943 MDAs, 541 Corporations, Huge Drain on Nation’s Fragile Economy

Kinsley Nwezeh in Abuja

Last Tuesday, the Professor Bolaji Owasanoye-led Independent Corrupt Practices and Other Related Offences Commission (ICPC) organised a high profile policy dialogue and zoom conference titled, “Corruption and Cost of Governance in Nigeria.” The conference revealed that government at a critical time like this in the country’s history still retained 943 Ministries, Departments, and Agencies (MDAs) and 541 state-owned corporations.

The policy dialogue was attended by Senate President Ahmed Lawan; Minister of Finance, Mrs Zainab Ahmed; and Head of Service of the Federation, Mrs Yemi Esan; among several academics.

Director-General, Budget Office of the Federation, Mr Ben. Akabueze, declared at the meeting that 943 MDAs and 541 corporations owned by the federal government had become a drag on the economy. Akabueze said the present size of the federal bureaucracy was unsustainable. He identified bloated civil service, high number of political office holders, cabinet size, corrupt budget practices, election cost, and multiplication of MDAs as drivers of high cost of governance.
He noted that there was a growing concern over huge government spending on recurrent expenditure at the expense of capital projects.

Akabueze said, “There have been persistent calls for reduction of governance cost in Nigeria in view of the impact on government’s fiscal situation. The current system is clearly unsustainable.”
He disclosed that recurrent spending accounted for more than 75 per cent of actual MDA expenditure between 2011 and 2020, personnel costs accounted for 40 per cent of actual recurrent spending in 2020, while overhead was just three per cent. Actual MDA recurrent spending rose sharply from N3.61 trillion in 2015 to N5.26 trillion in 2018 and N7.91 trillion in 2020, he said.

Akubueze said beyond Nigeria’s 27 ministers, 16 ministers of state, and 27 ministries, there were 561 federal government-owned corporations whose duplicated functions had significantly shot up the cost of governance. He said the multiplicity of ministries and extra-ministerial bodies had become a huge drain on the economy.

On the bloated federal civil service, Akabueze stated, “The current structure and size of the federal bureaucracy is clearly unsustainable for the size of the Nigerian economy.”
He, however, said “current efforts aimed at eliminating ‘ghost’ non-existent staff on FGN payroll are yielding some result; however hardly any sanctions against the perpetrators.”
He lamented the huge number of political office holders and their retinue of aides, saying they are driving up the cost of governance.
At issue at the conference was the high cost of governance in Nigeria, which was weighing heavily on the economy.

In her submission, Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, said the federal government had initiated a raft of measures to cut the cost of governance in the face of dwindling revenue occasioned by the headwinds of the COVID-19 pandemic and the attendant global economic tailspin. Ahmed said the measures were targeted at reducing recurrent expenditure, which was projected to gulp about 41.5 per cent of the total provisions of N13.588 trillion in the 2021 budget, amounting to N5.64 trillion.
She stated that the proposed cost-saving measures were aimed at streamlining government expenditure with revenue.

“We still see government expenditure increase to a terrain twice higher than our revenue,” she said, and urged all government agencies to come together to trim the cost.
The minister said the national budgets were filled every year with projects that were not only recycled but also unnecessary.
“Mr. President has directed that the salaries committee that I chair, work together with the Head of Service and other members of the committee to review the government payrolls in terms of stepping down on cost,” she said.

The minister disclosed that the federal government would review the number of government agencies in terms of their mandates, adding that the government would consider merging agencies with similar mandates.
According to Ahmed, “We need to work together, all agencies of the government, to cut down our cost. We need to cut down unnecessary expenditures, expenditures that we can do without.
“Our budgets are filled year-in-year-out with projects that we see over and over again and also projects that are not necessary.”

Reducing Cost of Governance

Akabueze maintained that it was imperative to minimise corruption and reduce governance cost in Nigeria to engender development. He recommended critical steps to be taken to include prioritising the completion of on-going projects to enable the country reap the benefits of such projects and save variation costs; allowing only properly conceptualised, designed, costed, and appraised projects; exclusion of projects that relate to matters that are the responsibilities of state and local governments; and exclusion of recurrent expenditure items from the capital budget.
He also advocated the amendment of the constitution to restructure the federation to six regions, instead of the current 36 states.

In addition, he said the constitutional provision on appointment of ministers should be amended to reduce the number of cabinet ministers.
“The president is obliged to appoint not more than 24 to be appointed from the six geopolitical zones, reduce the number of federal ministries from 27 to not more than 20,”Akabueze said.
He said the United States with 54 states and Washington D.C. had 15 departments/ministries.
On the federal bureaucracy, Akabueze stated, “To build a more efficient civil service, we must stop treating the civil service as some other form of political, ethnic, and religious patronage.

