Tinubu Under Scrutiny As Cost Of Governance Continues To Rise

Constitutionally, President Bola Ahmed Tinubu has about 26 days to name cabinet members. As his government continues to take shape, he has been told over and over again that he needs to cut the cost of government to match the present economic situation.

Already, the country’s finances are being strained by dwindling income from different sources, new economic policies, rising debts, and responsibilities to pay off debt. However, the government wants to run the country on tight budgets that can’t lead to real growth.

As these things are happening, development planners and experts in the public sector point out that fake civil service costs Nigeria about 30% of its yearly budget. They also say that the Federal Government could get about N12 trillion a year from realigning its national workforce.

On March 17, 2023, former President Muhammadu Buhari signed a law that required the new president and governors to name their choices within 60 days of taking the oath of office.

Out of the country’s $16.3 trillion budget last year, $6.8 trillion was spent on salaries and other costs related to people. This year, the number is higher because N8.5 trillion of the N21.82 trillion planned will be used to pay salaries, benefits, and other costs for public officers.

In fact, it is thought that by merging government Ministries, Departments, and Agencies (MDAs) that do the same things, Nigeria could save as much as N12 trillion per year. This is true if the government follows the suggestions in the Stephen Oronsaye report on lowering the cost of government. Nigeria is in a lot of debt right now. According to the Debt Management Office (DMO), the country’s overall debt stock is now at N49.85 trillion.

Still, the rising cost of government takes up a big chunk of the annual budget, leaving only a small amount for projects that help the country grow. During Buhari’s eight years in office, only 19.7% of the total budget, or N14.5 trillion, was spent on capital expenditures (CAPEX).

Most of this money went toward office tools and other miscellaneous things. The overall amount spent on CAPEX was less than half of the more than N30 trillion in debts that the government ran up.

In eight years, N59.2 trillion was wasted on office costs, salaries, and other recurring costs, as well as paying off debt. The African Development Bank (AfDB) had warned that the rising cost of debt payment, which the World Bank said could be more than 100% of retained earnings, would make it harder for Africa to spend in the infrastructure it needs to grow.

The DMO also said that between October and December 2022, Nigeria spent a total of N550.51 billion on servicing its internal debt and $312.27 million (N143.74 billion) on servicing its foreign debt. Nigeria paid N874.13 billion to service its domestic debt from January to March 2023. It also paid $801.36 million (N368.87 billion) to service its foreign debt, for a total of N1.24 trillion.

An in-depth look at Nigeria’s budget for 2023 shows that all government MDAs will get a sum of N18.04 trillion. With 541 MDAs, it is thought that each one will get about N33.27 billion.

If Oronsaye’s suggestion that the number of MDAs be cut down to 161 is followed, Nigeria will only need a little more than N5 trillion to pay for all of the MDAs. This will save the country over N12 trillion.

But that’s just one part of the trip. Even more worrying is the fact that elected government leaders live extravagantly and aren’t good with money.

Nigeria’s budget for 2023 says that the Presidency alone will cost N14.2 billion, while the National Assembly’s budget is N228.1 billion. Between 2016 and October of last year, former President Buhari spent about N81.80 billion on the Presidential Air Fleet (PAF) and trips abroad.

The huge numbers include N62.47 billion for running and maintaining the PAF, N17.29 billion for trips abroad and around the country, and N2.04 billion for other costs. Since May 2015, when Buhari took power, the Presidency has taken care of 10 planes.

President Bola Ahmed Tinubu joined the race to get into the Guinness Book of World Records last week with his over 120-car parade. This is happening at a time when Nigerians are fighting to make ends meet because of the high cost of living in the country.

A lot of people think that now is the best time to find the political will to put the recommendations of the Stephen Oronsaye Report into action. This is because the Federal Government is looking for ways to cut government costs because oil sales aren’t bringing in enough money.

The Presidential Advisory Council recently gave President Tinubu a report in which it suggested merging the Federal Inland Revenue Service (FIRS), the Nigerian Customs Service (NCS), and the Nigerian Maritime Administration and Safety Agency (NIMASA) into the Nigerian Revenue Service (NRS). This would make it easier for the Federal Government to collect all direct and indirect taxes and levies.

Stakeholders saw this suggestion as a sign of hope that the current government might implement the Oronsaye report, but they also called for caution because the goal seems to be mostly to bring in more money and not much on cutting costs.

In response to the council’s plan, Mr. Eze Onyekpere, the lead director of the Centre for Social Justice (CSJ), said that there is no real proof to show that the merger will make revenue collection more efficient and open.

He says that even though these goals are good, it is not clear that a merger is the best way to help them come true. “It looks like these goals can be met by supporting these organizations as they are now. Also, it will be very hard to bring together groups with different goals. The council’s suggestion is based on the idea that these organizations only exist to get money.

He also said that the job of the Nigerian marine Administration and Safety Agency (NIMASA) is to make sure that marine services in Nigeria follow the best standards around the world.

“Its main areas of focus are effective maritime safety administration, maritime labor regulation, preventing and controlling marine pollution, search and rescue, cabotage enforcement, shipping growth and ship registration, training and licensing of seafarers, and maritime capacity development. “Most of NIMASA’s jobs go beyond figuring out how much money to collect and how much to charge,” Onyekpere said.

