The ongoing economic rescue effort through the reduction of cabinet and other political appointment weight should be an all-inclusive affair—not one to be worn on one tripod leg.
The government structure under subsisting democratic system is loaded with high overhead costs. Excessive high cost of governance is a drawback that hampers economic reforms from achieving its potency.
The World Bank has been an unrelenting advocate in this regard. Apart from suggesting to the government to get rid of the fuel subsidy programme and adopt a liberal forex exchange policy, both the World Bank and the International Monetary Fund (IMF) advised the Nigerian government to prune the excessively high cost of governance.
The Bretton Wood institutions are of the opinion that freed funds gotten from reduced governance expenditure could be ploughed into the provision of quality education, improved health care delivery, and other essentials.
In January this year, President Bola Tinubu took significant steps to cut government expenditure by reducing his entourage on foreign trips from 50 to 20 officials. For local trips, he reduced it to 25 officials.
In addition, the vice president’s entourage was cut to five officials on foreign trips and 15 for local trips.
The World Bank’s position
The World Bank and International Monetary Fund are consistent in their advice to the government to prune the excessively huge governance cost believed to be a major drain of government scarce resources.
According to the World Bank, the Nigerian government is weak when it comes to reducing the cost of governance. The financial institution criticised wasteful spending in government, noting that the huge governance cost represented a major drain of government resources.
In a major report on Nigeria’s economy presented in Abuja two weeks ago, the World Bank suggested four policies that President Bola Tinubu’s administration should adopt to reduce the cost of governance while providing relief to Nigerians.
The recommendations are contained in the World Bank’s Nigeria Development Update report for October 2024, titled ,”Staying the Course: Progress amid Pressing Challenges.” The report assesses recent economic and social developments and prospects in Nigeria, placing them in a long-term and global context.
Recommendations
In the wisdom of the bank, the Nigerian government needs an infusion of prudence in managing her finances to stay above the economic storm. In its recommendations to the Federal Government, it suggested cut in wasteful expenditures that are not essential, such as the purchase of vehicles and external training.
It urged the government to reduce cost of collection for MDAs and government-owned entities, and, in addition, accelerate the rollout of targeted cash transfers.
“Allocate savings from PMS subsidy removal to sustainably expand cash transfers and other well-targeted support,” the World Bank also recommended. “It is thus essential to ensure that social protection systems offer comprehensive coverage, adequate benefits, and flexibility to adapt to shocks.
Ramping up social protection efforts and improving the quality of spending on development priorities is vital to helping households cope with the difficult economic situation,” the report added.
The bank noted that on the spending side, expenditures were expected to rise due to a higher wage bill from raising the minimum wage, increased capital investments in physical and human capital, and expanded social programs.
Governance cost
The current administration has demonstrated commitment to prune excessive costs of governance. President Tinubu last week shrunk the size of his cabinet ministers.
While he merged some MDAs, the president dropped five ministers in a major shakeup long, long predicted. Twenty-four hours after he dropped five ministers and appointed seven new ones, as well
The government’s economic reform policy would be a hoax unless it is complemented with a drastic cut in governance costs across the three tires of government
as the redeployment of 10 other cabinet members, he issued a memo restricting ministers, ministers of state, and heads of agencies of the Federal Government to a maximum of three vehicles in their official convoys.
The new policy directive announced last Thursday via a statement signed by the President instructed that no additional vehicles would be assigned to the public officials. In the directive, President Tinubu ordered all ministers, ministers of state, and heads of agencies to have at most five security personnel attached to them.
The security team will comprise four police officers and one Department of State Services (DSS) officer. No additional security personnel will be assigned, he ordered.
The President instructed the National Security Adviser to engage with the military, paramilitary, and security agencies to determine a suitable reduction in their vehicle and security personnel deployment.
The directive, whose implementation is with immediate effect, instructed affected officials to comply with these new measures, thus underscoring the urgency and seriousness of these changes.
Scope
The quest for reduction in governance costs should be a holistic approach and inclusive too. The sub-national level of the government must take a similar step. There is a huge waste of public resources at the state government level.
Most state governors fly on hired aircraft for state functions of less than two hours duration. They go about with multiple security aides. The number of vehicles on governors’ convoy exceeds an affordable financial limit.
Most state governors hire aides and political appointees in hundreds. The larger portion of the states’ allocation and independent revenue generated are funnelled into paying the salaries and emoluments of hundreds of political appointees.
This leaves the state with a meagre funds for infrastructure development. Over the years, most state expenditures, especially overheads, have been on a steady rise.
A report by BudgIT analysing states’ fiscal data revealed that growth in public spending at the state level had not translated meaningfully into economic performance as there’s still a high rate of unemployment, decaying infrastructure, and a worsening poverty rate across states.
Most states ended up spending their monthly FAAC allocations and IGR on overheads and still secured loans from commercial banks and raised bonds to meet up other pressing obligations.
A few governors have announced steps to prune governance costs. For instance, Governor Uba Sani of Kaduna State has announced measures by his administration to cut the cost of governance.
Amongst austerity measures, including a ban on purchasing new vehicles for officials and reducing allowances for commissioners, advisers, and the governor himself, who now receives half his salary monthly.
According to him, these measures have enabled the administration to focus on essential services, including education, healthcare, and other infrastructure development, notable among which are upgrading of schools, healthcare facilities, and critical infrastructure, such as roads and bridges.
Last line
The government’s economic reform policy would be a hoax unless it is complemented with a drastic cut in governance costs across the three tires of government.