Connect with us

Economy

Consistent Drop in Revenue Forced FG To Review Cost of Governance

Published

on

FEC Meeting- Investorsking

The federal government has initiated an order to cut the cost of governance in the face of dwindling revenue occasioned by the headwinds of the COVID-19 pandemic and the attendant global economic tailspin.

Minister of Finance, Budget and National Planning, Zainab Ahmed, said yesterday in Abuja that the measures were targeted at reducing recurrent expenditure, which is projected to gulp about 41.5 per cent of the total provisions of N13.588 trillion in the 2021 budget, amounting to N5.64 trillion.

She stated that President Muhammadu Buhari had directed the salaries and wages committee to review the payroll of public servants as well as consider the merger of some agencies.

Besides, the government will also remove some unnecessary items from the budget as a move to cut the cost of governance.

Ahmed spoke at a policy dialogue on ‘corruption and cost of governance in Nigeria,’ organised by the Independent Corrupt Practice and other Related Offences Commission (ICPC).

Also at the occasion, the Director-General, Budget Office, Mr. Ben Akabueze, proposed a constitutional amendment to pave the way for the restructuring of the country into six regions instead of the present 36 states structure. This, he said, would help to reduce the rising cost of governance.

Ahmed stated that the proposed cost-saving measures was aimed at streamlining government expenditure with revenue.

She said: “We still see government expenditure increase to a terrain twice higher than our revenue.”

She urged all government agencies to come together to trim the cost amid the country’s dwindling revenue.

According to her, the nation’s budgets are filled every year with projects that are recycled and that are also not necessary.

“Mr. President has directed that the salaries committee that I chair, work together with the head of service and other members of the committee to review the government pay rolls in terms of stepping down on cost,” she added.

The minister said the federal government would also review the number of government agencies in terms of their mandates, adding that the government will consider merging two agencies with the same mandate.

She said: “We need to work together; all agencies of the government to cut down our cost. We need to cut down unnecessary expenditures–expenditures that we can do without.

“Our budgets are filled year-in-year out with projects that we see over and over again and also projects that are not necessary.”

Akabueze, in a paper titled: ‘Reducing the Cost of Governance in Nigeria,’ described the country’s current system of democratic governance as very expansive and expensive.

He said the constitutional provision that mandated the president to appoint a minister from at least each of the 36 states, should be amended to reduce the number of federal cabinet members.

He cited the large federal structure to be one of the drivers of the high cost of governance and engendering public outcry that government spending is largely on recurrent activities at the expense of capital projects.

While describing the subsisting fiscal policy as unsustainable, Akabueze said the persistent call for the reduction of governance cost had continued to gain momentum in view of its impact on government fiscal situation.

He stated that the cost of governance is considerably cheaper in the United States from where Nigeria copied the presidential system of government.

According to him, the general cost of administration in the United States is less than 10 per cent of the total annual budgets while the United States, with a higher population than Nigeria, has only 15 secretaries and executive departments as against Nigeria, which has 27 ministers, 16 ministers of state and 27 ministries.

He lamented that the federal government is maintaining 943 Ministries Departments and Agencies (MDAs) with many of them having duplicated functions.

“There are 541 federal government-owned public corporations and enterprises. We need to cut these in order to install efficiency in governance. Also, we have a bloated civil service. The current civil service structure and size is clearly unsustainable for Nigeria’s economy,” he said.

He warned against the tendency where the civil service is accorded political, ethnic and religious patronage.

“A comprehensive staff auditing and job available is imperative to determine the right size of the federal civil service without having any adverse effect on the service. And to avoid duplication in the civil service, the staff rationalisation programme should be gradual,” he added.

Akabueze said the federal government’s recurrent spending accounted for more than 75 per cent of the actual MDAs expenditure between 2011 and 2020, in addition to personnel cost which accounted for government significant spending.

He accused the MDAs of incurring excessive personnel costs and wilfully indulging in wide range of underhand practices that are driving governance cost out of the ordinary.

According to him, in 2016, personnel cost was N1.87 trillion while at the moment the same cost has spiralled to over N3 trillion.

The effect of the rising cost of running government, Akabueze added, is the reason why only 30 percent of the budget is available for capital project and the cause behind many abandoned capital projects nationwide.

He said: “Personnel cost accounted for 31 per cent and 63 per cent of the total spending and retained revenue in 2020. In the USA, the general administration cost is less than 10 per cent of total budget.’’

He challenged Nigerians to task themselves on governance, saying that the success story of the Asian Tiger was a product of sound leadership and determination.

ICPC Chairman, Prof. Bolaji Owasanoye, described the cost of governance as the driver of corruption in Nigeria.

He said the government was committed to improving the country’s revenue by focusing on new and existing sources and by streamlining payroll.

