NextierThe Cost Of Governance
By Patrick O. Okigbo III and Anthonia Momoh
Indaboski Bahose is a self-proclaimed prophet who trends on social media in Nigeria more for his comedic aphorisms than for his clairvoyance. One of his maxims, which is apt for Nigeria’s current economic reality, is that “one whose phone battery is down to one-bar cannot afford to play games on the device”. Makes sense, right? Nigeria is in a profound economic dilemma and as such, cannot afford the bad choices that were papered over by high oil prices.
Let us restate the obvious just to set the context. Global demand for crude oil dropped significantly between January and April 2020 mainly in response to the ongoing COVID-19 pandemic. Nigeria’s Bonny Light, which started the year at $70 per barrel closed at $14.75 on April 21, 2020. The nightmarish implications are apparent. Nigeria cannot fund its proposed 2021 budget without a loan of about N5.2 trillion[1] ($13.7 billion) from local and international debtors. Most of the sub-national units are similarly vulnerable to the oil price shocks as they are dependent on the Federal Government to cover both their recurrent and capital expenditure. These challenges will impact economic activities, as the federal government is the biggest spender in the country. Indeed, the country is down to “one-bar”. It is now time to turn off all the “games” and focus on the essential apps.
SLASH AND GROW
What options are available to Nigeria? The government has to figure out how to grow its revenue and also how to cut costs. This essay focuses on the latter because if the government fails to trim the fat, it will lose any potential revenue growth through inefficiencies, wastages, and leakages. To grow, Nigeria must trim off all unnecessary fat.
A quick review of the 2021 proposed budget shows that the government will spend 43.1 percent of its revenue on recurrent expenditure, mainly salaries and overheads, and 25.5 percent on debt servicing. The government will spend the balance of 27.5 percent on capital expenditure. Compared to Ghana, Nigeria’s emergent regional neighbour, the numbers are 88.85 percent (recurrent expenditure) and 11 percent (capital expenditure).[2]
HONOURABLE AND DISTINGUISHED SOURCES
One logical place to seek some cost savings is at the National Assembly. The cost of running the National Assembly has increased from N2.2 billion for Nigeria’s 4th National Assembly (1999 – 2003) to N227 billion for the 8th National Assembly (2015 – 2019).[3] The percentage growth has outpaced national economic indicators such as gross domestic product and per capita income growth. The proposed budget for the National Assembly in 2021, N128 billion ($337.7 million), is 0.98 percent of the proposed national budget of N13.08 trillion. The proposed budget for the national assembly is high when compared to the capital expenditure for other critical drivers of the economy: power (1.51 percent), education (0.97 percent), healthcare (1 percent), agriculture (0.84 percent), etc.[4]
The average annual spend (salary and allowances) on a Senator and a Member of the House of Representatives is about N171 million ($451,187) and N111.6 million ($294,459) respectively. These salaries are in a country where the National Bureau of Statistics showed that 40.1 percent of the population is classified as poor. The average minimum wage in Nigeria is N30,000 ($79) per month. The annual salary of the average Nigerian legislator ($451,187) is 42 times the median annual salary in the country ($10,733). This situation is stark when compared to other countries such as Portugal (2.1 times), Brazil (10.6 times), United States (3.1 times), Japan (3.9 times), United Kingdom (2.6 times), France (2.2 times), etc. As a Senator, Barack Obama earned about $169,300 per annum. As President of the United States of America and leader of the richest country in the world, he earned $400,000/year plus a $50,000 expense account. For many years, Senators Richard J. Durbin, Charles E. Schumer and Representative George shared an apartment in Washington DC because they could not afford to rent apartments on their own while still paying their mortgages in their home states. This is the life of public servants.
