Fed Govt Personnel Cost Rises By 79.48%, Gulps N13.2trn In Four Years
The amount budgeted for personnel costs has increased from N2.29tn spent in 2019 to N4.11tn in the proposed 2022 budget, according to data obtained from the budget implementation report of the Federal Government.
This shows an increase of N1.82tn or 79.48 per cent in three years, signalling a rise in the cost of recurrent expenditure.
Economic Confidential observed that the personnel cost has been on a steady increase since 2017.
The personnel cost was N1.69tn in 2016. In 2017, it rose to N2.90tn, representing an increase of N1.21tn or 71.60 per cent.
In 2018, the personnel cost rose by N7bn or 2.41 per cent, with personnel costs gulping N2.97tn.
The following year, the personnel cost reduced by N68bn, dropping to N2.29tn. However, the budget rose again in 2020 to N3.05tn, representing an increase of N760bn or 33.19 per cent.
It was the same year that the new minimum wage was first reflected in the budget. This is believed to have contributed significantly to the increment.
In 2021, the cost continued to soar as N3.75tn was budgeted for personnel costs, representing an increase of N7bn or 22.95 per cent.
Of the 3.75tn budget, about N2.57tn had been spent from January to August.
In the latest 2022 budget proposal which has passed the second reading at the Senate, the personnel cost hit an all-time high of N4.11tn, representing an increase of N360bn.
The N4.11tn personnel cost in the 2022 budget proposal does not include allowances for members of the National Youth Service Corps who are not medical doctors, contract staff and anticipated promotion projections of existing staff.
The N4.11tn personnel cost represents 25.08 per cent of the nation’s entire budget and is the single largest component in the budget.
Experts said it was worrisome that despite the Integrated Payroll and Personnel Information System, which ought to weed out ghost workers, the personnel cost had continued to rise significantly.
The number of MDAs captured on the Integrated Payroll and Personnel Information System increased from 459 in 2017 to 711 to 2021.
Within the years of the Buhari regime, a total of N20.76tn has been budgeted for personnel costs. This total exceeds the N16.39tn budget in the proposed 2022 budget and is about 63.80 per cent of Nigeria’s debt stock of N35.47tn.
By size, public servants make up less than one per cent of Nigeria’s entire population.
BudgIT, a non-profit organisation, calculated that the 400,000-strong federal civil service, a mere 0.21 per cent of the nation’s population, was earmarked to take 27 per cent of the initial 2020 budget of N10.33tn. The current strength of the federal civil service for 2021 could not be ascertained as of time of going to press.
Experts and organisations have warned that the Federal Government’s personnel cost is rising at a fast pace.
According to them, this is disturbing, as the country still wallows in increasing debts and lags behind in the area of infrastructure.
Nigeria currently struggles with an economic crisis brought upon by the fall in oil prices and the COVID-19 pandemic, which has led to deteriorating revenue, increasing unemployment, inflation and poverty.
The Economic Confidential had reported that budget deficit had risen to N20.64tn under President Muhammadu Buhari from 2016 to 2020, with more than N7.97tn borrowed from foreign and domestic sources to fund these deficits.
Despite the increasing rate of the country’s debt stock, the Federal Government still plans to borrow more to finance the N6.26tn deficit in the proposed 2022 budget.
The government plans to borrow N5.01tn, while the rest of the deficit will be financed by multilateral and bilateral loan drawdown and privatisation proceeds.
In May 2021, the Federal Government, through the Minister of Finance, Zainab Ahmed, had said that it was working to reduce the high cost of governance by doing away with unnecessary expenditures, which may include salary cuts for workers.
However, the increase in personnel costs in the 2022 budget suggests that the government may have backtracked on the plan.
The Director-General of the Budget Office, Ben Akabueze, during a policy dialogue on corruption and cost of governance in Nigeria organised by the Independent Corrupt Practices and Other Related Offences Commission expressed concerns over the increasing cost of governance.
He had said, “There have been persistent calls for reduction of governance cost in Nigeria in view of the impact on governmental fiscal situation.
“The current system is clearly unsustainable; hence this national dialogue on corruption and the cost of governance in Nigeria is very timely.
‘’Cost of governance has generally been on the rise; actual MDA recurrent spending rose sharply from N3.61tn in 2015 to N5.26tn in 2018 and N7.91tn in 2020.
“This excludes the costs of government-owned enterprises and transfers to the National Assembly, National Assembly and the National Judicial Council.
“Recurrent spending accounted for more than 75 per cent of actual MDA expenditures between 2011 and 2020.
“Personnel costs accounted for 40 per cent of actual recurrent spending in 2020 while overhead is just three per cent.’’
Speaking on the development with our correspondent, a professor of economics at the Olabisi Onabanjo University, Ogun State, Sheriffdeen Tella, expressed concern over the high income earned by legislators, asking for a proper synchronisation of the payment system in the country.
He said, “We have a body that tries to harmonise payments for all kinds of public workers – civil servants, public servants, judiciary, legislators, and all that.
“Why have they not been able to synchronise the amount being paid to the National Assembly with the rest of the country?
“What special work are those legislators doing that they will be earning 10 to 15 times what the average person is getting in Nigeria? They have to synchronise them.”
He added that those in the executives need to reduce the amount of aides they have, alongside other costs such as travelling costs for avoidable trips.