How violation of public contract laws costs Nigeria $10bn yearly

Africa’s biggest economy is losing at least $10 billion annually due to lack of transparency and accountability in public contracts procurement, a new report by Agora Policy, an Abuja-based think tank said.

According to the report, 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 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 above narration, the report recommended an innovative and enduring mechanism for reporting corruption in procurement without having to insist on the disclosure of the identity of the whistleblower.

“This is necessary because people with information on corruption in the system tend to be discouraged by inadequate protection,” Agora Policy said.

The report suggests the need for improvement in remuneration for officials working in the public service.

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“It is tempting when the people with the power to process the kind of huge contracts awarded in government receive paltry salaries and emoluments and are denied any incentives capable of sustaining the principles and values of honesty, morality and patriotism,” Agora Policy said.

Other key recommendations are the need to enhance the legal framework supporting some of the initiatives, faithfully enforce or implement existing laws, improve the capacity and funding for some of the implementing agencies, enhance collaboration across government tiers, and implement a sustained and strategic campaign to promote value reorientation.

The report recommended the strengthening of the Office of the Auditor General of the Federation through improved staffing and better remuneration of the staff of the agency, and prompt presidential assent to the newly passed audit bill.

“While the Auditor-General of the Federation (AuGF) has a responsibility to eradicate corruption from Nigeria’s public finance system, this responsibility is limited to the extent that the country’s audit law permits,” said the report.

“Nigeria needs a fresh law that guarantees independence and powers to sanction the AuGF in line with established standards of the International Organisation of Supreme Audit Institutions (INTOSAI). Without the powers to sanction, the AuGF is more or less a toothless bulldog.”

It is on the strength of this that the report recommends that President Muhammadu Buhari should sign the Federal Audit Service Bill into law before he leaves office. The bill, which was passed by the National Assembly on 29 March 2023, repeals the Audit Ordinance of 1956.

The bill strengthens the operations and independence of the Office of the Auditor General of the Federation (OAuGF). It aligns with the present times and with global best practices and it enhances the utility of auditing as a powerful transparency and accountability mechanism.

“President Buhari refused to assent to an earlier version of the bill passed by the 8th National Assembly. He should quickly assent to the 2023 version once he receives a clean copy from the 9th National Assembly.

“Whatever misgivings the president may have can be accommodated in subsequent amendments. President Buhari should see the law as one of his parting gifts to the country.”

The report also calls for the amendment of Paragraph 3 (c) of the Third Schedule of the 1999 Constitution to ensure that assets disclosed by public officials can be made public by the Code of Conduct Bureau (CCB).

It also argues for improved funding for CCB for the agency to be better positioned to discharge its important mandate, including the verification of assets declared by millions of public servants across the three tiers of government.