The Cost of Governance (II) – By Ijeoma Nwogwugwu

Posted by admin Articles, NNP Columnists Saturday, July 2nd, 2011

Quite a few readers of the first part of this article wondered why I failed to include what it costs the federation to pay the salaries and allowances of lawmakers in the state and federal legislatures. My response to the enquiries is that except there is absolute clarity on how much the legislators are paid, I would prefer not to dwell on this subject matter.

As it stands, too many figures are bandied round with regular frequency on their take home pay. Not even the Revenue Mobilisation, Allocation and Fiscal Commission that is statutorily bound to determine the salaries, allowances and fringe benefits of the legislature appears to be certain as to how much the legislators pay themselves today. It is also uncertain if the legislature complied with the revision done by the commission on the Certain Political, Public and Judicial Office Holders (Salaries and Allowances, etc) (Amendment) Act 2008, which the late President Umaru Yar’Adua mandated RMAFC to undertake to slash the salaries and allowances of all political, public and judicial office holders in 2009. Until there is absolute clarity on what they earn, this a subject matter I would prefer not to comment on, as this would amount to conjecture and hearsay.

However, the revelation in recent weeks that the legislators, in contravention of the laws that they are meant to uphold and ensure compliance, met and increased the allowances meant to run their offices, and paid same into their personal accounts is something that should not be tolerated. While the Nigerian public should and has every reason to find their action galling, illicit and condemnable, it also brings to the fore the need for complete transparency in the manner the legislature utilises the resources of the state.
Since we are on the subject, further clarification may be necessary: First, each and every legislator incurs a cost running his office. These expenses are no different from those incurred by legislators in the US Congress to run their congressional offices, though ours may be significantly higher. Nor are they dissimilar from the expenses that a department or unit in a ministry, department or agency of the federal government incurs after its dedicated budget has been appropriated as part the consolidated budget of a particular MDA.

The major difference is that whereas the monetary warrant or cash backing for that department is paid into the account of the supervising MDA with the Central Bank of Nigeria, from which it may be transferred into the accounts of the MDA with commercial banks, the legislators elected to pay the money meant for their offices into their personal bank accounts and were completely unaccountable on how these funds were utilised. This is completely unacceptable.
Second, that 469 federal lawmakers and several thousands in the 36 states of the federation are costing the country this much just to run their offices (salaries, allowances and fringe benefits excluded), is enough to compel us to have a rethink on the presidential system of governance we have chosen for ourselves. Obviously, we can no longer shy away from the fact that some kind of modification to the kind of representation we have in the country today – be it permanent or part-time – would have to be debated and decided if we must reduce the cost of governance.

That said, another reason I have steered clear from commenting solely on personnel costs incurred at the federal level, even though this seems to resonate more with the public because of the pervasive poverty in the country, is that too much emphasis and energy is expended on only how much public sector workers are paid while other running costs relating to governance are ignored.
Every year the federal government draws up its budget, it is based on the assumption that it would expend money on anticipated receipts from various sources, chief of which is derivable from crude oil sales. The expenditure side of the budget is apportioned between capital and recurrent expenditure items, and statutory transfers and debt service payments. The total recurrent budget by itself comprises personnel costs of all public sector workers (excluding the Nigerian National Petroleum Corporation, Central Bank of Nigeria, Nigerian Communications Commission, and a few other pseudo-autonomous, self-sustaining parastatals of government); pensions (pay-as-you go and contributory schemes); overhead costs; service wide votes; and debt service on foreign and domestic debts.

However, a review of the budget implementation report for 2008 and 2009 from the Budget Office of the Ministry of Finance shows that the federal government’s overheads, pensions and service wide votes accounted for 50 percent of the non-debt recurrent expenditure for those two years. Non-debt recurrent expenditure refers to total recurrent expenditure less foreign and domestic debt payments.
What this means is that other than high personnel costs in the public sector, the federal government incurs substantial overheads and other costs that equally have to be pruned. Overhead costs refer to expenses relating to running the MDAs, including utility bills (electricity, water and telephone), maintenance of buildings, other real estate, vehicles and generators, procurement of office stationary and other consumables, training, and travel expenses, etc.

One reason that has been adduced for the high cost of running the federal government is that in the last four years, the Yar’Adua/Jonathan administration surreptitiously rolled back the monetisation policy started by former President Olusegun Obasanjo and embarked on a spending binge procuring and maintaining cars, furnishing houses, and piling up all manner of sundry expenses that had been whittled down between 2005 and 2007.
Another reason is that civil servants, being who they are, have found a way of circumventing the procurement process by including projects which ordinarily should be classified as capital projects under recurrent items, because the latter are not subjected to the same scrutiny by the Bureau of Public Procurement.

One other area that must be mentioned is one that human rights lawyer, Femi Falana, drew my attention to last week: the aberration called security votes disbursed to the office of the president, governors, principal officers in the legislature, and local government chairmen. Security votes allotted to these officials run into several billions of naira, yet how they are utilised has been completely shrouded in secrecy. It is no wonder that some sections of the public expressed surprise when Imo State governor, Rochas Okorocha, ‘donated’ N2.5 billion of his N6.5 billion security vote for the year to the funding of education in the state.
In another breath, the public sector remains over-bloated and costs continue to spiral because the executive and legislature have failed to be rigourous in the passage of new laws that lead to the establishment of more and more parastatals that overlap and undertake the same functions. In previous articles, I have raised concern over the establishment of new departments and agencies of government through legislations when parastatals that already exist can be empowered to take on new functions and responsibilities.
From all indications, more rigour needs to be applied by the executive and legislature by thoroughly scrutinising the functions, responsibilities and powers of existing MDAs and determining if the laws establishing them can be amended to take on new responsibilities, rather than creating new MDAs. If this is done, considerable savings can be made as fewer MDAs, which must all be funded by the federal government, would spring up.

I could go on for eternity on the needless expenses incurred by the federal government annually, starting from the presidential fleet maintained by the presidency to the salaries of domestic servants kept by ministers and the furniture allowances of civil servants that are borne by the state. But the bottom line is that a lot of these expenses have become entrenched, because they are relics of colonialism that have been abused by us.

As Dr. Mobolaji Aluko pointed out in his seminal paper on the monetisation of fringe benefits in the public sector, when the colonialists were with us, they provided the expatriate staff who ruled the natives with free housing, free transportation, free slaves, etc. They did not have to pay these benefits from their salaries, which invariably was paid to them abroad. In fact, these fringe benefits were hazard allowances that were provided since they were in hostile territory, and they were, in any case, temporary workers in a foreign land. But when these colonialists left, the indigenous civil servants that took over from them also took over all those benefits, with the first significant one being the movement into government reservation areas that the whites left behind.
But then came the abuse of the benefits, wrote Aluko. Instead of one car, our indigenous civil service “oga” has ten cars at his beck and call; has ten servants; has three government houses – for each of his wives; travels first or business class; and gets free medical facilities for the entire family.
To be concluded next week

Ijeoma Nwogwugwu, Email: [email protected]_posts