It is often the complain of officials of the Ministry of Finance, Budget Office and Debt Management Office to cite the 2010 increment of national minimum wage to N18,900 per month as reason for the astronomical increase in recurrent budget. However, analysis of official documents now in possession of Economic Confidential revealed that what civil servants earn in relation to total personnel cost of government is rather minute. A circular dated July 1, 2010, signed by Chairman of the National Salaries, Incomes and Wages Commission, Chief R.O. Egbule, announced that government had approved an upward review of the Consolidated Public Service Salary Structure (CONPSS). Least paid cadre, Grade Level (GL) 01 Step (S) 1 will receive an annual salary of N226, 800 which translates to N18, 900 monthly.
Public observers agreed that any substantial increase in public service wage levels would have a corresponding effect on the size of personnel cost. For instance, the government wage-bill grew recurrent expenditure from about N1.709 trillion in 2009 to N2.616 trillion in this year’s budget estimates while capital expenditure haphazardly descended from N890.136 billion to N633.53 billion. Research has shown that high governance costs tend to cripple markets, stunt economic growth, leads to rapidly rising inflation, outflow private investments and distort the real relationship between productivity and reward.
In recent times, concern has been expressed by relevant institutions and experts about the high cost of governance. The phenomenon is manifested in the undue bogus size of recurrent expenditure relative to capital, which is the part of public expenditure that funds development programmes and projects that impact on the people in respect of employment, investment and other growth-inducing activities. Government after government in Nigeria, since the return to democracy in 1999, has talked about reducing high cost of governance. The irony is that rather than reducing, every new government seems to be increasing it further than it inherited from its predecessor. When issues concerning high cost of governance are raised by the citizens, government oftentimes draw attentions to overblown workforce and magnitude of personnel cost, which is erroneously equated to the entire recurrent costs. Are these really true? There is need to beam search light on the treasury drain pipes.
Alarmed by the unsustainable size of the remuneration packages for public officers, late President Umaru Yar’Adua in 2009, asked the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) to make a review. In carrying out the exercise, the Commission observed that the 2007 remuneration package which had been in operation for two and half years had become unsustainable “because of the current global economic crisis which has resulted in dwindling revenue to government.” It said that it became clear from the analysis of the macro economic factors and variables, that the national revenue profile could no longer sustain the current level of expenditure on recurrent cost. Hence, the need for the downward review of the remuneration package as contained in the Commission’s 2007 Report and the “Certain Political, Public and Judicial Office Holders (Salaries and Allowances, etc.) (Amendment) Act 2008”.
RMAFC also discovered that apart from the reduction in allowances, there are other areas of leakages and wastages in revenue at all the tiers of government that must be addressed in order to ensure increase in revenue and its judicious management. Some of the observations made are as follows:-
“That there is non-compliance with the provisions of the remuneration packages such as contained in either the Report of the Commission or the Act itself. Such violations by the three tiers and arms of Government include arbitrary appointment of high number of Personal Assistants which is adding more cost to the running of Government at the various levels. It is difficult to determine what value they add to service delivery or to governance. The Commission advised that all these illegal appointments by the 3-Tiers of Government be stopped and officers concerned be relieved of their appointments. Also the three tiers and arms of Government should eliminate or limit the number of Personal Assistants to reduce cost of governance;
“That there are too many frivolous local and foreign trips by Political Office Holders throughout the Country. The Commission is advising that it is necessary to reduce local and foreign trips and the size of entourage on such trips when absolutely necessary in order to save cost;
“That there is the acquisition and use of assets such as motor vehicles far in excess of what is approved for official use; e.g. Governments Parastatals and Agencies purchasing project vehicles and eventually handing over same to their parent ministries as a way of circumventing the remuneration package. The Commission strongly advised all tiers of Government to issue circular to all government Ministries, Parastatals and Agencies to desist from buying vehicle under the cover of “Project Vehicles” to their parent ministries. Similarly, the Commission also observed the practice of buying fleet of cars in the name of Committee vehicles.
“This practice negates the whole idea of monetization, principle of modesty in governance and the spirit of the remuneration packages particularly in the legislative arm of government throughout the country. Therefore, under the current economic downturn of the nation, this practice has to stop and vehicles procured in this manner have to be sold and proceeds should be used to provide buses for the common citizenry.
