Nigeria’s cash-strapped government will likely do everything to meet its big-on-paper-light-on-impact budgets except one: cut its administrative cost.
As the government deals with budget deficits year after year, it prefers to pile debt rather than cut back on a costly lifestyle that has eaten away at national budgets for decades. A key beneficiary of that extravagant culture is President Muhammadu Buhari. The president preaches prudence in government spending in public, but the budgets he signs off annually tell a different story.
In 2022, the president’s office will spend a whopping N1.6 billion on new vehicles – the fourth largest by any government office. That comes just a year after the office spent nearly half a billion on the same item.
Since coming to power six years ago, the president’s office has spent N5 billion on vehicles – enough to build 500 health centres at N10 million each. It has spent billions more on food, uniforms, travels, a huge presidential air fleet, president’s hospital and more.
The expenditures are an example of how Nigeria’s federal and state governments annually channel scarce public resources into projects that sustain their flashy lifestyles while critical programmes that should benefit citizens are perpetually underfunded.
While the Buhari government has successfully increased Nigeria’s aggregate spending compared to previous administrations, a bulk of that rise still finances non-essential items.
As the budgets and their deficits rise since 2015, so has the cost of governance that covers everything from fuel to printing paper to “welfare packages”.
The N16.4 trillion budget for 2022 has a shortfall of more than N6 trillion and recurrent expenditure of more than N4 trillion, meaning that for every N160 the government spends, N60 will be borrowed and N40 will go to financing government operations, not building badly needed roads and hospitals.
Nigeria’s public debt has risen the most under the Buhari administration when compared to previous governments since 1999, and foreign debt has grown three times more than the combined figure recorded by the past three administrations, a PREMIUM TIMES analysis showed.
“The revenues are simply inadequate to fund fundamental expenditure, therefore, every available fund should be spent with the greatest value for money, tied to a high-level national policy framework and aimed at improving livelihoods, growing the economy, reducing poverty and inequality,” said Eze Onyekpere of the Centre for Social Justice, whose organisation launched an initiative to identify wasteful items in the 2022 budget.
“It is against this background that the pull-out of frivolous, inappropriate, unclear and wasteful expenditure calls the attention of the executive, legislature, private sector, civil society including the media to these frivolities at a time of grave national crisis.”
Mr Onyekpere condemned the culture of assigning billions of naira annually to projects such as “routine maintenance”, “foreign and local travels” and purchase of computers.
“According to the 2022 budget call circular, resources are to be allocated based on actual needs, in line with the immediate needs of the country as well as government’s developmental objectives and priorities. Starting from the presidency’s state house headquarters, the pull-out calls on the leadership to lead by example.
“Spending billions of naira every year on routine maintenance of statehouse facilities is a huge waste. All statutory transfers are stated as lump-sum provisions without details. No person, government agency or organisation has the right in a constitutional democracy to spend public funds in a way and manner that is unknown to the ultimate sovereigns, being the taxpayers and citizens.”
Rising Administrative Cost
The spending on vehicles follows a trend. For 2021, the president requested the National Assembly to approve N18.9 billion for the purchase of new vehicles for government offices. Of that amount, N336 million was proposed to buy new vehicles for the president.
In the new budget, the president will spend N1.6 billion on new vehicles while the vice president will spend N30 million on new vehicles.
In this regard, the president’s office is only surpassed by the Federal Road Safety Commission which intends to spend N1.7 billion on operational vehicles; the Nigerian Correctional Service (N1.1 billion); Ministry of Works and Housing (N720 million) and Ministry of Health – headquarters (414 million) and Ministry of Defence ministry (N835 million).
The presidency is also seeking the allocation of N21 billion for the construction of a new presidential wing for the president and his family as well as vice president and his family. The government plans to spend N19 billion on software, with the presidency amongst the biggest spenders.
“For a government that routinely allows medical practitioners to go on strike on the excuse of lack of resources and a president that routinely indulges in medical tourism, this vote is a waste. It is better channelled to the health of the entire population. Save this vote,” Mr Onyekpere said of the new clinic.
Personnel cost has continued to rise yearly despite the government not conducting a major recruitment.
In 2022, it hopes to spend N350 billion more on personnel costs and N167 billion more on the overheads than it did in 2021.
Overhead (costs related to administration) totals N792.4 billion for 2022, meaning spending on overheads will surge by more than a quarter in the year ahead should the legislature go ahead to assent to the appropriation bill.
The government got approval of N3.76 trillion for personnel costs for this year and wants N4.11 trillion for that same purpose for 2022.
The combined overhead and personnel expenses proposed for next year sum up to N4.9 trillion, 8.9 per cent higher than Nigeria’s entire budget of N4.5 trillion for 2015, the year Mr Buhari began his first term in office.
Those two expenditure categories also exceed the cash Africa’s largest economy intends to commit to developmental projects in 2022, estimated at N4.89 trillion.
The rising expenditure is of concern even to the government. In October, the finance minister, Zainab Ahmed, said the government was incurring huge debt as a result of a bloated payroll.
“Our debt service to overall revenue is high because we have a very large expenditure base,” Mrs Ahmed, the minister of finance, budget and national planning, told Bloomberg TV this month.
“We have a large proportion of our budget dedicated to payroll, and Mr President had decided from the beginning of his administration that we were not going to disengage staff.”
The government’s spending on non-debt recurrent expenditure in the last decade totalled N29.3 trillion, way too high when considered alongside a consolidated revenue of N33.2 trillion in the period in question.
There have been claims of “ghost workers” in the employ of the government, prompting it to introduce the Integrated Personnel and Payroll Information System. Mrs Ahmed did not immediately respond to a phone call and text message seeking comment.
The head of the government’s budget office, Ben Akabueze, however, had a slightly different opinion from the minister’s position about big spending. He disagreed the country’s expenditure base was “large” and said Nigeria was indeed spending too little and had the lowest expenditure to GDP ratio in all of Africa.
Mr Akabueze, however, argued the government needs to spend smartly and effectively on important things.
“Our revenue to GDP ratio is also the lowest in Africa,” he said at a meeting with journalists on Friday in Abuja.
“As I said earlier, it is about 9 per cent. So, if our revenue to GDP ratio is at 9 per cent and our public expenditure to GDP ratio with recent significant growth is about 14 per cent, then already you see a gap between 9 and 14 and that gap is funded by debt.
“That gap of 5 per cent is funded by debt. We must fix our revenue challenge because oftentimes people just say cut expenditure.
“The truth is cutting expenditure is not currently a viable option for two main reasons. Firstly, our public expenditure to GDP ratio is about the lowest even on the continent of Africa. As a country, our public expenditure to GDP ratio is under 15 per cent.
“Even on the continent of Africa, that ratio, the average is over 30 per cent. The global average is over 30 per cent. I am talking of the whole of the federal, state and local governments.
“The reality is that in aggregate, governments in Nigeria are not spending too much, they are spending too little,” he added.
He said the solution is not to cut government spending.
“The solution is to make government spending more efficient and increase the scope for the government to be able to spend more because our public expenditure to GDP is so low, that is why the delivery of public goods and services is weak,” Mr Akabueze noted.
He noted that cutting personnel cost which currently stands at N4.11 trillion would not be right because public sector wages are already low compared to the private sector.
“There is a correlation between low public expenditure to GDP ratio and low revenue to GDP ratio.”
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