Compared to other countries, Nigerian legislators are one of the highest-paid, yet, this investment does not translate to results. Legislative result is calculated as the number of bills passed into law. For instance, the 8th National Assembly passed only 515 Bills over its four-year tenure (2015-2019) while the 115th U.S. Congress (2017-2019) passed 442 Bills over a two-year tenure. It is interesting to note that both countries spend about the same amount on their legislature. However, compared to its GDP per capita of$2230, Nigeria spends 202 times on its legislators. Compared to its GDP per capita of $65,118, the United States spends 2.7 times on its legislators. In fact, the expenditure on Nigeria’s National Assembly accounts for about 20.5 percent of the proposed overhead costs of the Federal Government. This makes it a prime candidate for a place to trim some fat.
MAKE IT DEEP
From the preceding discussion, it is clear that Nigeria spends a more than proportionate amount of its resources on the National Assembly with less than commensurate results realised. Nigerians should be bold to call for a downsized, part-time, bicameral legislature. There are arguments for and against the proposed options.
A bicameral legislature is proposed because, although a unicameral one is cheaper to manage and facilitates faster passage of bills, Nigeria needs a second House to scrutinise and check the provisions in the Bills to ensure quality. A bicameral legislature is the best model for Nigeria given her diversity: ethnic, religious, social, economic, etc. The challenge is the cost of running such a structure.
A part-time National Assembly addresses the cost challenge. It is significantly cheaper to run because far fewer resources will be spent on the legislators. The position is less attractive to those interested in self-aggrandisement and more attractive to those genuinely interested in public service. The part-time nature of the office affords the representatives more time to spend with their constituents than in Abuja. It reduces class-privilege as the representatives are more accessible to the people. The counter-argument for a part-time legislature is that the legislators may be under pressure to seek alternative sources of income that may dispose them to the seduction of lobbyists. The evidence does not support this postulation as there are people who have chosen to work in the development space mindful that it does not pay as much as work in the private sector, but this has not made them more susceptive to lobbyists or corrupt practices. In any case, the current crop of legislators is said to be already susceptible to the said pressures from the lobbyists, and hopefully, they have not succumbed to the pressures.
IMPLEMENTATION
The number of sitting days for legislators should be reduced to 121 days. The 1979 and 1999 Constitutions stipulates that a legislator shall vacate his seat if he is absent for more than one-third (or 60 days) of the mandatory 181 days. In effect, legislators are expected to sit for not less than 121 days. Anyone who works for 50 percent of the number of working days in a year (250 days) is, in essence, working part-time.
The number of seats in the House of Representatives should be reduced from 360 to 252. In the Senate, this will be from 109 (or 3 Senators per state) to 73 (2 Senators per state plus 1 Senator for Abuja). This reduction will require a redrawing of the senatorial lines in the states.
The cost of running the legislature should be cut down by placing legislators on civil service grade levels. The job responsibilities of legislators are as crucial as those of Permanent Secretaries in Ministries who have the responsibility of implementing the laws made by the National Assembly. The salaries should be pro-rated for the number of workdays and paid for the days worked. A legislator who works the full 121 days should receive 50 percent of the salary of a Permanent Secretary who gets paid for working 250 days a year.
All of these changes should lead to about N55.2 billion ($145.8 million) in savings. This is 0.4 percent of the 2021 Nigeria budget. It will reduce the size of the loan Nigeria needs to obtain by at least 1.06 percent. There is no point postulating how many hospitals can be built with these savings as getting to the output depends on several other challenges that require fixing.
RAMS AND RAMADAN
Given that rams do not pray for Ramadan, Nigerians should not expect the legislators to push for this reform. Some of the legislators sold their assets or took out bank loans to contest for the seats. Logically, they would seek to repay the liabilities and replace the assets. This proposal is unfavourable for the political class as such; it is logical to expect that they would oppose it.
There is a need for a coalition of civil society organisations working closely with the people to advocate for the proposed changes. These members of the fifth realm must bring the scalp to trim the fat. Change would happen only when it is clear to the political class that the people are committed in their demands. This reform is essential to cut back on the cost of government. It is even more critical now that Nigeria is on its back heels. The country is down to its last few “bars”. It is time to stop playing games.