“A comprehensive staff audit and job evaluation is imperative to determine the right size for the federal civil service without any adverse effect on efficiency in the service. To avoid disruptions in the civil service, the staff rationalisation process should be gradual and handled fairly. Staff salaries need to be consolidated and harmonised across MDAs while allowances should be role-based.”

In a paper titled, “Reducing the Cost of Governance in Nigeria,” Akabueze stated, “This will reduce disparity, boost staff morale and reduce the motivation for corrupt practices. In addition, it is important to amend sections in the act establishing some agencies, which allows their boards to periodically review staff salaries without considering government’s fiscal position.

“Also, the National Salaries, Incomes and Wages Commission needs to consider government fiscal position in approving salary structures. To control abuse associated with non-regular allowances paid through GIFMIS to house officers and interns in the health sector, limit the number of such staff, their exit period and introduce mechanism for monitoring the implementation.”

He argued, “Payment of allowances should be role-based. Hence, for example, medical doctors in allied institutions and research institutes should not be paid shift allowance unless they are practising.”
The director-general of budget maintained that regarding recruitment abuses, the Budget Office and the Office of the Accountant General needed to work more collaboratively to prevent abuses in personnel cost.
He said, “We need to adopt a cost effective electoral system and limit the number and aides of political office holders.

Conduct of Elections

Akabueze identified elections as a major driver of high cost of governance. He said the conduct of periodic elections and the resultant litigations in tribunals and courts contributed to the high cost of governance in Nigeria.

According to him, “Although the conduct of open, free, fair and competitive election is important in democratic governance, its management should not be so costly to the government.
“The budget for the 2019 general elections exceeded N200 billion while about N40 billion is allocated to INEC in the annual budgets. Every year we see extra-budgetary allocations to INEC.”

Effects of High Governance Cost

Akabueze examined the effects of high cost of governance on the economy. He asserted that low revenue collections and high recurrent costs, actual capital spending had trended below N2 trillion for a decade.
According to him, the investments required to bridge infrastructure gap are way beyond the means available to government.

He said, “Due to funding constraints, many capital projects are abandoned, or uncompleted.
“Government’s huge recurrent expenditure has constrained the provision of good roads, steady power supply, healthcare services, quality education, quality shelter etcetera.

“This has contributed to observable underperformance of the economy, slow growth and current infrastructural challenges. No country can develop where a large part of its earnings is spent on administrative structures rather than on capital investment.”

He noted that budget objectives had been difficult to achieve.
Akabueze said, “Poverty rate remains high; NBS’ latest estimate is that 40.1% of the population (82.9 million people) are poor. High poverty is worsened by high unemployment. Unemployment rate increased from 27.1% in Q2 2020 to 33.3% in Q4 2020.

“More than half of the labour force (56.1%) are unemployed or underemployed. The infrastructure required to translate opportunities in the Nigerian economy to economic value is in deficit.”
In his welcome address, the chairman of ICPC said the policy dialogue and its concomitant policy brief were part of the key performance indicators in the implementation of the National Anti-Corruption Strategy (NACS), 2017-2021 and the Policies, Programmes and Projects Audit Committee (PPPAC) Roadmap (2019 – 2023) adopted by the federal government at the commencement of its second term in 2019.

Owasanoye noted that the documents required that stakeholders be engaged as part of activities “to promote an improved legal, policy and regulatory environment for the fight against corruption”.
He said, “For us at ICPC, this is not only a stakeholder engagement but a key component of our prevention mandate as we beam the searchlight on one of the drivers of corruption in Nigeria.

“In the PPPAC document, government committed itself to increase revenue from existing and new sources, improve coordination and cohesion amongst agencies in the revenue generating and expenditure ecosystem, drastically cut costs, including reducing all kinds of subsidies while protecting the poor and vulnerable, reduce the cost of delivering government services by streamlining payroll, reducing cost of contracts and procurement, and improve coordination and avoid duplication of efforts by MDAs etcetera.
“At a time the nation is facing myriad of challenges, including insecurity, high unemployment, high indebtedness, cost of funding political office holders and a near empty treasury, running such a nerve-wracking, bloated bureaucracy is unwelcome. It is most imperative that urgent steps are taken to address this stunning revelation.

“Overall, it is important to note that the Independent Corrupt Practices and Other Related Offences Commission (ICPC) has so far lived up to its name and mandate.”
The Owasanoye-led commission has tried to identify loopholes deliberately created by bureaucracy, and it has conducted investigations, arrested culprits, and secured convictions.
The continuing policy dialogue is a multi-stakeholder approach aimed at finding lasting solutions to the hydra-headed challenge of corruption, and a dialogue that could be adopted nationally to confront the challenge of misgovernance, and widespread corrupt practices.