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.”
Once Again The National Grid Collapsed
Nigeria’s electricity transmission system, also known as the National grid, has suffered another system collapse, plunging Lagos, the country’s commercial capital, Kano and other major cities into a blackout.
The collapse, which occurred about 11.00 am on Tuesday, was confirmed by two of the country’s electricity distribution companies in separate messages to their customers.
“We regret to inform you that the power outage being experienced across our franchise – Kaduna, Sokoto, Kebbi and Zamfara states – is as a result of the collapse of the national grid,” Kaduna Electric said on Twitter.
Eko Electricity Distribution Company Plc, in a text message to its customers, said: “Dear customer, there is a partial system collapse on the national grid. Our TCN partners are working to restore supply immediately. Please bear with us.”
The grid, which is being managed by the government-owned Transmission Company of Nigeria, has continued to suffer system collapse over the years amid a lack of spinning reserve that is meant to forestall such occurrences.
Spinning reserve is the generation capacity that is online but unloaded and that can respond within 10 minutes to compensate for generation or transmission outages.
FG Consider Diversification To Generate Revenue
As revenue from oil nosedives following incessant global price fluctuations, the Federal Government is now channeling efforts to the development of minerals in the mines and steel industry to shore up foreign exchange earnings.
Officials of the Federal Ministry of Mines and Steel Development said on Wednesday that while there had been concerted efforts to develop various minerals in the sector, much emphasis had been placed recently on the development of bitumen, barite and gold.
They told our correspondent in Abuja that the government through the mines and steel ministry was striving to diversify the Nigerian economy away from oil as the major foreign exchange earner for Nigeria.
They also confirmed that large quantities of gold had been discovered in various locations in Zamfara and Osun states.
Asked if the government had initiated programmes to explore the minerals and boost revenues now that the country’s income had plunged, the Special Assistant on Media to the Minister of Mines and Steel Development, Ayodeji Adeyemi, replied in the affirmative.
He said, “Indeed, the ministry has the mandate to generate revenue and diversify the economy through the mines sector.
“And bitumen is one of the key resources which the nation is abundantly endowed with, that has been identified for strategic development.”
To buttress his position, Adeyemi shared some recent presentations of the Minister of Mines and Steel Development, Olamilekan Adegbite, where the minister said his ministry was gathering data on some bitumen fields across the country to attract investors.
“A lot of people are interested in bitumen, which is coming from both local and foreign investors. However, we are still acquiring data in some of the fields,” the minister stated.
On barite, the minister said the mines and steel ministry was working on raising the quality of barite produced in Nigeria to an internationally acceptable standard, as certified by the American Petroleum Institute.
Adegbite said his ministry had contracted a consultant to help raise the standard in the local production of barite to ensure that oil industry players make use of barite produced in Nigeria as against importing the commodity from other countries.
He said, “Barite is a critical weighting material in drilling fluids used in the oil industry. We have a lot of barites but the issue is that it is not produced to API standards. However, we are putting a system in place which would be ready to launch in about July.
“We have got the millers who can produce barite to API standard. Hence we will be able to compete with foreigners and it would save Nigeria a lot of foreign exchange in import substitution.”
On the development of gold, officials at the ministry further stated that the commodity had been aggregated for the production of bullion bars and that this was the first time that such aggregation was happening in Nigeria.
They stated that the gold was sourced from artisanal miners, while the final refining to bullion was done in Turkey.
The sources stated that the ministry had registered two refineries that would now refine to LBMA standard when they come on stream. LBMA is the de facto standard, trusted around the world.
Nigeria Sovereign Investment Authority Generates N160.06 Billion in 2020
The Nigeria Sovereign Investment Authority (NSIA) generated revenue of N160.06 billion in 2020, according to the latest audited financial reports announced by the Managing Director of NSIA Mr. Uche Orji.
The NSIA income came from devaluation gain of N51 billion, and core income of N109 billion compared to N33.07 billion in 2019.
But Orji lamented: “Covid-19 adversely affected logistics around infrastructure projects, especially the toll road projects and the presidential fertiliser initiative.”
Despite the pandemic, the Authority achieved 33 percent growth in Net Assets to N772.75 billion compared to the previous year’s performance of N579.54 billion.
Orji said the NSIA “received additional contribution of $250 million; and provided first stabilisation support to the Federal Government of $150 million withdrawn from Stabilisation Fund last year.”
The same year, the NSIA received $311 million from funds recovered from the late General Abacha from the United States Department of Justice and Island of Jersey for deployment towards the Presidential Infrastructure Development Fund (PIDF) projects of Abuja-Kaduna-Kano Highway, Lagos Ibadan Expressway and Second Niger Bridge.
In response to COVID-19, Orji said: “NSIA partnered the global Citizen, a not-for profit group, to form the Nigeria Solidarity Support Fund. Separately NSIA acquired and distributed oxygen concentrators to the 21-teaching hospital as part of corporate social responsibility; in addition to staffing support to the Presidential taskforce on COVID-19.”
In 2020, the NSIA “invested additional capital into NG Clearing, the first derivative clearing house in Nigeria to maintain NSIA’s shareholding at 16.5 per cent following the company’s rights issue of 2020″ Orji said.
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