Thoughts on Reducing the Cost of Governance in Nigeria: Remarks at the Birthday Colloquium for Ogbeni Rauf Aregbesola, 29th May 2021
1. I am delighted to felicitate with Ogbeni Rauf Aregbesola on his birthday. I participated in his birthday colloquium last year, and I am pleased to join other compatriots to celebrate him today.
2. It is fitting that his birthday event includes this conversation on one of the most pressing public policy issues facing our country today.
Many Nigerians are aware of and are understandably anxious about the security challenges which confront the country.
This requires immediate response by launching coordinated military operations to reclaim ungoverned spaces, alongside steps to recruit more persons into the security agencies and provide them better equipment and technology.
3. Aside from insecurity, another threat confronts Nigeria.
Our country is sitting on a fiscal cliff-edge.
Public revenues are falling. N.N.P.C earnings are almost entirely devoted to funding petrol price subsidy, leaving little or nothing to contribute to the Federation Account.
Tax revenues at federal and state levels at not more than 7% of G.D.P, are considerably lower than the global, and even the African comparator nations average of about 20%.
The Federal Government is severely indebted.
It is maintaining an overbloated public service, but is limited in its ability to sufficiently fund its mandates for security and infrastructure.
In 2020, the federal budget for roads was about N200bn, but over 800 billion naira was spent on fuel subsidy in the same year.
4. Each one of us knows what we will do in our private capacities when our incomes reduce or even stay stagnant. We will most likely respond by cutting our expenses while seeking other ways to enhance our incomes.
5. Neither of these coping mechanisms is evident so far in our national response.
It appears that a signifiant section of our political elite is of the view that the revenue crisis does not require any serious and concerted action, as if this country can behave like the ostrich and just muddle through, while the problems will resolve themselves and the good times will return without any effort.
6. With utmost belief in Almighty Allah, I have no doubt that we cannot leave our fiscal problems to chance or wishful thinking.
Government must trim its costs and focus on security, infrastructure and economic competitiveness.
7. Reducing the cost of governance at federal, state and local government levels can be achieved through the following measures:
i. Revenue Enhancement and Waste Reduction: Forge national consensus now, not later, to implement policies that will create more fiscal space for Federal and State Governments to be viable.
This means we must broaden the tax net and raise VAT to between 15-20%, and stop pretending that the regulated levels of bank lending rates, exchange rate, prices of petrol and electricity, and salaries of the public sector are realistic, sustainable and will lead us to the promised land.
ii. Enhance Efficiency of Public Sector: Right-size the governments at Federal, States’ and Local Government levels based on non-oil tax revenues (I.G.R) affordability through the merger of M.D.As with similar mandates and functions, and a nationwide freeze on creation of any new administrative, regulatory or executive bodies for the foreseeable future;
iii. Staff Quality trumps Quantity: Review public sector staffing levels to energise, professionalize and compensate appropriately.
Boost numbers, equipment and technology in the defence and security sector.
iv. Enhanced Machinery of Government: Undertake significant review of the machinery and operations of all departments, branches and tiers of governments for effectiveness, efficiency and transparency:
a. Lean and affordable executive branch with a fully monetized compensation system
b. Less expensive national and state assemblies with lower “overheads allowances”
c. Well-functioning, better paid and less corrupt judicial system
8. However, what we face is not just a fiscal crisis. It is a crisis of economic development.
Our country clearly has to cut the cost of governance, reduce waste and eliminate fraud.
But it is also true that Nigeria as a whole needs to create more wealth, in the public and private sectors, to enhance the life chances of our people, build human capital and promote equality of opportunity.
The government has to take the lead to help catalyze economic recovery and growth.
9. What Should the Federal Government of Nigeria Do?:
End Guesswork and Governance in the Dark: Target to complete the biometric capture, identification and registration of every Nigerian citizen, his address, occupation, etc., to raise more tax revenues, enable development planning, ease security management and ensure socio-economic targeting is more accurate.
Internal Security Imperative: Restore internal security and strengthen national defence – comprehensively defeat the insurgents and bandits.
Socio-economic activities nationwide will sooner or later be grounded unless this is done within the shortest possible time.
Entrench True Federalism: Reinstate the Elite Consensus of 1951 – become a true federation of 36 states and F.C.T, as per the A.P.C True Federalism Committee Report of 2018:
i. Rule of Law
ii. Common citizenship and Respect for Diversity
iv. Devolution of Powers – move the following items from the
Exclusive List to the Concurrent List in the 1999 Constitution:
a. Police: decentralise it for effectiveness
b. Oil and Gas (other than offshore in the Continental Shelf and Extended Economic Zone)
c. Mines and Minerals (other than offshore in the Continental Shelf and Extended Economic Zone)
f. Fingerprint and criminal identification records
g. Stamp Duties
h. Registration of Business Names
i. Food, Drugs and Poisons (other than Narcotics)
j. Decentralisation of the Judiciary
k. Minimum Wage
l. Democratic Local Government system that is flexible recognising contextual differences, history, culture and other peculiarities.
Imperative for Economic Planning and Industrial Strategy: Develop a national economic strategy to 2050, with five year development plans, subnational strategies and plans incorporating national priorities in a sound industrial policy.
Oil and Gas is not the Future: Make wise and hard choices about the investment of revenues from this resource before oil and gas become irrelevant in the global energy marketplace.
Subsidies, Targeting and Prioritization: Abolish unaffordable subsidies and direct resources to areas of national priority.
Spending four times our national roads budget on subsidizing fuel, or 1.6 trillion naira to bail out a privatized electric power sector needs urgent reconsideration.
Financing Physical Infrastructure Deficits: Address the physical infrastructure deficits in electric power, roads and rail, aviation, e.t.c., by issuing bonds for bankable projects to be subscribed by Pension Fund Administrators.
Human Capital and ICT Development: Prioritize investment in soft infrastructure – ICT, broadband, higher education, secondary and tertiary healthcare.
Finally, adopt a national consensus to “Stop any more Conferences and Seminars” on many aspects of our national development.
All our policy problems have been studied to death.
We should simply resolve to end the analysis-paralysis. Just focus on implementation of agreed policies and programmes.
Happy Birthday Ogbeni, my egbon. I admire you greatly. May Allah continue to bless, preserve, protect and elevate you. Amen.
@views exclusive rights: Kaduna State Governor, Nasir Ahmad El-Rufai, May 29, 2021