“That there is a large use of motorcades by officials in excess of what is either specified in the remuneration package or compared to what is practiced in other parts of the world. The Commission views this as a complete violation of the Remuneration Package because it has significantly increased the overhead cost of governance. The Commission within its constitutional provision advised that all beneficiaries should adhere strictly to the specified number of vehicles to be used during official movements by all tiers of government throughout the country;
“That the Local Governments are spending over 95% of their revenue on salaries and allowances alone while the State Governments are spending approximately 50% for same. Also Government at the Federal level is spending 67.3% of its revenue on recurrent (consumption) expenditure while only 32.7% is allocated to Capital (investment) expenditure. The Commission strongly advises that the focus should be more on the provision of Capital Projects/Infrastructures rather than recurrent expenditure. Therefore, all the tiers of government should work towards reversing this trend of excessive expenditure on recurrent services.
“That it has become necessary to diversify the economic base of the nation in order to generate more revenue at the Federal, State and Local Government Council levels. The Commission therefore advises the 3 tiers of government to revisit the recommendations contained in the report of the Revenue Mobilisation Allocation and Fiscal Commission on the Diversification of the Nigeria Economy which had earlier been submitted for consideration and possible implementation by Governments of the federation. This report is in the process of being updated by the Commission
“That the present state of the economy of the country calls for caution and belt tightening measures in the expenditure programmes of government. The Commission is advising the government at all levels to concentrate on increasing productive capacity of the economy;
“That the Country’s Gross Domestic Products (GDP) continues to fall and it is currently below 7.5%. The Commission advises the 3-tiers of government to put in place adequate expenditure management and control system. This will ensure strict adherence to approved budgetary provisions, plans and financial/procurement regulations in the award for execution of contract;
“That there are delays in revenue remittances from collecting agencies resulting into huge amounts of Outstanding Transfers into the Federation Account. The Commission is advising the Federal Government to direct all revenue collecting agencies to stop their unilateral/illegal deductions; withholding and delaying remittances into the Federation Account;
“That there has been arbitrary granting of approvals in respect of waivers and other forms of exemptions by Government on Custom duties and other taxes. The Federal Government is advised to be cautious in granting waivers, concessions and taxes as these translate into huge losses of revenue to the Federation Account, and hence to all tiers of governments;
“That there are enormous inefficiencies and wastes in the oil industry arising from unfavourable Join Venture partnership terms and fiscal regimes; non-transparent Joint Venture Cash Calls and budgeting, with attendant high cost of production; inadequate arrangements for the monitoring of crude oil exports, petroleum products subsidies, lack of transparency in bidding, allocation of oil blocks, leases, etc. The Commission hopes that the ongoing reform in the oil and gas sectors will address some of these inefficiencies and waste.
“That it has now become the practice in Government to allocate funds to Committees through the Chairmen of those Committees rather than to their Secretaries who are the representatives of the Accounting Officers and who should be held responsible for the management and retirement of such funds. This practice should be discouraged to allow for due process, transparency and accountability in the management of public funds. Every Accounting Officer should be accountable for the funds released for the servicing of all Committees in all tiers and arms of Government;
According to a reliable document in possession of this magazine, a federal civil servant with school leaving certificate on grade level (GL) 04 who manages to get to Step (S) 15, will earn annual salary of N363, 794, which translates monthly to N30, 316, 167. A graduate on GL 08 – S15 will receive an annual salary of N978,663 which when divided by 12 gives N81,555.25 per month while a director on GL 17 – S9 will receive an annual pay of N5,452,136 which translates to a monthly income of N454,344.67.
A breakdown of the cadres shows that officers on GL02 – S1 will receive an annual salary of N230, 128 and receive N311, 935 at same GL on S15. GL 03 – S1 officers will receive an annual salary of N232, 970, to collect N333, 522 on attaining S15 while officers on GL05 – S1 will receive an annual salary of N261, 298 and on attaining S15 will receive N401, 637.
Meanwhile, annual basic salaries of the President and Vice President are N3, 514, 705.00 and 3,031,572.50 million respectively excluding other juicy allowances both in cash and kind. Chief Justice of Nigeria earns N3, 363, 972.50 million as annual basic salary, other judges earn averagely, N2, 035, 749.10 million annually.
