AT a newspaper stand at the Federal Secretariat, Abuja, on May 5, a number of civil servants huddled over copies of national dailies displayed by a vendor. The newspapers had screaming headlines on their cover pages.
Most of the headlines were about the prevailing state of insecurity in the country – kidnapping, terrorism, insurgency, herdsmen attacks, banditry, armed robbery, cultism and other violent criminal acts. But insecurity was not what made the gathered civil servants peruse the newspaper front pages with alarm and dread.
A particular news item, which appeared on the cover of most of the newspapers in different forms, was the cause for concern. According to various reports, the Nigerian government was planning to cut workers’ salaries as part of measures to reduce personnel cost, and ultimately bring down the high cost of governance in Nigeria.
The reports emanated from a presentation by Minister of Finance Zainab Ahmed at a policy dialogue on ‘Corruption and cost of governance in Nigeria,’ organised by the Independent Corrupt Practices and other Related Offences Commission (ICPC) the previous day, May 4.
Noting that the Nigerian government had initiated a number of programmes aimed at cutting the cost of governance in the face of dwindling revenue, Ahmed disclosed that President Muhammadu Buhari had directed the Salaries and Wages Committee to review the payroll of public servants.
“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 pay rolls in terms of stepping down on cost,” the minister said.
Considering that the planned review was informed by revenue challenges, it is expected that the development will lead to slash of workers’ salaries.
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A few yards away from the gathering at the newsstand, Joseph Mancha, a Level Seven officer in the Federal Ministry of Education, was reading a report on the planned salary cut in a copy of a national daily which he clutched in his hands. He had just bought the newspaper from the vendor.
Taking a break from reading the newspaper, Mancha told The ICIR‘s correspondent, who was at the Federal Secretariat, that he was worried about the government’s plan to reduce salaries.
Mancha, who said he was still waiting for his first promotion years after joining the federal civil service, said his salary was not enough to make ends meet.
Reducing the salary would amount to a death sentence, he observed.
Speaking with The ICIR, Mancha said, “The salary is very small as it is – you can’t do anything meaningful with it and now we are hearing that government wants to reduce salaries. If that is to happen, how will I survive? I am very worried.”
A civil servant on Grade Level Seven in any of the core ministries that make up the federal public service earns about N50,000 monthly. However, the package for a government worker on the same level varies in some parastatals.
Disparities in wages in the federal public service was another issue the minister of finance said the government intended to address in order to bring down personnel cost.
The minister also said there were plans to merge ministries and agencies undertaking similar functions.
Mancha expressed fears that the planned merger could lead to downsizing of the workforce.
“If the government decides to merge agencies, it could lead to downsizing and the problem is those who retired from service are finding it difficult to receive their severance benefits. So, what will now happen to people who will leave the service if the government decides to downsize?” he wondered.
Mancha’s concerns were shared by a staff member of the Federal Ministry of Communications and Digital Economy, who introduced himself to The ICIR as Sampson. Sampson said he could not give his full name because he was afraid that he could be victimised by the authorities.
In a chat with The ICIR, Sampson said he got hint of the plan by the government to slash workers’ salaries while listening to the radio earlier that morning.
“It is something every government worker should worry about,” he said, noting that he was not able to make ends meet with his current salary.
“I can’t imagine how I will survive if they reduce the little I am getting now. That will be terrible. I wonder whether the people in government are not aware of the state of things in the country,” Sampson said, a worried expression on his face.
Another civil servant, Chika Blessing, said the national minimum wage was nothing to write home about.
She wondered if the reported plan to reduce workers’ salaries would involve a reduction of the minimum wage.
“I heard over the news that the minister of finance said the Federal Government is planning to review workers’ salaries in order to cut personnel cost. I am yet to understand this properly but with the way government keeps on saying that there is no money, it only means that they want to reduce salaries. That shows that instead of making progress, we are moving backwards. It is unfortunate,” Blessing, an administrative officer in one of the ministries located at the Federal Secretariat, said.
Blessing expressed regrets that she had not been able to raise enough money to set up a private business.
“The only way to survive is to have additional income,” she added.
Bashir Usman, a staff member of the National Assembly Service Commission, could not hold back his anger when he spoke about the planned wage cut in an interview with The ICIR.
“The news of the plan by government to reduce salaries came to me as a shock. The news is everywhere – that is the only thing workers are talking about at the moment,” he said.
Usman said the Nigerian authorities were not sincere about reducing the cost of governance.
“If the government is sincere about reducing the cost of governance, then it should cut the cost of maintaining those in the executive and the legislature, especially the National Assembly,” he said.
Usman pointed to ‘huge’ sums budgeted for running the Presidential Villa, as well as the allowances enjoyed by the president, vice president, ministers, senators and members of the House of Representatives. Of particular concern to Usman is the large number of expensive vehicles in the convoys of these categories of public office holders.
“So much money is going into the purchase and maintenance of these vehicles in their convoys. The government should cut off all those expenses if it is serious about cutting the cost of governance. It should block all leakages in revenue generation and manage the available resources very well,” Usman said.
