SUBSIDY ISSUES : The wastages that drain development

CONCERNED  about the  high cost of governance and economic leakages in the system, the Federal Government  in  September 2010, set up an Expenditure Review Committee, ERC, headed by Professor Anya O. Anya.  The committee described the size of the federal bureaucracy as unsustainable.

While it was expected that the government would address the issue to forestall further waste of funds, Nigeria  still has over 40 ministers managing often competing bureaucracies. This report takes an in depth look at the various leakages and channels of waste in the system.

THE “war” triggered off by the removal of the alleged fuel subsidy may have been fought, won or lost but it has raised bitter concerns about how Nigeria’s commonwealth is managed at all levels of government.

Acting President Goodluck Jonathan (right) at the opening of the weekly meeting of the Executive Council of the Federation at the State House, Abuja, yesterday. Photo by Abayomi Adeshida

From the federal ministers, who displayed how best to support a president in time of crisis, to the joint labour delegation whose doggedness kept the executive arm of government on its toes, and among the general public, the concern about the wastage in the system is near unanimous.

Indeed, most revelations that emanated from the recent subsidy impasse, have become a source of worry to most Nigerians who believe that  the cost of governance has risen considerably at the expense of the welfare of the citizenry.

Examples of wastages range from the cost of sustaining constitutional system of government through the multiplication of bureaucracy and officials of government to the open stealing of government funds by those in government and their proxies.

Who needs bicameral legislature or a huge cabinet?

The Senate and the House of Representatives with a total of 469 members carry out almost the same functions with the notable exception of the approval of certain categories of executive appointments, which is the preserve of the Senate.

Leading the pack of those who cried out loud on the matter recently was the Governor of the Central Bank of Nigeria, CBN, Mallam Sanusi Lamido Sanusi.

He queried the rationale behind the huge vote for recurrent expenditure in the 2012 budget, saying if he had a choice, he would recommend the sacking of 50 per cent of the civil service and a restructuring of the country.

There are also structural costs that may need a tinkering of the constitution to resolve. One of these is the constitutional requirement that each state of the country should have a minister. It is not as if any of the presidents since President Olusegun Obasanjo had shown any concern in this perspective as none ever maintained less than 40 ministers at any time.

The National Assembly has also helped to sustain the unwieldiness by proliferating the number of committees leading to increased expenses.

The Senate has more than 54 standing committees a situation that every Senator is either a vice-chairman or a chairman. It is a survivalist measure for the Senate president and speaker who use committee positions to buy loyalty of legislators, but all at the public expense.

The House of Representatives on its part has more than 70 standing committees. The United States Senate has 16 standing committees compared to Nigeria’s 54. It would be recalled that  the Theophilus Danjuma-led Presidential Advisory Committee, PAC, had in January 2011, expressed concern over the increasing cost of governance and advised President Jonathan to reduce the number of ministries, departments and agencies (MDAs).

PAC, in some of its recommendations, insisted that the government should begin the process of merging and reducing the federal ministries and other government agencies to help cut down on government’s unnecessary spending.  The PAC also recommended a rationalisation of all non ministerial agencies to eliminate overlap, duplication and redundancies. The Nigeria Labour Congress has also made a similar call.

Reduce number of ministers

Nonetheless, these unheeded suggestions  were also supported by a report which maintained that, the emoluments (salaries, allowances, perks, etc) of 17,474 public office holders and the judiciary at all tiers of government amount to about N1.2 trillion per year, gulping about 60 to 70% of the federal budget in a country of 140 million people.

Besides that is the uproar associated with many provisions of the 2012 budget, which have generally been termed as wasteful,  bloated and unrelated to the felt needs of the majority of Nigerians.

An extract of the presidency’s budget would seem to indicate that the focus of the authorities could well be out of tune with the sufferings of the common man.

The presidency proposed N230.133million on the acquisition, upgrading and furnishing of the VP’s official guest house.

Over N1.06billion, comprising N500million for the construction and furnishing of the extension of the same VP’s lounge, and another N560million for the construction of official quarters for the VP’s director of protocol (DOP), aide de camp (ADC) and  security chief, was provided for in the 2011 budget for the same Aguda house.

Another sum of N116.733million has been provided in the 2012 budget for installation of universal power system (UPS) facilities at the VP’s residence, while about N108million has been budgeted for the provision of communication equipment at the VP’s guest house along with the presidential villa, Dodan Barracks and State House, Marina.

Salaries and emoluments of lawmakers: Another source of worry is the jumbo salary and allowances of federal, state and local government legislators. Ever since the current CBN governors revealed that Nigerian lawmakers gulp 25% of the national budget, controversy has continued to trail the structuring of salaries of political, public and judicial officeholders by the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC). Each senator reportedly earns N15.18m in salaries and allowances monthly, just as each member of the House of Representatives takes home N10.59m a month. Annually a Senator takes about N198.54 , while a House member earns  about N127.18m.

Further checks revealed that , it will cost the country at least three hundred and thirty eight billion, six hundred and forty five million eight hundred and forty five thousand, five hundred and ten naira N338,645,845,510bn in taxpayers’ money to keep the 469 members of the Senate and House Representatives.

