Cost Of Governance In Nigeria

JEROME MICHAEL EBRUPHIYO Friday, November 26, 2021 Basis



This article will provide information on the cost of governance in Nigeria and also provide answers to questions regarding the cost of governance in Nigeria.

An Overview on the Cost of Governance in Nigeria

The cost of governance is the money spent on administrative processes. It is also known as administrative expenditure. Other authors defined cost of governance as costs associated with the running of government. In other words, these are costs incurred by the government is running this affairs. The government helps to sustain the social contract that binds every member of the state. Similarly, cost of governance can be defined as any expenditure in maintaining government administrative structures. He also equates cost of governance to total administrative expenditure, which is a part of total federal government expenditure in Nigeria. He said that the justification for using total administrative expenditure as cost of governance stems from the fact that administrative expenditures are incurred in governing processes. Cost of governance is government budget allocated to both capital and recurrent expenditures on maintaining government administrative structures, which appears to be very enormous in Africa the question of efficiency in governance is, therefore, to ensure that public funds are spent judiciously, while public goods and services are sufficiently provided. The distribution of Public goods and services in Nigeria is based on the principle of equity. Natural and human resources may skew income distribution in favour of endowed groups when the market is allowed to be the principal mechanism for resource allocation. Free markets are, therefore, more likely to be hindered when pronounced disparities exist in the distribution of natural and human capital endowments among groups that exist in a particular society. This mostly explains why the nationalists of northern extraction did not agree at first with the idea of independence in Nigeria, since their limited investment in human capital would put them at a disadvantage in a post independent Nigeria. Nigeria, therefore, put up a political arrangement that ensured that the commanding heights of the economy were left in the domain of the public sector. With the benefit of hind sight, one could say this arrangement signaled the beginning of patronize activities that stifled the market and productivity, promoted rent seeking, brought an imbalance between efforts and rewards, and raised the cost of governance in Nigeria. Cost of governance is the cost incurred in running the government. It is the cost of performing political duties, and discharging civil services to the public. A larger than optimal civil service, dominated mainly by that section of the country with significant human capital deficiencies is bound to raise governance costs and institutionalize the mechanisms for rent extraction. This is a major problem in Nigeria. Another institutional factor that raises cost of governance is the provision of security by the state. For instance, a public good like law and order (security for short) has a high degree of public interest, upon which there is a broad consensus that it could be more cheaply provided by government, particularly by a central government, if we admit that in reality there is no pure public good, we should understand why profit maximizing firms could equally provide complementary security services. However, government provides that bulk of security services. Thus, the role of the private sector in the security sector is minimal. We recognize that the different levels of government would be able to organize security effectively.

What are the Two Types of Cost of Governance?

Cost of Governance is any cost associated with the running of government. In other words, it is the cost incurred by the government in the course of providing goods and services to the citizenry. It may be subdivided into recurrent and capital expenditure.

Analysis of the Cost of Governance in Nigeria and its Implications on the Economy

Since May 29, 1999, political activities across the country have assumed different dimensions. This is why politics has virtually become the most lucrative business in the polity. It is therefore not surprising that in some sections of the Nigerian society, politics has become a do-or-die affair. It is no longer unusual to see a spirants and candidates assassinated over tussles for political positions; in numerous cases property and building are destroyed in clashes between two opposing camps. These are pointers to the level of desperation that accompanies the desire to get to public office to earn enormous salaries. The outcry over high cost of governance in Nigeria reacted new height recently. The renewed angst that the Governor of Bauchi State Mallam Isa Yuguda; appointed 1,070 political aides to assist him in running the affairs of the State. These political aides are in addition to members of the Bauchi Executive Council, members of various boards and statutory corporations and governing councils of institutions of higher learning. Governor Yuguda is not alone in this decision to appoint a large number of aides purportedly to run state affairs. His counterparts in Adamawa and Imo States, Governors Murtala Nyako and Rochas Okorocha also appointed a large retinue of aides which included special assistants and special advisers. However, it is not too late for them to reconsider their actions by reducing to the barest minimum, the number of their political aids. This is in the interest of their states and ultimately the people. The public sector should under no circumstances be seen as a vehicle for wasteful, spending on large retinues of appointees. Nigeria at the moment can ill-afford such profligacy. Nigeria need not to operate the most expensive democracy in the world. If fully and faithfully implemented, these measures will go a long way in reducing the overall cost of governance in Nigeria. Our yearly financing gap has been estimated at US$10 billion. Most of this will have to be generated internally. More financial resources will be released for capital expenditure as a result of these cost cutting measures.

