The federal government increased its budget for personnel expenses, pensions and other recurrent expenditure by 241 percent in 13 years, a development that dampened economic growth and impoverished millions of its people.
Data obtained from the government’s official documents showed the government increased its non-debt recurrent expenditure from N2.4 trillion in 2011 to N8.27 trillion in 2023, yet the country has 113 million people living in multidimensional poverty.
Further findings showed rising recurrent non-debt expenditure has become a permanent feature of successive administrations despite challenges surrounding revenue shortfall, a development that has left little or no cash to invest in critical infrastructure.
In 2013, half of what the federal government earned was committed to salaries as it spent N2.4 trillion on non-debt recurrent expenditure despite having total revenue of N3.8 trillion.
By 2017, that number was 86 percent as the federal government spent N2.9 trillion on non-debt recurrent expenditure despite having a total oil and non-oil revenue of N3.35 trillion.
In 2019, it spent about the same amount of N4 trillion paying worker salaries and running its various ministries, departments and agencies, as it did on capital projects, debt servicing and recurrent expenditure combined in the whole of 2014.
“In one glance, I hear the government demanding the people to make sacrifice; in another glance, I see the lifestyle of public officials, in the cost of governance, in the 25-car convoy, or the contingency travel,” said Oluseun Onigbinde, co-founder of BudgIT, a civic organisation focused on strengthening civic engagement and institutional accountability.
“You can’t have people struggle and those in public office enjoying themselves; that perception has to be clear,” he added.
Other analysts questioned why the federal government continues to fund its bloated civil service structure when the country is among the top 10 countries in the world with the worst inflation rates based on 2021 figures, according to a survey by World Bank.
“Fuel subsidies had to go for Nigeria’s economy to survive. Having done it, what’s the sacrifice for our political elite? The cost of governance is too high,” Kingsley Moghalu, founder and president of IGET and a former deputy governor of the Central Bank of Nigeria, tweeted.
Lekan Ademola, a Lagos-based asset manager, said Nigeria is certainly living above its means with the rising recurrent expenditure.
“Nigeria has ignored its revenue challenge by going on a recurrent expenditure spree. Yet, this has not impacted the economy, which has been stuck in a low growth path despite higher cost of governance,” Ademola said.
The huge financial burden of Nigeria’s recurrent expenditure is fuelling confusion among economists and business leaders who are at a loss on why a supposedly cash-strapped government is losing billions of dollars to violation of public contract laws.
For instance, Agora Policy, an Abuja-based think tank, said the country is losing at least $10 billion annually due to a lack of transparency and accountability in public contracts procurement.
According to a report by Agora Policy, Nigeria’s current public procurement practices established significant correlation between weak public procurement procedures and corruption and its associated consequences such as poverty, infrastructural deficits and underdevelopment.
“The assessment put the government’s revenue loss to underhanded transactions at 60 percent, averaging US$10 billion annually,” the report said.
Agora Policy identified inflation of contract costs, absence of procurement plans, poor project prioritisation, poor budgeting processes, lack of competition and manipulations of procurements in Nigeria’s contract award processes.
The report noted that some civil servants at the state and, in some cases federal offices, have themselves become the very face of the corruption they are appointed to help fix with public financial management.
“In many instances, these civil servants source multiple bid proposals from favoured contractors and award jobs to them for some negotiated returns,” the report added.
It noted that some civil servants even award contracts to their personal companies registered specifically to make money in violation of regulations against conflict of interests.
To change the narrative, Tinubu’s Advisory Council listed the implementation of civil service reform, including the adoption of the Oronsaye report as critical to achieving the president’s ambitious desire to boost Nigeria’s economy to $1 trillion within the next eight years.
Read also: Debt servicing gulps N1.24 trn in Q1, 2023
In 2012, the Stephen Oronsaye report was submitted to the government. The 800-page report recommended the abolition and merger of 102 government agencies and parastatals, while some were listed to be self-funding.
The report revealed a high level of competition among several overlapping agencies, which had not only created ill feelings among government agencies but also brought about unnecessary wastage in government expenditure.
The report also made far-reaching recommendations regarding the streamlining of the overstuffed and ineffective public sector. The report recommended, among other things, the discontinuation of government funding of professional bodies and councils. The measures were primarily aimed at freeing funds for much-needed capital projects across the country.
In a nod to the Oronsaye report, the federal government has notified professional bodies and councils that it would cease to fund them beginning from the 2024 budget in line with the decisions of the Presidential Committee on Salaries.