Beyond Orosanye Report: Addressing Nigeria’s High Cost of Governance
Minutes after being sworn in as the President of the Federal Republic of Nigeria on May 29, 2023, President Bola Ahmed Tinubu announced the removal of fuel subsidy that had cost the country over 400 billion Naira monthly. The President stated that the country could no longer sustain fuel subsidies and that the trillions of naira spent yearly to sustain the subsidy were needed to improve healthcare, transportation, education, housing, and national security. The hardship that followed led Nigerians to demand a reduction in the cost of governance. There is a growing awareness among Nigerians that sacrifices should not be borne solely by the common man, but also by those in government who need to reduce their expenditures.
Over the years, the costs associated with running the government in Nigeria have increased dramatically. The primary functions of the government require more and more public revenue to support them. Despite the increase in government expenditure, Nigeria still ranks among the poorest countries in the world. Recently, there has been a consensus among Nigerians, both in and out of government, that the cost of governance needs to be reduced. This can be achieved by eliminating areas of wastage in the budget and exploring opportunities for prudence. Many Nigerians believe that reducing the cost of governance across all three levels of government will lead to more resources being allocated towards development projects that will improve the quality of life for citizens.
In August 2011, former President Goodluck Jonathan established a Presidential Committee on Rationalization and Restructuring of the Federal Government’s Parastatals, Commissions, and Agencies in response to the call for a reduction in the cost of governance. The committee, led by former Head of Service of the Federation, Stephen Orosanye, submitted a report containing significant recommendations. However, some of these recommendations have caused concern among government employees. In the report, the committee reviewed the current laws and submitted that “The average cost of governance in Nigeria is believed to rank among the highest in the world…If the cost of governance must be brought down, all arms of government must make spirited efforts at reducing their running cost.” The committee recommended reducing the current structure of 263 statutory agencies to 161, with additional proposals that 38 agencies be abolished, 52 be merged, and 14 others be reverted to departments in various ministries. These agencies and parastatals employ approximately 30,000 workers nationwide.
The Orosanye report only highlights what’s obtainable at the federal level. A cursory look at how state governments are run shows a high level of misplacement of priorities. A study by BudgIT in 2019 showed a steady increase in Nigeria’s sub-national government expenditure. According to the report, state governments’ recurrent costs have increased significantly over the years, with only a small portion of collected revenue and loans dedicated to meeting capital expenditure; 36.73% or N1.93 trillion of the N5.26 trillion total expenditures in 2019 was dedicated to capital expenditure while 63.27% or N3.33 trillion went to recurrent expenditure and loan repayments.
Year on year, between 2018 and 2019, actual expenditure on capital projects for all 36 states reduced by – 0.57%, from N1.94 trillion to N1.93 trillion.
Spending on payment of workers’ salaries and pensions of retirees is important. What becomes worrisome is the amount being spent by state governors on their appointees. A governor with over 500 Special Advisers and Special Assistants will have a bloated recurrent expenditure that can affect the required spending on capital expenditure and other investments, thus limiting economic activities and the generation of revenues.
There is a need to end this trend of bloated cost of governance that has pushed the previous administration into taking the shortcut of borrowing more money and getting the central bank to print more money to finance their consumption. This increased money being pushed into circulation to finance consumption without a corresponding increase in the level of goods and services being produced in the country is directly responsible for the constant fall in the value of the Naira and the high inflation rate that we are all being subjected to today.
It is commendable that the Tinubu-led administration has committed to implementing the Orosanye report. However, mere words are not enough. President Tinubu needs to demonstrate to Nigerians that he is serious about reducing the rising cost of governance associated with his administration. The president and his team must work hard to convince Nigerians because, at present, the way this administration took off has a resemblance to that of the previous administration.
The management of our resources seems to be more extravagant under the current administration, as evidenced by the enlarged cabinet size and the two supplementary budgets presented in the last six months. These budgets have primarily financed consumption and the excesses of those in power.
However, it is not too late for a retrace. If the current administration is serious about reducing the cost of governance, the first step to take is for the president to reduce the number of people in his entourage whenever he travels, whether home or abroad. Just like he admonished Nigerians to take “baby steps of pain,” he also should demonstrate those baby steps in reducing the cost of governance before the eventual implementation of the Orosanye report.
