• Friday, September 29, 2023
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Public service under spotlight as Nigeria’s fiscal crisis worsens

Public service under spotlight as Nigeria’s fiscal crisis worsens

The worsening fiscal crisis facing the Nigerian government has put the spotlight on the corruption and inefficiency in the country’s public service.

“I can tell you that Nigeria is broke,” Chris Ngige, minister of labour and productivity, said in July. “There is no money to fund capital projects next year. As you can see, the dollar that has been hovering around N500 and N600 is now above N700. The truth is that there is no money anywhere. The money that the FAAC (Federation Account Allocation Committee) has been sharing is money from taxes, Customs and other revenue-generating agencies. The National Nigerian Petroleum Company Limited (NNPC) no longer remits money to FAAC. So, the situation calls for patriotism from all Nigerians. The lack of money to fund capital projects would have implications on the capacity to create jobs. If jobs are not created, poverty will increase in the country.”

The country’s fiscal position worsened in the first four months of the year as debt servicing costs surpassed the government’s revenue.

“If you are borrowing and accumulating debts for the next generation and the next generation after them, it is criminal. What are you borrowing for? If we are borrowing for recurrent expenditure, it is the height of folly. If we are borrowing for development that can pay for itself, that is understandable. Then the payment, how long will it take to pay itself?” former President Olusegun Obasanjo said.

The International Monetary Fund (IMF) had warned in June that Nigeria’s government may spend nearly 100 percent of its revenue on debt servicing by 2026. This, it noted, is a reflection of the low revenue base of the country, urging the country’s political and financial managers to mobilise more revenue to be able to have macroeconomic stability.

“I think the biggest critical aspect for Nigeria is that we have done a macro-fiscal stress test, and what you observe is the interest payments as a share of revenue and as you see us in terms of the baseline from the federal government of Nigeria, the revenue, almost 100 percent, is projected by 2026 to be taken by debt service,” the IMF resident representative for Nigeria, Ari Aisen, warned.

Nigeria’s federal government intends to borrow over N11 trillion and sell national assets to finance the budget deficit next year.

Nigeria has recorded a budget deficit every year since 2009 averaging about N1.1 trillion in the five years before the Buhari administration came into power in 2015. However, since 2015, budget deficits have averaged N4 trillion.

In 2021, the Federal Government spent a sum of N4.22 trillion on debt servicing, compared to N3.27 trillion spent in the previous year, while revenue only increased by 9.3 percent to N4.39 trillion. Petrol subsidy bill has soared in recent years.

“This subsidy that the government has been paying over the years is the root of all the atrocities and fraud committed in this country. For example, if you look at it from 2006 till 2020, we have spent over N10 trillion on fuel subsidies. Apart from that, there is also a subsidy on foreign currencies, everybody knows how much is dollar in the market, but the government is also subsidising it. So, this and the fuel subsidy, within this period, have gulped between N14 trillion and N15 trillion,” Mele Kyari, the head of the country’s national oil company, said in 2020.

Nigeria’s public service including its civil service has been described as a major constraint to efficient and effective public spending.

In January, BudgIT, a civic organisation promoting accountability and transparency in public spending in Nigeria, reported that its preliminary analysis of the 21,108 capital projects in the 2022 approved budget revealed 460 duplicated projects amounting to N378.9 billion.

In the 2021 budget, BudgIT observed 316 duplicated projects inserted into the 2021 budget approved by the National Assembly, while the Independent Corrupt Practices and Other Related Offences Commission verified 257 duplications, and the Budget Office confirmed the existence of only 185 duplicated projects worth N20.13 billion.

Read also: Nigeria inches towards IMF bailout on mounting debt

“A cumulative total of N6.3 billion was allocated to supplying street lights in 73 communities across the 36 states, while N14.8 billion was allocated for the construction of 219 roads across 36 states; whereas the majority of the roads are the responsibilities of state and local governments and not the Federal Government,” the organisation said.

According to Gabriel Okeowo, BudgIT’s country director, the loopholes for fraud in the 2022 federal budget is a crime against the 86 million Nigerians living below the poverty line, an injustice to hardworking taxpayers and an open mockery of countries and lending institutions that intend to lend Nigeria N6.29 trillion in 2022.

The amount of foreign exchange used for the payment of estacodes and personal travel allowances to ministries, departments and agencies as well as to fund Bureaux De Change operations was $3.95 billion in 2019, according to the Central Bank of Nigeria. A 2018 audit report by the Office of the Auditor-General of the Federation revealed that N3.77 billion was paid out as fictitious estacodes to government officials with no document to show that officials of the government parastatals undertook foreign trips.

The Federal Government has spent N36 trillion since 2011 on (non-debt) recurrent expenditure, while it earned N37.9 trillion in the same period.

Vice-President Yemi Osinbajo said in December 2020 that the country needed to spend about $3.3 trillion in capital expenditure over the next 30 years to close its infrastructure deficit.

In a bid to cut down the cost of governance, the government is dusting off the report of the Presidential Committee on Restructuring and Rationalisation of Federal Government Parastatals, Commissions and Agencies, otherwise known as the ‘Oronsaye report’.

In April 2012, the Oronsaye committee submitted an 800-page report, which 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 committee recommended the abolition and merger of 102 government agencies and parastatals, while some were listed to be self-funding.

The committee led by the former head of the civil service of the federation, Stephen Oronsaye, further recommended the termination of government funding of professional bodies and councils in order to free funds for the much-needed capital projects across the country.

The Oronsaye report was not implemented by President Goodluck Jonathan’s administration.

“President Buhari should have known that the cost of governance was unsustainable when he emerged in 2015, and with the political will he had then, he should have set about reshaping governance as a priority,” Chidi Odinkalu, professor of Practice in International Human Rights Law at the Fletcher School, said.

“The groundwork was already laid before he came, but instead, he saw governance as ‘sadaka’ for his inner coterie and vengeance against the people he defined as ‘5 percent.’ As a result, instead of fiscal consolidation, we had a snowballing of the cost of governance and of corruption too,” he added.