Also speaking with The ICIR at the Federal Secretariat in Abuja, Godwin Nwosu said the ‘meagre’ salaries paid to civil servants in the core ministries had nothing to do with high cost of governance in Nigeria.
“Let them tell us the total wage bill of the government and how much of that is spent on the executive and the National Assembly. You will find out that the total package a senator collects in a month can pay the salaries of more than 100 civil servants in these ministries,” Nwosu said.
With eyes fixed on a headline that read, ‘FG plans to cut workers’ salaries,’ on the cover page of a national daily at the newspaper stand, Monday Akpan, a Level 12 officer in the Ministry of Science and Technology, told The ICIR that the Nigerian government would be condemning workers to a life of penury and destitution if it cut salaries.
“I am very worried, but I don’t want to believe that the government will be that insensitive to the plight of the citizens who are already going through severe hardship,” Akpan said as he bent over the vendor’s stand while reading the displayed newspapers without buying any copy.
Announcing plans to reduce the cost of governance, Finance minister Ahmed had stated that the measures she outlined were targeted at reducing recurrent expenditure, projected to gulp N5.6 trillion, about 41.5 per cent of the N13.5 trillion budgeted by the Nigerian government for the 2021 fiscal year.
- Labour unions say no to reduction of workers salaries
The ICIR observed that the planned ‘wage cut’ suggested by the finance minister was already attracting spirited opposition from labour leaders in the public service.
General Secretary of Senior Staff Association of Statutory Corporations and Government Owned Companies (SSASCGOC) Ayo Olorunfemi, in an interview with The ICIR, said government must be ‘joking’ if it was actually thinking of cutting workers’ salaries.
“The information is just getting to us now, but we believe they (government) are joking. Even though the labour movement in Nigeria today is nothing to write home about, some of us will resist it. I believe it is just wishful thinking on the part of government,” he said.
Stressing that the wages being paid to government workers were not enough, Olorunfemi said the national minimum wage was ‘under negotiated.’
He added, “If they want to reduce salaries, they must call us for discussions and we are not going to discuss reduction of salaries when the salaries we are getting is not enough. We are not getting the salary we are getting now through Buhari’s magnanimity.”
Olorunfemi observed that should the government decide to cut salaries, personnel in institutions such as the military, the police and the State Security Service would all be affected.
“Who is going to allow it? And if you now exempt some people from the reduction, how will you justify that? Does it mean that people would be asked to show the importance of their job?”
Arguing that salaries had nothing to do with the high cost of governance in Nigeria, the labour leader asked, “How much are they giving us as salary compared to what they steal every day?”
Also speaking with The ICIR, President of the Association of Senior Civil Servants of Nigeria (ASCSN) Tommy Okon said it would be ‘insensitive’ for the government to think of reducing workers’ salaries “knowing full well that the N30,000 minimum wage was not enough.”
“But should that be the case, the government should have a rethink,” Okon added, noting that rather than slash workers’ pay, the government should reduce the salaries and other allowances being paid to political officeholders.
He also suggested making members of the National Assembly and state assemblies operate on part-time basis so as to reduce the huge costs associated with maintaining that organ of government.
Noting that there was a need to pump funds into the economy for economic growth, Okon said, “Government at this time should not be thinking of cutting down personnel cost in the public service.”
Asked if the labour union would embark on strike should government went ahead with the plan, he said, “When we get to that point, we will cross it.”
- Cost of governance spiralling out of control
In 2019, while unveiling the 2020-2022 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP), Finance minister Ahmed revealed that there would be a spike in personnel cost (including pensions cost) from N2.45 trillion in 2019 to over N3.4 trillion in 2020 due to the Nigerian government’s decision to create five new ministries. At the time, it was reported that the additional personnel cost arising from the creation of the new ministries was not factored in the implementation of the new minimum wage.
That development highlighted how lack of planning contributes to the high cost of governance in the country.
The disproportionately huge size of recurrent expenditure compared to capital expenditure in annual national budgets illustrates the high cost of governance in Nigeria.
And the need to keep up with the continuous hike in the cost of governance has seen recurrent expenditure taking prominence over capital expenditure in recent national budgets.
In the 70s, capital expenditure accounted for a larger portion of total government expenditure in Nigeria. While recurrent expenditure was put at N3.81 billion in 1977, capital expenditure was N5 billion. In 1980, recurrent expenditure rose to N4.8 billion while capital expenditure more than doubled the amount, at N10.1 billion.
But from 1980, recurrent expenditure assumed a more prominent role. From N36.2 billion in 1990, recurrent expenditure rose to N461.6 billion in 2000, N1.5 trillion in 2007 and N2.63 trillion in 2011. On the other hand, capital expenditure received N24.04 billion in 1990, N239.45 billion in 2000, N759.3 billion in 2007 and N1.9 trillion in 2011.
By 2021, the sum of N5.6 trillion earmarked for recurrent expenditure amounted to more than 40 per cent of the budget of the Nigerian government. Thirty-seven per cent of the budget, N4.8 trillion, was allocated to paying salaries and overheads in the ministries, departments and agencies (MDAs) of the government.