Comparatively, a lawmaker in the United Kingdom earns $8,686(N1.3m) monthly while his counterpart in Sweden earns $7,707 (N1.2m) monthly. In addition, with  a total annual package amounting to over N500 million ($3.23 million), the office of the Senate president gets 10 times more money than the $400,000 (N62million) US president Barack Obama earns as annual salary.

Security votes

Section 14(b) of the 1999 Constitution states that: “the security and welfare of the people shall be the primary purpose of government.” Although this vested the security of lives and properties in the hands of government, it did not state that there shall be a pool of funds called “security vote.”Every year, billions of naira are squandered under the guise of security votes in Nigeria. The funds earmarked to provide security for the president, governors and their domains, end up being transferred into personal bank accounts. With security challenges such as armed robbery, kidnapping and bombing campaigns on the increase across the country, many Nigerians wonder what the security vote is being used for.

The governor of Imo State, Mr. Rochas Okorocha, disclosed after he came into office that his predecessor, Mr. Ikedi Ohakim, received a whopping N6.5 billion annually as security vote.

During the four years that he was governor, Ohakim could then have collected N26 billion as security vote if Okorocha is to be believed. But the security challenges in Imo State only grew worse during Ohakim’s stewardship.

Presidential aircraft and cost of maintenance: To a lot of Nigerians, the size of jets in the country’s presidential fleet amounts to waste, considering what it costs to maintain the fleet.

In the proposed 2012 budget, the presidency reportedly budgeted N18 billion for its presidential fleet. It was gathered that Nigeria has no fewer that ten aircraft in the presidential air fleet. Only Russia and Mexico are known to have higher number of aircraft in a presidential air fleet while several other countries maintain none.

Following, the whopping amount dedicated for the maintenance of the presidential fleet, analysts have argued  that the amount is only N1 billion higher than what could provide decent accommodation for the 17 million Nigerians estimated by UN Habitat to be homeless. In contrast, the Egyptian government operates an Airbus A340 200 (Registered SU GGG) as a VIP transport.

Similarly, the Pope flies on a chartered Alitalia fixed wing aircraft when travelling to or from more distant destinations. The tradition is for the Pope to fly to the country he is visiting on a chartered Alitalia jet and to return on a jet belonging to a flag carrier from the visited nation. The Queen of England flies on commercial aircraft.

N280m for two presidential bullet proof cars: Under the “replacement of aged vehicles of the presidential ground fleet (PGF)”, in the 2012 budget proposal, N280 million is set aside for two bullet proof vehicles for the President and the Vice President.

The 2012 budget also proposes for the “procurement of two treated (bullet proof) Mercedes Benz saloon 600 E Guard for use by the President and Vice President at N140,000,000 each”.

Next year, the Presidency plans to spend N356,724,300 to replace aged vehicles belonging to the presidential ground fleet. Besides, there are plans to acquire “five Mercedes benz saloon 350 (semi plain/partial bullet proof) at N25,000,000 each, 10 jeeps (assorted Range Rover, Prado and Land Cruiser) at N10,000,000 each and procurement of accessories and maintenance equipment for guard vehicles at N25,000,000.”

Multiple ministers/Special advisers

Whereas the 1999 constitution mandated the President to appoint at least one minister from each state of the federation including the FCT, currently,  there are about  42 ministers. This does not include  agencies, embassies, commissions and parastatals. In a lecture titled“Perspectives on the cost of governance in a democracy”,Mallam Nasir El Rufai lamented that, up until December 2006, there were 31 cabinet level Ministries including the FCT Administration and about 42 Ministers.

According to him “The reforms of 2006 led to the merger of the ministries of petroleum and power into a single Energy Ministry, water resources and agriculture into a single agriculture ministry, commerce with industry, the addition to Steel Development to the mandate of the Solid Minerals ministry, the abolition of the ministries of police affairs, communication, and Cooperation and integration into larger ministries, works into transportation.”

He noted that the reforms reduced the number of cabinet level MDAs to 21 but without a significant reduction in the number of ministers but that the Yar‘Adua and Jonathan administrations reversed these reforms leading to the increase in the ministries to 30 and accommodating between 42 and 48 ministers. Also, the present administration has also been criticized for accommodating a record number of Special Advisers who by some estimates are now more than 16. Special Advisers are almost of cabinet rank. El Rufai is not alone in this claim of government profligacy, as many believe that a larger part of the country’s income goes to political office holders.

Over 400 parastatals

The federal government, apart from its 42 ministries, reportedly runs about 400 parastatals. The ministries with the highest numbers are Health, 77; Science and Technology, 40; Education, 41; Agriculture, 44; Power and Steel, 27 agencies.  Most of the parastatals, investigations revealed, are unable to provide prompt and efficient services, for which they were established. This has led to the erosion of public confidence in the ability and sincerity of public administrators who manage them.

Granting of special waivers: The waiver granting policy of the government has been identified as another source of wastage in governance.  And it has started generating concern from various quarters. For example, the House of Representatives not long ago, described the policy as a conduit pipe draining the nation’s economy.

Speaker Aminu Tambuwal, weeks after assuming office, criticised the government over the waiver policy. He particularly expressed worry over alleged indiscriminate waivers granted  to companies offering diverse services, describing this as inimical to the growth of the nation’s economy.

In a bid to check the alleged arbitrary waiver granting policy, the House reportedly mandated its Joint Committees on Finance and Customs and Excise to investigate over N276.9 billion in waivers and exemptions granted by the government.

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