Buhari and cost of governance

Over the past 12 months, Nigeria has been faced with a chronic public finance challenge characterised by the inability of many state governments to pay salaries and the inability of the Federal Government to raise sufficient revenue amidst declining oil prices.

BusinessDay has argued in a previous editorial (“Like Venezuela, like Nigeria”) that the problem with Nigeria’s economic performance is not the plunge in oil prices but the failure to save up during boom time so there could be some sort of cushion during the busts.

Added to this failure to save is the failure to rein in the towering costs of maintaining the government machinery in this country, which is Africa’s largest democracy.

Nigeria’s high cost of governance is well captured in a recent speech by senator-elect Ben Murray-Bruce: “One percent of the federal budget is spent on pilgrims for both Muslims and Christians; 3 percent of the national budget is spent for the National Assembly for 469 people; 30 percent is spent on 1.2 million civil servants.”

This is the cost structure that President-elect Muhammadu Buhari will inherit and will be left to grapple with as he takes over power on May 29, 2015.

Past governments have lacked the political will to bring down the cost of governance in Nigeria, and this is a critical success factor to achieving lean cost model of governance.

Back in 2012 when the then Central Bank governor, Sanusi Lamido Sanusi, raised alarm over the high cost of governance in the country, many in the public space thought it was rather exaggerated, especially his recommendation to sack 50 percent of the civil servants.

Also in 2012, the aftermath of partial subsidy removal was a promise by the executive to take a 25-percent haircut on basic salaries. But this remains unverifiable beyond the first few months of the heated issue in the polity.

The Stephen Oronsaye report, which recommended, among other things, the abolition of 38 agencies, merger of 52 and reversion of 14 agencies to departments in the relevant ministries, remains largely unimplemented, whether in parts or as a whole; whereas some reports have shown government could save N860 billion from its implementation.

Austere measures promised by the outgoing Goodluck Jonathan administration, such as a cut-down on foreign travel by public officers and the huge travel expenses that go with such benefit, may have been jettisoned since losing the election.

When Muhammadu Buhari comes into power, his political will to address the elephant in the room will be tested and stretched to the limit. His humble profile and austere values are well known but the machinery of government that he will inherit may not be so cooperative.

For instance, he must convince an incoming National Assembly (fortunately with his party in the majority) to lead by example by reducing the N120 billion-N150 billion “unquestioned and undisclosed” budgets that come to legislators yearly. He must also convince an entire civil service structure to reconsider wages, allowances and expenses that amount to about N1.8 trillion in the 2015 budget and date back to 2009, when phenomenal increases in the public sector wages were contracted by government.

Buhari must show the political will and send a clear signal to bring down the cost of governance. We agree with Ben Murray-Bruce that “Nigeria is too poor for our leaders to act like multi-billionaires, and Nigeria is too rich for the people to be so poor”.