On the other hand, an aggregate sum of N3.8 trillion, 29 per cent of the budget estimate, was allocated for capital expenditure.
The sum of N3.124 trillion, 24 per cent of the 2021 budget, was allocated for servicing Nigeria’s debt obligations. The amount represents an increase of N445.5 billion from N2.68 trillion earmarked for debt servicing in 2020.
High cost of governance is forcing the Nigerian government into borrowing money to finance budget deficits, and also to fund capital projects. But the cost of servicing the loans has taken a huge toll on the economy.
- Corruption as major factor in high cost of governance in Nigeria
In a report released on May 3, BudgIT, a civic organisation which advocates transparency and accountability in public finance, disclosed that its investigations into the 2021 budget revealed at least 316 duplicated capital projects worth N39.5 billion. One hundred and fifteen of such capital projects occurred in the Federal Ministry of Health.
In addition, BudgIT noted that some MDAs received allocations for capital projects they could not execute. For example, the Federal College of Forestry in Ibadan in Oyo State got N50 million for the construction of street lights in Edo State.
The BudgIT publication also observed that various non-security related government agencies now requested and received funds for ‘security votes,’ which were not accounted for.
“In the 2021 budget, a total of 117 federal agencies received allocations for ‘security votes’ worth N24.3 billion, despite many of these agencies already having allocations for ‘security charges’ to cover each agency’s security needs,” the BudgIT report said.
Chief Executive Officer of BudgIT Gabriel Okeowo said loopholes in the budget often gave room for corruption and theft. According to him, the N4.69 trillion which the Nigerian government planned to borrow to meet its expenditure in 2021 could end up in private pockets if loopholes in the budget were not blocked.
Noting that the ‘staggering’ N3.31 trillion debt servicing burden would wipe out about 41.63 per cent of the N7.99 trillion projected 2021 revenue, Okeowo said the Nigerian government could maximise the ‘little public funds left’ by blocking leakages.
- Nigerian public office holders among highest paid in the world
Despite Nigeria’s revenue challenges, the country’s political office holders are reputed to be among the highest paid in the world.
Nigeria is ranked as a ‘lower middle-income country’ by the World Bank.
Nigeria’s president and vice president earn N3.5 millon and N3.03 million as basic salary, per annum, respectively, according to the Revenue Mobilisation Allocation and Fiscwl Commission (RMAFC) records. The RMAFC determines the emoluments of political office holders.
The annual basic salary of political office holders are: minister, N2.02 million; minister of state, N1.95 million; special adviser, N1.94 million; governor, N2.22 million; deputy governor, N2.11 million; and commissioner, N1.33 million.
In addition to the basic salary, the president is entitled to allowances such as hardship allowance – 50 per cent of his salary, about N1.757 million, and consistency allowance – 250 per cent of his salary, which is about N8.79 million.
The president’s gratuity is 300 per cent of his salary, amounting to N10, 544,115, and he is also entitled to a leave allowance of 10 per cent of his salary, as well as a vehicle loan which amounts to 400 per cent of the salary.
The vice president, governors, members of the National Assembly and some other categories of political office holders also receive similar allowances in different amounts.
Also, other regular allowances enjoyed by the president, vice president, the governors and members of the National Assembly include: personal assistant, constituency, vehicle fuelling/maintenance, domestic staff, entertainment, recess, newspaper/periodicals and utilities.
These political office holders are also entitled to house maintenance, security, special assistant, furniture, wardrobe, duty tour, accommodation, estacode and medical allowances.
In January 2020, RMAFC said it had started preliminary work on the review of the remuneration of political office holders. But the exercise has encountered hitches due to lack of funds.
- Oronsaye report proffered solutions but recommendations have not been implemented
While the Nigerian government continues to pay lip service to the clear and present need to reduce the cost of governance, a document which offered a blueprint on ways to actualise the objective is gathering dust.
The Presidential Committee on Restructuring and Rationalisation of Federal Government Parastatals, Commissions and Agencies, chaired by a former Head of the Civil Service of the Federation Steve Oronsaye was set up by former President Goodluck Jonathan to essentially reduce the cost of governance, eliminate duplication of functions in government departments and agencies and reasonably devolve governmental powers.
The 800-page report turned in by the committee, which became known as the ‘Oronsaye Report,’ contained far-reaching recommendations that, if implemented, would help to address the high cost of governance in Nigeria.
The committee identified 929 MDAs in the Nigerian government’s budgeting structure, including 541 parastatals, commissions and agencies. It identified 38 agencies to be abolished, and 14 to be reversed to departments in the federal ministry.
Also, the Oronsaye Report recommended a reduction in the number of statutory agencies from 263 to 161, as well as the merger of 52 institutions.
It is unlikely that the Muhammadu Buhari administration would take up the implementation of the Oronsaye Report, but Ahmed suggested that the government was looking in the direction of one of the key recommendations of the report when she disclosed plans to review the number of agencies in terms of their mandates.
Ahmed said the government intended to merge agencies with similar functions.