He added that the federal government would also ensure removal of subsidies and reduction in the cost of contracts and procurement are for the benefits of the vulnerable.

He listed critical area of concern to include payroll padding and the phenomenon of ghost workers.

The federal government’s intended cost-cutting approach is coming amid a report by a public finance transparency advocacy firm, BudgIT that the 2021 federal budget contains over 316 duplicated capital projects worth N39.5 billion.

BudgIT, a public finance transparency advocacy firm, said in a report that the duplication of projects was just one among other loopholes for corruption in the budget.

It said: “Our investigations into the 2021 budget revealed at least 316 duplicated capital projects worth N39.5 billion, with 115 of those duplicate projects occurring in the Ministry of Health. This is very disturbing, especially considering the health infrastructure deficit and the raging COVID-19 pandemic affecting Nigeria.

“BudgIT also found zero audit records of the N10.02 trillion received by the security sector between 2015 and 2021.”

It also alleged that budgetary provisions were made for agencies for projects that are beyond their execution. It added: “Even worse, agencies now receive allocations for capital projects they cannot execute. For example, the National Agriculture Seed Council has an allocation for N400m to construct solar street lights across all six geopolitical zones, while the Federal College of Forestry in Ibadan in Oyo State got N50m for the construction of street lights in Edo State.

“These are aberrations that need to be corrected.”

Continue Reading
Comments

Economy

Remittances To Africa Projected to Drop By 5.4% in 2021: UNECA

Published

on

Remittance-Investors king

According to a new report from United Nations Economic Commission for Africa (UNECA), remittances to Africa are projected to drop by 5.4 percent to $41 billion in 2021 from $44 billion last year.

The report notes that the bleak situation has been compounded by the high cost of sending money to Africa from abroad, as the cost of remittances to Africa remains the highest in the world at 8.9 percent.

Remittances are an essential part of economic activity in low and middle-income countries (LMIC), including Africa. Due to the economic crisis induced by the COVID-19 pandemic and shutdown, global remittances are projected to decline sharply by about 20 percent in 2020. For Africa, remittances are projected to drop by 5.4 percent to $41 billion in 2021 from $44 billion last year, according to a new report by the United Nations Economic Commission for Africa (UNECA) projects remittances.

The report, titled “African regional review of the implementation of the Global Compact for Safe, Orderly and Regular Migration”, notes that the projected fall is mainly due to a fall in the wages and employment of migrant workers, who tend to be more vulnerable to loss of employment and wages amid the pandemic.

The report adds that the bleak situation has been compounded by the high cost of sending money to Africa from abroad as the cost of remittances to Africa remains the highest in the world at 8.9 percent.

“A migrant sending $200 to his/her family in Africa pays an estimated nine percent of the value of the transaction, indicating that the continent is still far from achieving the three percent target set out in Sustainable Development Goal 10,” the report stated.

This signals huge deficits in millions of African households depending on their friends and relatives abroad for a financial lifeline, thus threatening a perpetuation of macroeconomic imbalances on the continent.

The Addis Ababa Action Agenda of the Third International Conference on Financing for Development and Sustainable Development Goal indicator 10(c) provides that countries should, by 2030, reduce to less than three percent the transaction costs of migrant remittances and eliminate remittance corridors with costs higher than five percent.

In response, some African countries have taken action to lower the costs of remittance transfers by offering diaspora bonds to investors and relaxing foreign exchange controls to allow for electronic and mobile money transfers at reduced costs.

“It should be noted, in that regard, that the use of digital money transfer platforms reduces transfer fees in Africa by an average of 7 percent,” says the report.

“Private financial institutions also offer incentives to encourage members of diaspora communities to use their services, including low transaction fees for remittances, and facilitate diaspora-initiated projects, especially in the real estate sector. These measures all promote the financial inclusion of migrants and their families.”

The report recommends that member States support migrants and their families through adopting laws and regulations to facilitate the sending and receiving of remittances, including by fostering competition among banks and other remittance handling agencies to establish low-cost transfer mechanisms.

In addition, the report recommends that African countries make every effort to reduce the transfer costs associated with remittance payments by making more extensive use of digital transfer solutions, such as MPESA, and by streamlining the regulatory constraints associated with international money transfers.

Finally, the report concludes that the African States should also engage with destination countries to identify ways to enhance the provision of basic services to migrants in those countries as remittances are a primary source of national income for at least 25 African countries, all of which have large diaspora populations.

Continue Reading

Economy

Nigeria’s Inflation Rate Declines to 17.01 Percent in August 2021

Published

on

Lagos Nigeria - Investors King

Prices moderated further in Africa’s largest economy, Nigeria, in the month of August despite rising costs and growing economic uncertainties.

