Close-up of the flag of Nigeria on satin texture.

By M.N Ibrahim Esq.

Recently, many voices have added to the call for the need of the Nigerian government to reshape and readjust itself to meet the current economic realities of the world. Owing to the Covid-19 pandemic, which has negatively affected commerce, trade and caused the price of crude-oil to dip to an alarmingly low-price of $10per barrel and Nigeria is having to stare at the stark possibility of becoming bankrupt. Whether this precarious eventuality could be tackled, avoided, or managed is a question of the government’s readiness to do so.

Every government aims to ensure that the wheels driving the social contract between the people of a nation and its government never comes to a halt. To ensure that these wheels are oiled regularly, the government needs funds which must be sufficiently acquired and efficiently managed. Hence, the government simply cannot exist without adequate means and resources evenly distributed between the various expenditures for continual infrastructural developments as well as maintaining the mechanism of governance through which these developments can be carried out. This indeed should not result in a panic-stricken reality where the cost of doing a job surpasses the value of the job done. It then goes without saying that government must be able to balance between its recurrent and capital expenditure.

The justification for relying on the budgeted amount/percentage of recurrent expenditure of a government in its total budget as an indicator of the cost of governance is due to the assertion that capital expenditures impact more positively on the economy in respect of employment, investment and other economic growth-inducing activities, a research from the World Bank has shown. Previously, Nigeria in 2018 apportioned N6.25 trillion out of its N9.12 trillion budget to recurrent expenditure. Leaving less than a quarter of the total budget – N2.87 trillion – to capital expenditure. Whilst in 2019, Nigeria traversed the route once again by budgeting N4.04 trillion Naira as recurrent expenditure, leaving N2.031 trillion for capital projects in its total budget of N8.83 trillion.

Still on the same path, the Nigeria budget for the year 2021 has about N6.11 trillion as the recurrent outlay and only N3.85 trillion as the capital outlay. The entire budget is with a deficit of N5.20 trillion (which will be borrowed). More alarming to this mysterious submission is that a chunk of this recurrent expenditure will go straight to debt servicing. What more is there to be said when the recurrent expenditure almost doubles the capital expenditure forecasts in the budget? If the cost of running the nation gulps this much of the budget, is it not right for every Nigerian to be worried and concerned about the direction the country is moving?

A spending pattern like the above which is typically biased against capital projects is inimical to growth and development, to say the least as they invariably promote wastages and inefficiency. The outbreak of covid-19 pandemic has exacerbated the financial woes of Nigeria as the country’s dependence on crude oil revenue has made its economy vulnerable and fragile.

The Speaker of the Nigeria Federal House of Representatives notably stated that “the COVID-19 pandemic has devastated global economy at a time social welfare demands on the public purse were higher than they had ever been. Nigeria’s present reality called for nothing short of a wholesale reform of its governance structures, systems, and processes.

“Such efforts must of necessity, begin with drastic reductions in the cost of governance, coupled with determined efforts to drive economic diversity and innovation in the non-oil sector. There are no longer any sacred cows, protected spaces, or classes. Every area of our national health policy, economic policy, tax policy, education policy and security architecture are now on the table for reform”.

The minister of finance recently cried out that insufficient revenue has been the major problem in the effective implementations of the federal budgets. Despite this outcry about revenue shortfall, not much has been seen done by the authorities to address this unsustainable level of the cost of governance, which invariably has not reduced despite these clearly identified revenue challenges.

It is obvious, that the cause of this mess Nigeria is currently in is both institutional and attitudinal. All hope is not lost, if the federal government and policy makers can take another look at the deleterious system of government that currently defines the structure of governance in Nigeria.

From the prism of its institutions, the appropriate structure of government is one major issue that is needs to be addressed in reducing the high cost of governance in Nigeria. Hence the bicameral nature of our legislature, for instance, needs to be critically examined. Given our current economic circumstances, can the country afford to continue with this arrangement when some developing countries have modified imported parliamentary structures to suit their peculiar circumstances?

Why can’t Nigeria do the same? Operating a bicameral legislature with its members raking in outrageous take home packages that has no bearing whatsoever on the grim economic realities of the country. The House of Representatives Spokesman Benjamin Kalu in a remark on the 12th of November 2020 while briefing journalists in the National Assembly, premium times reports, argued that it is the executive arm of government that controls a larger chunk of the national wealth and thus, should be the one to reduce its cost is quite absurd and appalling coming at a time when there is hunger in the land and a persistent public demand to that effect.

The Orosanye’s report- Rationalization and Restructuring of Federal Government Parastatals, Commissions and Agencies report which recommended the merger, conversion and scrapping of many government agencies should be fully implemented as a matter of urgency. The immoral laws in some states where former political office holders declare themselves eligible to a lifetime pensions of stupendous amounts of money-scarce resources is not only immoral but inhuman.

Furthermore, the government needs to start working more than it talks about diversification of the Nigerian economy from being oil reliant. Rigorous efforts must be made to develop the agricultural, manufacturing, and solid minerals sectors. Increasing the internally generated revenue of the nation is only the first step in this direction. It will be fool hardy to squander the scarce resources of the nation on the extravagant lifestyles of a piloted few. People are always willing to pay tax. Albeit, transparency and accountability in governance is pivotal to getting people to pay taxes. You cannot ask a man who toils day and night just to earn his daily bread to pay taxes just to line the pockets of those in government! This sham of a federalism we currently adopt must be done away with and fiscal federalism must be adopted in its truism which will hopefully ensure a balanced federation, engender socio economic developments, and secure the collective development and unity of our dear nation.

 

M.N IBRAHIM ESQ.
WRITES FROM KADUNA
0813-737-4044
Nasirmohammad26@gmail.com