According to an exclusive document obtained by Economic Confidential, political office holders in the executive and legislature including judicial officers totalling 1,268 with the federal government earn a combined N173,656,335,193.60. There are 4,418 individuals functioning in the same category in the 36 states earning a combined N360.091 billion while in the 774 local governments, there are 11,788 officers falling into the category earning N592.8 billion. In totality, 17,474 political office holders function in Nigeria’s public service with annual remuneration of N1.126 trillion.
Legislators earn allowances as percentages of annual basic salaries as follows: accommodation 200 percent; furniture- 300 percent once in four years; motor vehicle; 400 percent loan; fuelling allowance; 50 percent of basic salary; personal assistant- 25 percent; duty tour allowance and estacode when travelling within or outside the country; domestic staff- 50 percent; entertainment- ; utility- 301 percent; recess allowance- 10 percent; robe allowance- 25 percent; newspapers- 15 percent; constituency allowance- senators 250 percent, Reps- 150 percent; severance gratuity- 300 percent once after tenure; house maintenance; responsibility allowance- between five and 10 percent depending on office;
Annual total regular allowance for a Senator stands at N15, 299,320.00 million. In the irregular category of allowances, the Senator earns N6,079,200.00 for furniture and another N6, 079,200.00 as severance once in four years. Total irregular allowances are difficult to compute because estacode and duty tour allowances depend on how many local and international travels were conducted. The Senator also collects N8,105,600.00 as vehicle loan (which has never been repaid anyway).
And that in terms of percentage of pay (to these infinitesimal number of this class to a population of 175 million) to revenue, this translates to 10.88 for federal government; 44.49 percent for state governments and; for local government councils, it is a whopping 95.01 percent.
Ministers, Secretary to the Government of Federation (SGF) and Chairmen of the federal commissions are earning annual basic salary of N2,026, 400 million with annual basic allowance of N179, 516, 640 million just as a Special Adviser to the President (SAs) earn N1, 942, 875.00 million as annual basic salary and at least N174, 333,300 million annually as allowance.
The comparative analysis which shows gross fiscal indiscipline and revenue drain pipes reveal that a Senator and a Representative earn more than one hundred times what a graduate on GL 08 – S15 receive annually as the ratio is more than twenty times when compared to what a director on GL 17 – S9 receive annually.
Aside these figures determined by the RMAFC, many state governments appoint far higher numbers of personal aides to governors. One governor appointed over 500 advisers and personal assistants whose salaries and allowances are anchored on allocations from the federation.
Again, While the law is clear that no agency of government should spend outside appropriation since their annual expenses are only permitted through appropriation, it remains cloudy to the citizens how revenue generating agencies such as NNPC, Federal Aviation Authority of Nigeria (FAAN), Nigerian Port Authority (NPA), Security and Exchange Commission (SEC), Federal Inland Revenue Service (FRIS) among others manage the funds regarding how much they generate, how much they spend on salaries and allowances and how much is excess they have to remit to the government’s coffer. Some analysts submitted that Section 22 (1) and (2) of the 2007 Fiscal Responsibility Act created some unbelievable loopholes that allowed these agencies remit almost nothing to the government treasury because Section 22 (1) demands these agencies establish a ‘General Reserve Fund’ and only pay in one-fifth of their operating surplus for a year, and Section 22 (2) goes to state that the only one-fifth in question is their operating surplus, these allow the agencies to smartly push their operating surpluses close to zero so that one-fifth of close to zero surplus means close to zero amount of money to be remitted to the government treasury.
Last month, the Senate during the second reading of 2015 budget, accused revenue generating agencies of fiscal indiscipline which in turn undermine the budgets, saying that funds from theses agencies should be enough to fund the budget, unfortunately for gross fiscal indiscipline, the Lawmakers said, this is just a dream.
One of these agencies generated N3.06tn in 2009, but remitted only N46.8bn to government treasury; generated N3.07tn in 2010 but only paid into government treasury mere N54.1bn; and generated N3.17tn in 2011 while remitting N73.8bn. The most culpable is the NNPC and its subsidiaries, discovered to have internally generated as high as N6.20tn between 2009 and 2011 but made zero remittance, simply because they declared zero operating surpluses.
Like RMAFC observed in its 2009 report, officials buy fleet of cars in the name of operational vehicles on only to hand them over to ministers and ministry officials and this practice negates the whole idea of monetization, principle of modesty in governance and the spirit of the remuneration packages. Therefore, under the present economic hardship, this practice has to stop. The present state of the economy of the country calls for caution and belt tightening measures in the expenditure programmes of government.
