• Wednesday, November 29, 2023
businessday logo


Tinubu must reform public sector to drive development

Nigeria’s population, huge attractive market for investors – Tinubu

Domestic policies of the President Muhammadu Buhari administration played more than a significant role in impeding Nigeria’s pre-2014 economic performance. His successor, President Bola Tinubu, has vowed to chart a new course in order to deliver prosperity to Nigerians.

To build on the immediate, major reforms, and seize the opportunity to rise to its potential, Nigeria has crucial choices to make. Africa’s largest economy would have to reform its bloated and inefficient public service. It would have to free resources from an unproductive public sector as it has done with the removal of petrol subsidy and foreign exchange management reforms, in order to drive critical development outcomes.

Nigeria’s government faces a daunting dual challenge: it must control and, in the long term, slash major budget deficits fuelled by long-term inefficient management of the economy, while at the same time improving the performance of the public sector so that it can meet its complex and ever-rising obligations.

In 1970, the Federal Government expanded the scope of the operations of the public service from core policy implementation to active participation in all sectors of the economy through the establishment of agencies, parastatals, and commissions.

The additional bodies were to be the drivers of the socioeconomic objectives of the Federal Government. Some of them were set up on an ad hoc basis to address specific challenges.

Over the years, the bodies transmuted into permanent institutions with overlapping functions in some cases, and successive administrations had further created more bodies without regard to their efficacy in the attainment of the socio-economic agenda of the Federal Government, leading to an escalation in cost of governance.

Rather than drive development, the public service became a multi-headed corrupt leviathan sucking much-needed billions of dollars out of the nation’s treasury and stalling development.

Nigeria is among the eight economies with the lowest human capital in the world, ranked 167th out of 174 countries on the World Bank’s Human Capital Index.

Nigeria spends only $220 per Nigerian per year, and at merely 12 percent of GDP, this is one of the lowest levels of spending in the world.

As real household disposable income per person in the country has continued to fall over the past eight years, the governments have continued to spend heavily on paying salaries, pensions and emoluments to public servants.

The federal civil service employs nearly 90,000 people, most of whom are under-utilised, and the government will spend N7.108 trillion on recurrent expenditure this year, with personnel costs, overheads, pensions, gratuities and retirees benefits for public servants amounting to a whopping N5.740 trillion.

The amount available for the capital expenditure of ministries, departments and agencies stands at a mere N3.536 trillion for 2023.

Regressive public spending has over the years resulted in poor outcomes for the country’s population of more than 200 million citizens, the majority of whom continue to live in poverty.

Whether it is a school or a road, the Federal Government or state governments can invest only when they have the funds to do so. With 60 percent of the low levels of overall spending being absorbed by public sector salaries and pensions, fiscal space for implementing projects, especially multi-year projects, remains highly constrained.

At the present level of public investment allocations, the World Bank says, it would take Nigeria 300 years to provide the minimum infrastructure that the country needs.

In June, 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.

In August 2022, the 36 state governors counselled the federal government to offer federal civil servants who are older than 50 years a one-off retirement package to exit the service, as part of coordinated efforts to instil fiscal discipline and prevent the nation from imminent economic collapse.

They also urged the then president, Buhari, to begin the implementation of the updated Stephen Oronsaye Report, which recommended the merger and shutdown of agencies and parastatals with duplicated or contested functions as a way to address bureaucratic inefficiency and reduce the cost of governance.

“Working in the civil service makes you idle as there is nothing for you to do until you become a director or at least a deputy director,” a staff member of one of the federal ministries told BusinessDay in 2022.

In August 2011, the then president, Goodluck Jonathan, had set up a seven-member Presidential Committee led by former Head of Service, Stephen Oronsaye, to advise on the restructuring and rationalisation of the Federal Government’s agencies, parastatals and commissions.

The committee had critical directive to “examine critically, the mandate of the existing federal agencies, parastatals and commissions and determine areas of overlap or duplication of functions and make appropriate recommendations to either restructure, merge or scrap some to eliminate such overlaps, duplications or redundancies; and advise on any other matter incidental to the foregoing which might be relevant to the desire of government to prune down the cost of governance”.

In 2012, the 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, last week, the federal government 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.

“We have a historical burden as a country where we do not have a realisation that public funds and public revenue are actually meant for the development of the entire country as opposed to being used to maintain the public service. This seems to be the dominant thinking among a lot of policymakers, lawmakers and civil servants who design, develop and implement public budgets,” a retired foreign service officer said.

“So, you budget tens of billions of naira for let’s say the National Space Research and Development Agency or PenCom, for example, and people within these organisations think you have budgeted these monies for them rather than for practical and tangible projects that affect the people.

“We have to look at ways of changing that mentality or worldview. The public service must undergo a reorientation in terms of outlook, in terms of ethics and in terms of practice to be fit for purpose. We need a whole revamp in the way people in the public service think and work.”

Read also: Everything wrong with Tinubu’s subsidised convoy

The World Bank, in its latest Nigeria Development Update report, said: “The current window of opportunity offered by a new government, if effectively seized, could have a transformative impact on the lives of millions of Nigerians and establish a solid foundation for inclusive, sustained growth. The removal of the petrol subsidy and the initial FX reforms are critical steps. Now, the challenge is to implement a comprehensive reform package that encompasses a range of complementary measures. Addressing certain imbalances while neglecting other areas could prove costly for Nigeria’s economic performance and may not yield the desired benefits.”

For Nigeria’s reform-focused president, cleaning up his country’s troubled economy must start with cleaning up its over-bloated and underperforming public service. To do this, he must dust up the Oronsaye report and implement it as soon as possible.

Afterall, restoring the health of Nigeria’s public finances is the prerequisite for preserving the country’s public sector in the long term. The impact of Tinubu’s proposed reforms of the economy would depend on the efficiency of the public service.

At present, Nigeria’s public service is neither working nor fit for purpose, and its deficiencies are harming the effective delivery of policy.