Consumer Price Index (CPI), which measures inflation rate, grew by 17.01 percent year-on-year in August 2021, representing a 0.37 percent decrease when compared to the 17.38 percent recorded in the month of July 2021.

On a monthly basis, inflation rate increased by 1.02 percent in August 2021, slightly higher by 0.09 percent than the 0.93 percent filed in July, the National Buruea of Statistics (NBS) stated in its latest report.

Prices of goods and services continued to drop on paper in recent months even as costs are hitting record highs across most sectors in Nigeria.

Naira has plunged to a record-low against the United States Dollar and other global currencies following the Central Bank of Nigeria’s decision to halt sale of forex to Bureau De Change Operators in an effort to curb illicit financial flows and forex supplies to the black market.

Naira plunged to N560 per United States Dollar at the black on Wednesday to set a new record low against the greenback and subsequently dragged on cost of import goods and profit of import dependent businesses.

Food Index also rose at a slower pace in August 2021 even with Nigerians complaining of over 50 percent increase in the price of food items. Food composite index rose by 20.30 percent in August, at a slower pace when compared to 21.03 percent recorded in the month of July 2021.

The rise in food index were caused by increases in prices of Bread and cereals, Milk, cheese and egg, Oils and fats, Potatoes, yam and other tuber, Food product n.e.c, Meat and Coffee, tea and cocoa, according to the NBS report.

On a monthly basis, the food sub-index grew by 1.06 percent in August 2021, representing an increase of 0.20 percent from 0.86 percent filed in the month of July 2021.

Looking at a more stable food index guage, the twelve-month period ending August 2021 over the previous twelve-month average, food index increased by 0.34 percent from 20.16 percent achieved in July 2021 to 20.50 percent in August 2021.

Continue Reading

Economy

Glo to Reconstruct 64km Ota-Idiroko Road Using Tax Credit Scheme – Fashola

Published

on

Tax Credit - Investors King

Mobile telecommunications giant, Globacom, has offered to reconstruct the 64 km Ota-Idiroko road in 2022, using Federal Government’s Tax Credit Scheme.

The Minister of Works and Housing, Mr. Babatunde Fashola, announced this on Wednesday during an inspection tour of the ongoing reconstruction of the Lagos-Ibadan Expressway.

“From Ota to Idiroko, we don’t have a contract there, but Chief Mike Adenuga of Globacom has offered to construct that road using the tax credit system.

“So, that has also started, they are doing the design, and hopefully, by sometime early next year, they should mobilize to site. The real reconstruction is going to happen if we have a deal with Glo,” Fashola said.

He said that FERMA would carry out rehabilitation works on the Ota-Idiroko road between October and December.

“But between now and December, FERMA has gone to take measurements there and they will move there from the end of September if the Ogun State Government does two things.

“Clear all the squatters, traders, and the settlers on the road and help us manage traffic and the governor as at last night has committed to doing that for us,” the minister said.

He said efforts were on to bring in Flour Mills of Nigeria Plc and Unilever to reconstruct the Badagry link to the Lagos-Ota-Abeokuta road under the Tax Credit Scheme of the Federal Government.

The minister said that the Lagos-Ota-Abeokuta road had become a problematic road due to years of neglect by previous administrations, as such the highway required a huge investment.

He commended Gov. Dapo Abiodun for his passion for fixing roads in Ogun State, adding that the reconstruction of the failed portions of the Lagos-Ota-Abeokuta road would be completed by December at the cost of N13. 4 billion.

The minister added that the project would be handled by the Federal Road Maintenance Agency (FERMA).

He called on federal lawmakers representing Lagos and Ogun States to ensure increased budgetary allocation for the roads to ensure their speedy completion to ease the hardship on road users.

“When people say Fashola is looking away, I am not looking away, I just can’t find the money,” he said.

He also called for support of citizens for parliamentarians to ensure more borrowing for infrastructure upgrades because the future depends on development strides today.

Also speaking during the inspection tour, Gov. Dapo Abiodun of Ogun said that the project became necessary because Ogun is the industrial hub of the nation that needed good roads for interconnectivity to boost commerce.

He said: “We have given the commitment that we will relocate traders, we will control and manage traffic, whatever that it is we need to do, we will ensure that we begin to bring succor and needed relief to our people.

“The state of that road today is pitiable. I went on that road myself and I felt bad for our citizens.”

Abiodun said the state government was ready to borrow to reconstruct the Lagos-Ota-Abeokuta Road should there be a delay in the Sukuk funding for the highway.

“If this Sukuk bond would not happen immediately, the state government is willing to go and borrow against that promise so that we can mobilize the contractor,” he said.

He thanked Fashola for the efforts to reconstruct roads in the state and pledged the support of the state government in fixing the highways.

Continue Reading




Advertisement
Advertisement
Advertisement

Trending