Nigeria’s economy is in advanced stage of financial asphyxiation. It showed grievous signs of stress even before the coronavirus pandemic plagued the global economy. Now that the pandemic has dried up demand for crude oil and pushed prices perilously close to production cost, Nigeria’s economic crisis has simply escalated.
The federal government has insisted on implementing this year’s budget with bumper deficit rather than scaling it down to the level of income available to it. The review, even with the scaling down of the budget oil reference price from $57 to $25 per barrel, has only reduced the budget by less than N300 billion.
Consequently, the 2020 budget has a deficit of N5.3 trillion as against the N1.9 trillion chalked up in 2019. In other words, government projected revenue for 2020 would be less than half of the budget’s projected expenditures of N10.5 trillion.
The tottering economy is at the root of the decision by President Muhammadu Buhari to implement the White Paper on the Stephen Oronsaye Committee on the Rationalisation and Restructuring of Federal Government Ministries, parastatals and Agencies.
Implementation of the Oronsaye Committee report would not have any significant financial impact on the 2020 budget because it is going to be a very cumbersome process that may take more than a year to execute.
Some of the mergers and liquidations would require acts of parliament to consumate. That is not something one could handle in one year.
Some members of the National Assembly are sympathetic to the labour unions now bent on protecting their members’ jobs. Under such circumstances, the laws needed to back the mergers and liquidations would meet a stiff resistance in the National Assembly.
Besides, the cost of cutting Nigeria’s unfettered cost of governance through down-sizing could sail perilously close to N600 billion. That looks repulsive, but it is a worthy investment.
The federal government would reap bountiful financial rewards by implementing the recommendations of the committee. The federal civil service is nauseatingly unwieldy and embarrassingly unproductive. It is believed that it could function efficiently with 40 per cent of its current workforce. Nigeria could use less to achieve more.
When the Oronsaye Committee submitted its report, there were 541 parastatals and agencies both statutory and non-statutory. The committee recommended the liquidation and mergers of about 102 statutory agencies. That action was expected to trim the federal civil service by at least 200, 000 workers and make it more efficient and productive. It would save N862 billion in three years.
Now, there are fears that the number of parastatals and agencies of the federal government has risen to 606. Buhari himself has helped to raise the number of ministries during his second term. The president now rules a country of 201 million people with annual gross domestic product (GDP) of $446.5 billion with a cabinet of 43 ministers.
During his first term he had a cabinet of 36 ministers. Ironically Donald Trump, America’s mercurial president manages a country of 325 million people with GDP of $19.5 trillion with a cabinet of 15 members.
The unwieldy structure of the federal civil service is therefore a relic of Buhari’s king-size cabinet. Now that Buhari is ready to trim the federal civil service, the surgical operation should start with the federal cabinet.
Implementation of Oronsaye Committee report is going to be a long drawn battle. The labour unions are warming up for grueling labour duel because no one trusts the federal government to carry out such humungous surgical operations on the civil service without short-changing some of those to be affected by the down-sizing.
At a time when more than 30 million people are jobless, implementation of the massive down-sizing would be very expensive and unpopular. However, it is absolutely necessary. The only way government could do it with minimum damage to the economy and the individuals to be affected by the exercise would be for government to set aside instant funds for settlement of severance packages of those to be hacked down.
Besides, the pension of those to be affected in the massive purge should start three months after they leave service. Currently, those retiring from the federal civil service wait for one year before their gratuity is paid. The pension follows much longer.
Those to be affected by the planned rationalization of the civil service should not be subjected to the clumsy and duplicitous procedure of federal pension.
The fears of the labour unions are worsened by the plight of the embattled former staff of the defunct Nigeria Airways who were thrown into the streets in 2005 when the airline was suddenly liquidated.
It was Buhari who eventually assuaged the plague of the airways workers some 14 years after the liquidation of the airline. Hundreds of the workers died in penury before Buhari’s large-heartedness brought succor to those who survived the torment.
Those working on the rationalization exercise should start with the appointment of men of integrity to handle the severance packages of those to be affected by the exercise. Government should be willing to compensate the affected staff adequately to allay the fears of the labour unions now warming up for battle.
One thing that the federal government must not ignore is the fact that the act of cutting the cost of governance, which is the aim of the rationalization exercise, must not begin and end in the civil service. The National Assembly and the federal cabinet are crushing financial burdens on Nigeria’s lean purse.
One politician earns the pay of 100 civil servants. The N13 million illegal monthly allowance collected by members of the National Assembly is not only unconstitutional but a brazen act of extortion. It must be stopped.
The cost of keeping each minister in the federal cabinet is atrociously high for Nigeria’s dwindling income. A government that could only manage to raise less than 50 per cent of the revenue for a year’s budget has no reason keeping a minister with a fleet of seven cars on the road. It is simply outrageous and unacceptable.