Dangerous debts and governance cost reduction

By     Date Published29/06/2015

In the parlance of financial experts, debts are usually categorized into different groups– good or bad, dangerous or manageable. generally, however, a debt is a debt. If an individual is indebted, his life is dented; his economy is easily cornered and threatened. And so, if a country is heavily indebted without concrete investment like in the case of Nigeria with unserious economic policies and poorly- managed assets and cash flow (in and out), then the nations’s image and integrity become dangerously dented in global diplomatic rating.

The general postulation that the richest country in the world is the most indebted nation is just but a statemeut void of substance. Because the way the advananced democracies run their own economies is not the way we run our own. For example, America has a population of 316 million people with the Gross domestic product (GDP) of $17,328 tn. This is about 30 times Nigeria’s GDP. And with all these, it is said to have only 15 federal ministries.

Also, India the second largest Asian country has only 24 federal ministries. It is also the world second largest country in terms of population. And of course, the United Kingdom (UK) has only 17 federal ministries.

However the case of Nigeria is something else. With a population of about 170 million people, it has 28 federal ministries with 542 federal agencies and parastatals with about 50 of them having no enabling laws establishing them. That is, some of them are run illegally with brazen impunity.

Just a few days ago, some stakeholders said that most of the portfolios of ministers were not responsive to the major challenges of Nigeria like “family and child affairs, religious affairs, Vulnerable and the north-east crisis”

The statement continued: there is an apparent conflict between the desire of reducing the cost of governance through cabinet downsize and the constitutional requirement of cabinet level ministerial appointments from each of the 36 states of the federation”. The situation became conspicuously pathetic under the PDP-Controlled administrations of chief Olusegun Obasanjo (1999_2007) and Dr. Goodluck Jonathan (2011–2015 when about 42 ministers were said to hold positions in all available ministries either with or without portfolios.

The Debt Management office (DMO), which is directly under the presidency has indicated that the country’s sovereign domestic debts as at March 31, 2015 was N8.51 trillion even as the nation’s major revenue earner, the petroleum industry remains highly unstable.

As at December 31, 2014 when the debt figures were last segregated between federal and states, that of states components of the nation’s debt profile stood at 33.63 per cent while the Federal Government’s Component stood at 66.37 per cent. The breakdown further indicated that Lagos State occupied the top position on the list of the most externally-indebted states with $1.16 million dollars (i.e N233 billion).

Other heavily indebted states include Cross River ($131 million or N26 billion) Edo ($123 million or N24.5 billion), Ogun ($109 million or N22 billion), Bauchi ($87 million), Enugu ($62 million), Katsina ($78 million), Osun (N67million) and Oyo ($72 million). However, there are other unverified reports that have indicated sharp increases in the above profiles in the last five months.

It has just been released that just a total of about 10 states of the federation have accumulated arrears of salaries to pay totaling N110 billion. That is just on salaries alone, not capital projects and other expenses. And that is from less than one-third of the nation’s 36 States and the federal Capital Territory (FCT), Abuja. These 10 states are Osun, Rivers, Oyo, Ekiti, Kwara, Kogi, Ondo, Plateau, Benue and Bauchi.

It is said concerning Osun State that by the end of June, 2015, it will owe its workers alone a total of N25.2 billion for seven months salaries. The wage bill of civil servants in the state was put at N3.6 billion per month by Governor Rauf Aregbesola while the workforce was also put at about 40,000 saying it was next to that of Lagos seven when it is known by all and sundry that Osun is neither the second or third richest state in Nigeria as at today.

Already, 18 states from the nation’s six geo-political zones have been declared bankrupt no thanks to their financial indebtedness and their individual inability to pay their public servants and innocent pensioners when due.

The months salaries owned by them range from three to 11 months in both Northern and Southern states affected.

With the global crisis in the oil sector coupled with the Federal Government’s daily spending on petroleum subsidy which is said to have possibly risen to N2.06 billion naira. And the country’s flamboyant democracy, there can be no better wisdom than to reduce the cost of governance in Nigeria.

The lead director, Centre for social justice, Mr. Eze Onyekpere said: “A dire economic situation needs some adjustments and reforms, or else, the country will not just stagnate, it will enter the reverse gear.”

Nigeria does not need the number of ministers, ministries and parastatals that are currently in place or vacant. This country has nothing to do with 542 agencies and politicians must desist from appointing redundant officers in order to score mere political points.

This downsizing exercise must touch the three arms of government the executive, the legislature and the judiciary. It must also touch the three levels of government — Federal, state and local governments with all the segments of their operations. No time is better than now to effect this. It is the wisest thing

SOURCE: Nigerian News Direct.

Leave a Reply

Your email address will not be published. Required fields are marked *