What Exactly is the Size of the Federal Civil Service Today and its Total Cost to the Treasury?

When the Public Service Reform Team (PSRT) was constituted in 2005, the number of the federal public servants was slightly above one million. The civil service was rapidly ageing, mostly untrained and largely under educated. Their average age then was 42 years, and over 60 percent were over 40 years. Less than 12 percent of the public servants held university degrees or equivalents. Over 70 percent of the junior grades 01-06, were of sub-clerical and equivalent skills. About 20 percent of the public servant employees were “ghost workers” non existent people on the pay roll which goes to staff of personnel and accounts departments. In the FCT, out of an initial head count of 26, 000, we found 3,000 ghosts in the first round of audit. By the time we introduced biometric ID and centralized, computerized pay roll, we found nearly 2,500 who failed to show up for documents. It is a nightmare as no one, including the various governments of the federation, really knows either the size of the civil service or its total cost to governance. For instance, the former Minister for Finance, Mr. Segun Aganga, was reported recently as saying that a staff audit of only seven of the MDAs showed that of the staff strength of 112, 000, there were 43, 000 so-called ‘ghost’ workers on the pay roll of the federal government. He also stated that personnel cost alone represented 50% of the recurrent expenditure of the federal government. Roughly, this translates to over N1.2tr. per annum. It could even be more as no reliable data is available in respect of the total staff strength of the federal civil service. Data from the federal office of statistics are outdated. Some staff audits have been conducted periodically since 1999, but the findings of these staff audit were not made public. Another staff audit was conducted recently by a committee chaired by Professor Anya. But the full details of this audit have not been released either.

Way Forward on the Cost of Governance in Nigeria

  • Constitutional amendments should be introduced urgently to reduce the size of the federal cabinet to not more than 18 to be appointed from the six geopolitical zones. In this regard the President and state governors should take the initiative in bringing about the necessary constitutional amendment for the reduction of the number of Ministers in the federal government. The approach to the issue has to be bi-partisan
  • There should be a limitation on the number of special advisers and special assistants serving in the government. It is estimated that over 300 are currently serving in those capacities now. This number should be reduced considerably
  • There should be a merger of the MDAs to reduce the cost of governance. There is far too much duplication of functions in the federal bureaucracy
  • The Fiscal Responsibility Act should seek to enforce budgetary and fiscal discipline in public expenditure. Appropriate legislation should be introduced limiting the size of the recurrent budget. Savings accruing from this exercise should be transferred to the capital budget
  • The pay and allowances of the federal and states legislators should be reviewed downwards by at least 60%
  • There should be a regular (preferably quarterly) auditing by the Auditor General of the Federation of all public expenditure
  • The Accountant General of the Federation should be under a constitutional obligation to publish quarterly expenditure of the federal Government
  • The Public Accounts Committees of the National assembly should be strengthened to enable it discharge its oversight functions on public expenditure more efficiently
  • All the governments of the federation should be made to depend less on the sharing of the federally collectible revenue and more on their internally generated revenue
  • The current de-registration of political parties by INEC is a welcome development
  • The National Assembly should be a single chamber and peopled by part time law makers
  • The number of states in Nigeria should be reduced and ministers appointed along geopolitical zones (at least 2 from each zone)

What is the Cost of Corruption in Nigeria?

The results show that corruption in Nigeria could cost up to 37% of GDP by 2030 if it's not dealt with immediately. This cost is equated to around $1,000 per person in 2014 and nearly $2,000 per person that lives in Nigeria by 2030.

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