How They Mismanaged The Nigerian Economy

By Nasir Ahmad El-Rufai

This year, every Nigerian – all 162 million of us – man, woman and child will “pay” the sum of N27,685 each to help run the Federal Government.

What we cannot afford, government will borrow on our behalf to pay for its activities. That is why the Federal Government, on behalf of you and I will spend the sum of N4.485 trillion (over N4,000 billion) in 2011.

This is against the backdrop that our entire oil earnings for the year cannot pay the generous salaries and allowances of politicians on the one hand, and the meagre pay cheques of other public sector workers on the other, while infrastructure and unemployment are barely getting attention.

When you walk into a government office to request a basic service, the member of staff you meet may not even bother to reply to your greeting and barely has time to listen to you; the policeman that should protect you on the road block, stops you and demands for bribes and has no qualms shooting dead any motorist that refuses to give him N20; the customs officer at the border who is supposed to stop smuggling takes a bribe and actually connives with the smugglers to bring in banned products into the Nigerian market, while harassing the traveller entering Nigeria with two new pairs of shoes; the hospital staff member that, contrary to every professional oath, refuses to attend to dying patients because they are on strike; the soldiers who get so bored that they occasionally go on a rampage, using policemen for target practice.

With live ammunition, of course; the politician who rigs himself into office then proceeds to loot the treasury: these are all the people whose standard of living we are spending nearly 75 per cent of the 2011 budget to pay for – and borrowing some after spending all our collections from oil and taxes!

It will cost nearly N2.5 million this year on average to pay for the salary and upkeep of each of Nigeria’s nearly one million federal public sector workers – in the police, civil service, military and para-military services and teachers in government schools and institutions.

Whether this amount justifies the service that is rendered is left for Nigerians to decide. In all, the 49 line ministries, departments and agencies (MDAs) specifically mentioned in the 2011 Appropriations Act will each cost an average of N49.49 billion to run.

We elect a total of 360 members to the House of Representatives and 109 senators to make laws and enhance good governance by checking and balancing the excesses of the executive arm of government.

For this privilege, the 469 members of the federal legislature and their support staff at the National Assembly will spend N150 billion this year.

It is worth noting that the National Assembly only passed eight bills as at the end of May 2011. So assuming that they manage to pass another seven bills before the end of this year, it would cost the Nigerian citizen an average of N10 billion to pass a single bill! This implies that to pass the 2011 budget (which allocates N150 billion to the National Assembly), Nigerians paid N10 billion.

An even more interesting statistic is the cost of maintaining every legislator every year. It works out to princely N320 million per legislator per annum. At this rate, every four-year stint at the National Assembly works out at N1.28 billion per legislator. No wonder machetes, guns and thugs are used at will to “win” primaries and the elections.

How many new businesses can achieve a turnover of N1.28 billion within four years with a net tax-free profit in excess of 50 per cent? Is this social justice?

For the National Assembly, even the amount of N150 billion above is just what we can see easily but is not broken down for further analysis or accountability.

There is a bit more hidden all over the Appropriation Act – another N1.595 billion was tucked away for “In-lieu of accommodation for the Seventh Session of National Assembly” and another N200 million for “Funding of House Resolution Mandates.” What these two provisions mean is best explained by those that legislated them and the executive that will release the sums! What is clear is that none of these will ever be accounted for or audited!

Last week, I wrote about the cost of justice. I got a few things wrong because I did not appreciate fully the unique role of the National Judicial Council (NJC) in the administration of the nation’s judicial system. My friend and former classmate, Mrs. Maryam Wali Uwais, clarified this and educated me, for which I am grateful.

The NJC’s budget of N95 billion covers the salaries and allowances of all judges of superior courts of record in Nigeria – that is state high courts and their federal equivalents, Court of Appeal and the Supreme Court. The NJC also funds the overheads of all the Federal Courts only – the Federal High Court and the appellate courts, as well as the salaries and allowances of all federal judicial support staff.

The state governments are responsible for the salaries of all other judicial staff (magistrates, support staff, etc.) and the overhead costs of all courts within their respective jurisdictions. It is therefore slightly more complicated to compute what it costs to keep our entire judicial system running without adding up all the budgetary allocations to the judiciary in all 36 states. We will return to this sometime soon.

An interesting observation is the fact that the government said the problem of power shortage is a priority, yet the Ministry of Power only got N91 billion as total appropriation in 2011, while the National Security Adviser (NSA) controls and will spend N208 billion (recurrent – N51 billion, capital N59 billion, and another N98 billion for the amnesty programme!).

This amount does not include the Defence budget. The Defence Ministry will get N348 billion, while the Police will get N309 billion. In other words, though Nigerians have never felt so insecure in recent history, the NSA, Police and Defence will spend a combined N865 billion – more than N2 billion a day, weekends included! This does not include the 36 states’ so-called security votes. Even state assembly members and local government councillors now have security votes. Clearly their security is more important than ours!

The point of these statistics is to show how expensive governance has become and how little Nigerians get in return. And the unproductive portions of our national budget have been rising rapidly in the last four years, to the detriment of capital investments in infrastructure and human development.

Four years ago in 2007, the entire federal government budget was N2.3 trillion; today we are spending N4.485 trillion.  In 2007, statutory transfers amounted to 102 billion naira or 5 per cent of the total budget. Today, transfers amount to 418 billion or 9 per cent of the total.

This year, the Federal Government will spend N495 billion or 11 per cent of the budget on debt servicing compared to N326 billion or 14 per cent it spent the year we finally exited from the London Club debt. More telling is the N1.05 trillion or 46 per cent for recurrent expenditure in 2007 against the N2.425 trillion or 54 per cent government will spend this year. Just four years ago, capital expenditure accounted for 36 per cent (N830 billion) of the budget.

This year, the amount for capital expenditure has fallen to 25 per cent (N1.147 trillion – out of which N1.136 trillion is the budget deficit – that is to be borrowed!).

To the uninformed eye, the figures may seem to represent increases in all aspects, but to what cost, and to what effect? Apologists would want us to believe that the astronomical increase in the cost of government services can be explained by inflation, but even taking into consideration the high inflationary trend (thanks to Jonathan’s profligate campaign year spending), statutory transfers in the budget has gone up by a whopping 310 per cent; debt servicing has a 52 per cent increase; recurrent expenditure has gone up by 131 per cent, while capital expenditure has increased by 39 per cent over four years. In real terms however, and accounting for inflation, the total budget has increased by 33 per cent with recurrent expenditure going up by 58 per cent while capital expenditure has actually reduced by 6 per cent.

Facts and figures do not lie. Every figure used in this analysis came from official government records. What is the justification for allocating such huge amounts to running the government when a staggering 30 million Nigerians are unemployed? Only N50 billion has been budgeted to create employment, forgetting that money by itself does not create jobs without a well thought out plan to stimulate small and medium scale enterprises and the creation of appropriate regulatory environments.

What are the strategies to ensure that these funds are not diverted? How many jobs will be created this year or in the next four years? Are our priorities right?

All these come down to the questions: Will government’s N4.485 trillion budget make life any better or even provide security for Nigerians?  Can we feel the impact of this huge spending? Is the cost of governance justified? If we do not have the courage to ask these questions, we will be doing ourselves a disservice and endangering our people’s future.

Nasir Ahmad El-Rufai

This article was initially published in the THISDAY Newspaper back page as El-Rufai On Friday