BusinessDay
Nigeria's leading finance and market intelligence news report.

Reps chew own words, sponsor Establishment Bills

…Move contradicts FG’s MDAs merger plan

Contrary to the caution by the leadership of the House of Representatives in February, to its members against sponsoring Establishment Bills that could increase the nation’s cost of governance, the lower legislative chamber appears to have eaten its words.

The reality on ground indicates that over 100 Establishment Bills are currently under consideration on the floor of the House.

This seems to be contrary to the move by the Executive arm to merge some Ministries, Department and Agencies (MDAs), a measure aimed at cutting the cost of governance in the face of dwindling economy.

Nigeria is presently in a state of economic quagmire over global decline in oil price and moves to switch over to alternative sources of energy which pose more threat to the already battered economy that depends almost wholly on oil.

A large chunk of the country’s annual budgets has over the years gone to recurrent expenditure as evident in the N13.588 trillion 2021 Budget in which non-debt recurrent expenditure stood at N5.641 trillion.

Out of this amount, N3.75 trillion goes to personnel costs for the MDAs and Government Owned Enterprises (GOEs) which according to the Minister for Finance, Zainab Ahmed, accounts for 66percent of the Recurrent (Non-Debt) expenditure in 2021 Budget.

Worried by the high cost of personnel and low revenue flow, the Federal Government said it was going to take a tough decision of merging the about 1000 MDAs and cutting down the salaries of Civil Servants to shake off the financial yoke imposed by both aspects.

Minister for Finance, Ahmed who spoke last week at the National Policy Dialogue on Corruption and Cost of Governance in Nigeria organised by the Independent Corrupt Practice Commission (ICPC), had said government would also remove some items from the budget to reduce expenditure.

She said such measures have become imperative because “we still see government’s expenditure increase to a terrain twice higher than our revenue.

“We need to work together, all agencies of the government to cut down our cost. We need to cut down unnecessary expenditure; expenditure that we can do without.

“Our budgets are filled year-in-year out with projects that we see over and over again and also projects that are not necessary. Mr. President has directed that the Salaries Committee that I chair, work together with the Head of Service and other members of the Committee to review the government payroll in terms of stepping down on cost”.

The Minister stressed that government agencies with the same mandate would be merged.

This is in line with the Report of the Steve Oronsaye Committee on Restructuring of Government MDAs submitted many years ago but had not been implemented due to what many consider as lack of political will.

The 2012 Oronsaye’s 800-page report, recommended the abolition and merger of 102 government agencies and parastatals, among others, to drastically cut the cost of governance.

The Committee had identified 541 government parastatals, commissions and agencies, both statutory and non-statutory, and recommended a reduction in the number of statutory agencies from 263 to 161; 38 agencies should be abolished; 52 agencies should be merged and 14 should revert to Departments in Ministries.

Nigerians had on February 10 received with excitement the news that government would not be incurring additional costs when Speaker of the House of Representatives, Femi Gbajabiamila cautioned members against sponsoring Establishment Bills.

Gbajabiamila, who gave the caution while welcoming his colleagues from the Christmas and New Year break, said it has become more difficult with each appropriation cycle for the government to meet its obligations, hence Bills to set up new institutions and organisations be discontinued to reduce the cost of governance.

He noted that: “At a time of reduced revenue, with preexisting and worsening infrastructure deficits requiring significant investments, we cannot afford to keep establishing more institutions that impose a permanent liability on government income.

“I am not unmindful of the realities that often necessitate such legislation, yet we cannot ignore the facts that lie before us. Let us work together to reform and strengthen the institutions already in existence, and remove those no longer fit for purpose. I believe most sincerely that this is the pathway to a legacy that we can all be proud of”.

This pronouncement had received the backing of experts who said it was necessary to reduce the huge cost of running government which is stressing the national purse and negatively affecting infrastructure and other aspects of development.

One of such experts, Ken Ike, a professor of Economics, had said the cost of governance was getting unbearable and new establishments should not come up but, instead the Oronsaye report should be implemented to rationalize existing institutions.

Ike had told BusinessDay that: “If they are bringing in Bills, the Bills should seek to amend the existing institutions or extend the activities of the existing institutions or expand their mandate. Bring together institutions that are similar rather than creating new ones.

“So, I support what the Speaker is saying because of the cost of governance. The cost of governance is getting unbearable. We shouldn’t be compounding the problem by creating more and more institutions. We should rationalize the existing ones, extend their mandate and ensure that you integrate”.

This hope was soon dashed as many members and subsequently the Speaker himself made a U-turn and continued with sponsoring and passing Establishment Bills to bring on board new institutions and organisations that would add more cost to the Federal Government.

Bills such as the Petroleum Industry Bill (PIB) which Nigerians are hoping on for the needed reforms in the country’s oil sector to address the dwindling economy; Electoral Act Amendment Bill aimed at strengthening the electoral process and the second Economic Stimulus Bill aimed a tackling the adverse effects of Covid-19 on economy have continued to drag in the House.

However, over 100 Establishment Bills have received accelerated legislative actions by passing through first, second reading, being at public hearing stage and third readings from February when the Speaker gave the caution to date.

Most of these Bills seek to establish tertiary educational and health institutions in states where such are already in existence and are suffering from poor funding, staffing, equipment and facilities.

There are also those that are seeking to create new institutions with full organisational structures and budgetary allocations separate from being under certain Ministries where they are presently warehoused.

Notable amongst the Bills are: Bill for an Act to Establish the Sustainable Development Fund, Bill for an Act to Establish Nigerian Maritime Security Trust Fund, Bill for an Act to Establish Federal Medical Centre, Orerokpe, Delta State, Bill for an Act to Establish Federal Capital Territory Signage and Advertisement Agency, Bill for an Act to Establish Federal College of Education (Technical) Baure, Katsina State and Bill for an Act to Provide for Establishment of National Hospital, Port Harcourt, Rivers State.

Others are: Bill for an Act to Provide the Legal Framework to Establish Federal Medical Centre, Ilesha–Baruba, Kwara State, Bill for an Act to Provide for Establishment of Federal College of Nursing and Midwifery, Obuoffia, Awkunanaw, Enugu State; Bill for an Act to Establish the University of Agriculture, Langtang, Plateau State, Bill for an Act to Establish the Environmental Trust Fund and Bill for an Act to Establish National Renewable Energy Development Agency and to charge it with Responsibility of Promoting the use of Renewable Energy Resources.

The House also passed for second reading, ‘Bill for an Act to Alter the Provision of the Constitution of the Federal Republic of Nigeria, 1999, to create Additional Special Seats for Women in the Federal and States Legislative Houses.

To crown it all, Gbajabiamila who cautioned lawmakers against sponsoring Establishment Bills last week presided over the passage through second reading, Bill for an Act to Provide a Legal Framework for Establishment of National Social Investment Programmes which he is the lead sponsor.

It is now worrisome whether the National Assembly, particularly the House of Representatives would support the Federal Government’s efforts to cut cost by trimming down redundant agencies.

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