fail to realise is that as they punish their enemies in those towns by not investing in infrastructure and renewals, they at the same time kiss their IGR goodbye.
WHAT THE PEOPLE MUST DO DIFFERENTLY
We maintain that the only reason the masses are suffering in the midst of plenty, the only reason profligacy seems to have triumphed over prudence in Nigeria is that the citizens condone and accept it. The saying that every society gets the kind of leadership it deserves, cannot be truer. We can at least demand accountability from our leaders. But to do this, we must first begin to show interest in the issues. We must also pay attention to how leadership emerges in our little corners. When you do not show interest, you are then asking for the wrong leaders. Elsewhere, before one aspires to an office a few issues must be resolved, and an agenda set, for the electorate and the aspirants to engage in a public discourse. A situation where a few individuals sit down and decide who they want to impose hardly brings the right kind of leadership. After all, everything succeeds and fails on the altar of leadership. Like it is said, the fish gets rotten from the head. It therefore behoves on all of us to critically evaluate and ask important questions before we allow anyone to lead us.
Like we had pointed out earlier, the World Poverty Clock reports that we have close to 90m Nigerians living below poverty line of less than $1.90 or N760 per day. This means that of the total world’s 720m poorest people, over 12% are from Nigeria.
Furthermore, 63% of the number or 56m people reside in the rural areas while 37% or 34m of such people dwell in the urban areas. In fact, about 40m of the people that fall under this category are unemployed. The rest are involved in menial jobs and therefore, live by the day. They are the artisans, the petty traders and labourers, the poor taxi drivers, the peasant farmers, the scavengers and all such people who survive mainly on what they earn daily.
Against the backdrop of the above revelations, one is left to wonder why such is our story, our fate; a people whom God has chosen to bless – a people who, since the advent of the oil boom have their governments share millions of petrodollars every month. So, why are many Nigerians still this poor?
The answer, Ladies and Gentlemen, lies in amongst other things, a structural defect, that ensures that we spend over 70% of our budget on recurrent expenditure and less than 30% on Capital expenditure. The recurrent vote goes mostly into running government while the rest of the people are meant to benefit from the capital expenditure.Our final submission is that we must restructure this country to streamline and tame cost of governance and focus on pulling our people out of poverty. We can choose to do it voluntarily or wait for economic forces to force us to do it. The choice is ours.