He pointed out that the Nigeria Customs Service and FIRS both bring in money for the government, but they do so in different ways. He said, “These different ways of bringing in money need to be deepened through specialization, institutional autonomy, and the use of knowledge and experience gained over the years.”

“If the council’s suggestion is put into action, it will create a revenue behemoth that is too big and hard to manage. If anything goes wrong with how it is run, the whole revenue chain will suffer.” Instead of merging, it is suggested that these agencies should make it official to work together more, share information, and talk about good ideas. “They should be made stronger as they are,” he said.

Dr. Muda Yusuf, the CEO of the Centre for the Promotion of Private Enterprise (CPPE), said that the whole process needs to be looked at very carefully so that the government doesn’t make a problem worse while trying to solve it. He said, “I think it’s a plan we need to look at very, very carefully so that we don’t make a bigger problem when we’re trying to solve one.”

“Bringing in money is not the main job of NIMASA. The main job is to keep the seas safe. Now, if you combine the two agencies and make an accountant the head of the new one, how will that person be in charge of security?

“We have to watch out. If it’s about making money, I think a system can be made so that FIRS can handle the money part and the money will move directly to FIRS. This way, you can leave the core services to the people who know the business best.

“So it’s something that needs to be talked about in a very thorough way. No matter what happens, this process needs to involve the stakeholders in a strong way.”
Professor Uche Uwaleke, a professor at Nasarawa State University, Lafia, thinks the merger is a great idea because it will improve efficiency and openness and stop money from leaking out.

“When revenue collection companies join, it tends to lead to what we call “economy of scale.” This means that the cost of collecting revenue goes down, and it also makes it easier to standardize how revenue is collected. It helps the government see how much money is coming in as a whole.

“This is not a new habit. In the UK, for example, there was the Inland Revenue Service and Her Majesty’s Customs before 2005. Both were different at first, but later they were put together because they thought it was best. “In the UK, Her Majesty’s Revenue and Customs Service is in charge of collecting all kinds of taxes and fees, such as income tax, company income tax, indirect tax, and customs duties,” he said.

He also said that the same thing is happening in India. He said that the different agencies will be folded into the new agency as units, but their main jobs will still be done by the same organization. He also said that the move fits with the plan to lower the cost of government, which is part of the Oronsaye Report and calls for merging agencies that do the same things.

“As they are now, Customs and FIRS do some of the same things. Uwaleke said, “Let’s do this because we can’t keep doing the same thing and hope for a different result.”

In response, Auwal Ibrahim Musa (Rafsanjani), Executive Director of the Civil Society Legislative Advocacy Centre and Head of openness International in Nigeria, said that he supported any policy that would increase openness, efficiency, and stop income leaks.

He said that the Oronsaye Report already said that government agencies and parastatals that do the same things should be united. He did warn that it doesn’t make sense if it’s just a way to give jobs to the “boys” without making things better.

“Since they all need changes to the law, they need to look at it very carefully. We need to look at them again to see if we need to merge them and to find out if doing so will improve service. Again, we need to think about how to help people who might lose their jobs because of the merger, Rafsanjani said.

Professor Godwin Oyedokun of Lead City University in Ibadan thinks that the system needs to be made more secure to stop money from leaking out. Ayedokun gave the example of a house with more than one door and said, “If your house has 10 doors, you need 10 security systems to protect it.”

He said, “Nigeria is losing a lot of money because there are so many agencies that collect taxes.” We need a single body to collect taxes, just like how it is done in other countries. Not only will leaks be stopped, but the cost of collecting will also go down.

Kelvin Emmanuel, the CEO of Dairy Hills Limited, thinks that the Stephen Oronsaye report is the most complete list of changes for the public sector in Nigeria that have been put forward.

He said that the National Assembly needs to change the Federal Character principle, which says that each state and the FCT should have 2.7% of the seats on the Federal Executive Council (FEC), before the report can be used.

He also said, “Nigeria needs to switch from a representative model of government to a performance-driven model, where merit is rewarded over the state of origin.” The study suggests merging and getting rid of MDAs as a way to save money and get rid of parastatals, offices, and agencies that don’t do their jobs well.

In a time of austerity, the government must also automate the procurement process to cut down on procurement fraud and get rid of wasteful spending. It must also enforce section 22(2) of the Fiscal Responsibility Act of 2007, which says that MDAs must send back 4/5th of their operating surplus to the Consolidated Revenue Fund (CRF).

In his comments, Professor Sheriffdeen Tella said, “The high cost of governance happens on at least two levels: the costs of having a lot of different government agencies (MDAs) and doing the same job twice, which the Oronsaye committee looked into but didn’t fully apply its advice on. Second, the wages and salaries of political actors, especially the legislature and public important officers or parastatals, which determine their salaries and allowances outside of the official Revenue Mobilization and Fiscal Commission, must be looked at. Third, the unrestricted number of political assistants for political office holders, especially governors, must be dealt with.

Professor of Economics at Olabisi Onabanjo University, Ago-Iwoye, Tella also said that the high cost of government is partly caused by the waste of money on keeping old government properties like factories, presidential planes, and buildings, among other things.