FG may cut operational costs of MDAs by 50%

The federal government could cut its overhead and personnel costs by up to 50 percent as the finance minister, on Monday launched Nigeria’s first ever efficiency unit that would maximise efficiency in spending in government agencies and deliver quantifiable cost savings.

The Unit would adopt a systematic and methodological approach to review overhead expenditure with a view to benchmarking costs against what is obtainable in the private sector, identifying wastage and curbing inefficiency, according to the document seen by BusinessDay.

Headed by Patience Oniha, a Chartered Accountant formerly of the Citibank and Standard Chartered and currently a Director in the Debt Management Office, the Unit, is established within the Ministry of finance but would encompass every Ministry, Department and Agency that receives government funds.

Adeosun said that current economic situation and reduction in oil price has exposed Nigeria’s vulnerabilities and therefore with the unit applying insight and ideas from the private sector and pools of best practice within the public sector, should be able to provide practical, implementable recommendations that will deliver quantifiable savings to the Nigerian people.
“We must deliver more but spend less,” Adeosun noted as she inaugurated the unit head by in Abuja.

A document seen by BusinessDay indicates that specifically, the unit would work across all MDAs to identify and eliminate wasteful spending, duplication and other inefficiencies.  It would also
identify best practice in procurement and financial management and to share such knowledge to ensure its adoption across government resulting on quantifiable cost savings. It would also make recommendations aimed at enhancing efficiency and to promote a culture of cost consciousness across all areas of government.

To minimise costs, existing underutilised accountants in service would be carefully selected and retrained and redeployed to undertake the project work.

Adeosun disclosed that urgent steps were needed to check excessive government spending since their initial reviews have so far exposed a lot of wide variations in the prices of basic items between departments and agencies. “Paper costs varied by up to 80 % between departments; range of prices for airline flights to the same destination differed by 100 percent; while printer catridges of the same specification ranged in price from N16,000 to N62,000,” she said at the meeting.

She gave reasons to include poor negotiating skills, lack of reliable price data or that the manner in which government could be inflating the costs.

‘In the few weeks I have spent as the minister of finance, it has become clear that without a radical intervention to manage the costs of government, no meaningful improvement in our nation will be forthcoming.

A cording to her, no amount of fiscal innovation, financial re-engineering or other well intentioned economic policy would deliver the desired results, for as long as the manner in which government is expended is not carefully controlled. “We need to put the fiscal house in order,” she also noted

“We will seek to understand why in many cases the price paid for basic services by government exceeds attainable in the private sector.”

She added that in the face of low oil prices and dire need for fiscal consolidation, government can only enhance public services by reallocating resources from low priorities to strategic initiatives and by generating greater spending efficiency.

The efficiency unit would be a critical tool in the management of public expenditure and would help government improve delivery of public services to ensure that “every naira spent counts.”
BusinessDay learnt that Kabir Mohammed, former ICAN President, Kunle Elebute, Partner KPMG, and Seyi Kumapayi, Chief Financial Officer, Access Bank would be serving in the unit.
Members of the supervising committee include Minister of Finance, to serve as the Chairman; Head of Service; Accountant Ge4neral of the Federation; Auditor General of the Federation; and Director Budget.

 

Onyinye Nwachukwu