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Cost of governance leaps to N3.516t from N2.593t in 2015

By Mathias Okwe (Assistant Business Editor, Abuja) and Benjamin Alade (Lagos)
29 September 2019   |   3:53 am
The cost of running governance at the federal level has steadily grown from N2.593t in 2015, when the current administration came into office, to N3.516t at the end of the 2018 fiscal year, as revealed by figures from the Budget Office of the Federation obtained by The Guardian.

[FILES] National Assembly (NASS)

The cost of running governance at the federal level has steadily grown from N2.593t in 2015, when the current administration came into office, to N3.516t at the end of the 2018 fiscal year, as revealed by figures from the Budget Office of the Federation obtained by The Guardian.

This revelation sharply contradicts claims by officials of the President Muhammadu Buhari-led government that the government has cut down on the cost of governance in such a way that priority is now given to capital project.

The cost of governance includes emoluments of all political office holders in the three arms of governments, as well as the federal bureaucracy, which is borne by the provisions in the recurrent and overhead parts of the annual budget.

Instructively, in a year where the sum of N3.516t was spent on servicing the bureaucracy, only N1.862t was released for the implementation of capital projects.

“An analysis of data from the Office of the Accountant General of the Federation on the capital performance for MDAs as of June 30, 2019, showed that a total of ₦1, 862.22b was released and cash-backed to MDAs for their 2018 capital projects and programmes. The sum of ₦1,446.57b was released as the usual capital, ₦328.54b as capital supplementation, and ₦43.56b as Sukuk proceeds. The sum of ₦343.88b as first releases, ₦423.45b as second releases, ₦36.33b as additional second releases, ₦185.57b as third releases, ₦10.91b as additional releases, ₦472, 10b as online Authority to Incur Expenditure (AIEs), and ₦389.99b as Manual AIEs, “according to the Director-General of the Budget Office, Mr. Ben Akabuaze.

The data also revealed that ₦1, 655.26b (or 88.89 percent) of the total amount released and cash-backed was utilised by MDAs as at June 30, 2019

It would be recalled that a total of ₦9, 120.34b was appropriated for expenditure in the 2018 budget. Of this amount, ₦3, 516.48b (38.56 percent) was for recurrent (non-debt) expenditure, ₦2, 203.84b (24.16 percent) was for debt servicing, ₦530. 42b (5.82 percent) was for statutory transfers and ₦2, 869.60b (31.46 percent) was for capital expenditure.

While the budgeted amount for capital recorded funding shortage, votes for recurrent was 100 percent funded and implemented.

The report said: “The aggregate Federal Government expenditure for the period translates to a prorate quarterly expenditure outlay of ₦2, 280. 08b in 2018. Actual expenditure in 2018 stood at ₦7, 511. 19b indicating a decrease of ₦1,609.15b or 17.64 percent below the annual projection. The 2018 expenditure was, however, ₦1, 047. 58b or 16.21 percent higher than the expenditure of ₦6,463.61b recorded in 2017. Actual expenditure in the fourth quarter of 2018 stood at ₦1, 944.60b, translating to a ₦335.49b (14.71 percent) expenditure shortfall for the period.

“Total non-debt recurrent expenditure of ₦938.19b was spent in the fourth quarter of 2018. This implies an increase of ₦59. 07b (6.72 percent) above the quarterly estimate of ₦879.12b. It was also ₦150. 01b or 19.03 percent above the ₦788.18b recorded in the third quarter of 2018 and ₦80.11b or 9.34 percent above the ₦858.08b level of expenditure reported in the fourth quarter of 2017,” it further analysed.

Even though the plan to cut down on the cost of governance by the administration is yet to be realised as reflected in the numbers posted, officials of the government have continued to score themselves high on fiscal discipline.

“Government continued to prioritise capital expenditure above discretionary recurrent non-debt expenditure like overtime in the face of continuing revenue constraint. The strategic initiatives of government aimed at cutting down recurrent costs were therefore strongly pursued during the period. This included among others, the continued rollout of the Integrated Payroll and Personnel Information System (IPPIS) across MDAs, restriction on some overhead items, as well as the use of Treasury Single Account (TSA). The above efforts have also aided the government to stop further increases in overhead while at the same time gave room for substantial increases in capital expenditure since the 2016 fiscal year,” the report added.

Reacting to the development, a development economist, Mr. Odilim Enwegbara said the only way to cut down on the cost of governance is when the government embraces modern fiscal and financial technology applications that monitor both accruals and expenditure real-time, with full briefs and details for expenditure.

“This government is not serious in checking revenue loses and theft by its officials. I am saying so because I have proposed to it, an app that is capable of blocking all these lootings through procurement and spendings on ghost workers, but it has not shown any interest more than two years ago. The app if embraced would complement the TSA such that every accrual would be well accounted for while expenditure, including a high cost for procurement, would be reduced because the app is equally priced sensitive. But to date, I am yet to get a response from the Finance Ministry,” Mr. Enwegbara told The Guardian.

Relatedly, stakeholders in the automotive industry have continued to decry plans by the National Assembly to purchase official vehicles worth N5.55b for members.

According to the Dean, School of Transport, Lagos State University (LASU), Prof Samuel Odewumi, there is no better demonstration of the fact that our political class does not have the ultimate interest of this country at heart than this instance.

“They preach to the poor to buy Nigeria and they cannot use this golden opportunity to show a good example. In this regard, they are all united in their self- interest.

“There is no difference of opinion between the Peoples Democratic Party (PDP), the All Progressives Congress (APC) or the All Progressives Grand Alliance (APGA). That should tell the poor that are fighting themselves over political affiliations to ‘borrow themselves brains.’

“Please note that these people have been paid their car allowances. They are using the decoy of committee chairmanship to still collect another official car. The committees are so many that all of them will have justification to collect cars individually. We are in the political wilderness. I just hope that one day we will get out of this selfish and wicked entrapment,” he added.

The Principal Partner, Media Advocate Limited, Manny Philipson, questioned, “isn’t it laughable that a country that is currently grappling with the challenges of paying N30, 000 minimum wage sees nothing wrong in its National Assembly expending N5.550b on exotic vehicles for its principal members.”

Philipson, who said it has become routine for federal lawmakers to spend lavishly to acquire luxury cars for themselves in spite of agitations to encourage local vehicle manufacturing, added that politicians prioritise their self-interest and luxury over the welfare of citizens.

“You would also recall that President Muhammadu Buhari’s inauguration car was a Mercedes Benz – Maybach S550 worth N280m. What precedent is the executive setting for the legislative arm? Nigerians will be crying wolf if they think that they can restrain or stop the National Assembly from procuring these choice vehicles. We must set our priorities right for us to address this matter subsequently.”

He continued: “Sometimes I wonder why the previous vehicles used by the outgone legislature can’t be retrieved and refurbished for incoming principal members, rather than spend fresh budgetary implications on common vehicles. I think it goes to show our level of ignorance and the value we attach to mundane things.”

Philipson said these vehicles are supposed to be official and as soon as the principal members of both houses are done in the office, the vehicles should be retrieved and handed over, after all, they were paid salaries and allowances while in office.

“And should these cars be procured, they should be bought from local vehicle assemblers. So far we have 10 subsisting vehicle assemblers, including Peugeot Automobile Nigeria, Nissan Motors Nigeria, Honda Motors, Innoson Vehicle Manufacturing Company, CIG Motors Company Limited, Hyundai Motors Company, Ford Motors Company, JAC Motors Company, KIA Motors, and Volkswagen AG,” he added.

Chairman, Motor Vehicles & Miscellaneous Assembly Sectoral Group of the Manufacturers Association of Nigeria (MAN), Dr. David Obi, said if the amount was spent on locally assembled vehicles, it would have great impact on job and wealth creation.

Deputy Managing Director of Massilia Motors, Kunle Jaiyesimi, said the country was unfortunate to have in place, a system where “lawmakers are the ones breaking the law. And it is like people are already giving up on issues here in the country. The non-passage of the auto policy is a major hindrance for investors coming into the sector.

“Serious investors would see us as a laughing stock if the NASS invests such amount in buying exotic vehicles without investing in the NAIDP. We started this in 2013/2014 and the Federal Government is yet to assent to it. Ghana that started theirs last year, passed the enabling law in January and they are making huge progress.

“I am happy that the President recently in Japan was raising questions about when Toyota and Suzuki are coming to Nigeria in the light of the fact that they are starting their assembly operations in Ghana in 2020. Maybe the question that Toyota management should have asked him is ‘when are you signing your auto policy bill into law? What all these shows are that the government is not too committed to Project Nigeria. That is why you see senators spending so much now on new vehicles. If they commit this amount into vehicle procurement facilities for the masses, the government can also enjoy from the pool,” he added.