Before Country Goes Bankrupt

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Put Nigeria First.


Anytime I remember this story, I grin. After our wedding some years ago, my wife and I decided to pay “thank you” visits to family members and friends. We visited my mother-in-law’s boss at the office.

As we chatted, we noticed he was sweating inside his well air-conditioned office. My wife said: “Sir, are you all right? You’re sweating!” The man smiled and replied: “Don’t mind me, my sister. This is how I sweat anytime I’m spending too much money. You know I’m an Ijebuman!” We had a good laugh. I wish this were the way Nigerian government officials sweat when they are spending our money, especially recurrent expenditure. Maybe it would curtail their appetite. What we have in Nigeria is a money-spending ruling class that cares little about the security of revenue. All they think of is expenditure, expenditure, expenditure!

The major component of public expenditure today is recurrent: salaries, allowances, pocket money, security vote, foreign trips, duty tour, all what not (a notable exception is Lagos State, where capital expenditure is over 60 per cent of the budget). In the federal budget, 74 per cent is for recurrent. A large amount goes into benefits for political appointees-SA to the SA and PA to the PA, among others. I once read of a governor who appointed 5,000 special assistants and claimed that the salaries were “nothing”. At the federal level, President Goodluck Jonathan promised us a “leaner” cabinet and ended up with 42 ministers! Members of the National Assembly collect all kinds of allowances-weekly, monthly, yearly, severance, constituency, name them. All these, multiplied by 36 states, are heavy burdens on the treasury. Most of the revenue that comes our way goes into paying allowances and bills.

Why don’t our leaders sweat, like my mother-in-law’s boss, when spending this money? To start with, they didn’t work hard to produce it. My mother-in-law’s boss is spending his own money, so every kobo he spends pinches him. He has laboured so hard for this money and he is not too glad to part with it. Oil money, however, belongs to “everybody” and “nobody”. The dream of many Nigerians is to be given political appointments so that they can partake in the sharing and spending of oil money. Many want to travel for one-week conferences in Australia, attend only one day and pocket the allowances. The rest of the stay is for shopping. We buy them first-class tickets and lodge them in five-star hotels. Spend, spend, spend. Interestingly, the approvals for recurrent expenditure come in a jiffy, while capital projects take ages. So while recurrent is utilised 99 per cent, capital scores less than 50 per cent.

Why do they find it so easy to spend this money? It is oil money, it is nobody’s money. If government has to finance its expenditure from internally generated revenue (IGR) without the oil money, are we likely to see any governor or president appoint 5,000 aides? If a state generates N200 million internally, it would have to live within its means. The governor is not likely to be buying state-of-the-art cars for traditional rulers, except he wants to take a loan to do that. He is not likely to start building the latest governor’s lodge in town. But since he is sure that at the end of the month, he would pick a cheque for N2 billion from the federation account-about 80 per cent of which comes from oil revenue-he is encouraged to keep spending until he drops. No need for savings or caution.

There is a belief that we cannot be saving money when there is so much work to be done. A country that needs a lot of infrastructure cannot be saving. All the money is not enough to solve our problems so why keep part of it? But, then, what is the assurance that if everything is spent, it would go into infrastructural development? What is the assurance that it would not go into buying more bullet-proof cars? Is it reasonable and safe for a state to base its livelihood on a commodity it is not in control of the pricing? It could be $60 today and $30 tomorrow. What kind of planning can you do on that? What is wrong with developing a fairly predictable revenue base and treating oil money as “surplus” which should be spent only on specific projects, not on allowances? That way, you could have fiscal discipline. If a state has to restrict its recurrent expenditure to its IGR, the propensity for waste will be reduced.

Let’s look at the argument this way. Let’s say my salary is N1 million a month. I will call this my IGR. It makes sense that I plan my expenditure on this. This would cover my electricity bill, rent, water, school fees for the children, house keeping allowance, foodstuff and other household items. Now if I make an extra N500,000 per month, maybe by buying and selling frozen chicken or grass-cutter, should I go ahead and employ more housemaids and more security men? Should I start throwing parties every weekend to entertain my friends? This is what Pastor Matthew Ashimolowo would call “downward investment”-unfruitful expenditure. Rather, it would make sense if I invest my additional income in things I can point to in the future, like building a house for rent or buying buses for commercial transport to generate more income.

As it has been proposed by many commentators, including our own Olusegun Adeniyi-in line with what obtains in some mineral-rich countries-I support the idea that government should begin to work towards generating the income it spends on itself through IGR, while oil earnings should go mainly into capital expenditure (capable of generating more income by providing infrastructure for business), with the balance saved for the future. That way, the waste on recurrent bill will reduce. This idea of sponsoring people to Mecca and Jerusalem every year is a massive waste of money. Anybody who cannot afford pilgrimage should stay at home. If care is not taken, government will soon start paying tithe, offering and Zakat on behalf of the citizens. The budget for foreign training for government officials should be reduced drastically-bring the trainers to Nigeria as much as possible. The length of convoys must shorten. The population of SAs and PAs must dwindle. Foreign trips under the guise of searching for “foreign investors” must reduce. The time has come for us to re-order our priorities.

Meanwhile, government must begin to increase its IGR by adopting short-term, medium-term and long-term strategies. In advanced economies, government finances its expenditure mainly from taxes and levies. In Nigeria, “big men” don’t want to pay tax (ironically, workers’ taxes are taken at source!) What rich men declare when it comes to personal income is pittance. A “big man” doesn’t even want to part with N100 at a toll gate-he would claim “government official” (after all, there is a police escort sitting beside the driver). These same big men know what they pay in taxes for their houses and cars in Europe and US. It’s sickening. Also, we lose so much money through the corrupt import duty waiver system. We lose billions of naira to corruption at government offices because of complicated procedures and failure to computerise operations. We don’t care about the leakages because we know petrodollars will always flow in.

Politicians, because of the desire to win elections, typically avoid the task of driving up IGR by collecting taxes as due. They don’t want to offend anybody. They look the other way. After all, they will pick up a fat cheque of N2 billion from the federation account at the end of the month. In Ghana, even operators in the informal sector pay taxes. In Nigeria, it is considered politically unwise. Why? Because in Ghana, the state survives on IGR; in Nigeria, the state lives on oil. Oil money is nobody’s money. IGR is more difficult to collect. That is why in Nigeria, we focus on oil money and fritter it away through heavy overheads. It’s easy money. Easy comes, easy goes. Is it any wonder that Lagos State, which depends 80 per cent on IGR, spends less than 35 per cent on recurrent budget? There must be a link between revenue efforts and expenditure.

Across the country, the wage bill is very high. The subsidy bill is crazy. Meanwhile, oil income is, as things stand now, uncertain-with another global economic crisis approaching. If we don’t curb our appetite for wasteful spending and begin to tap other sources of income as a matter of urgency, we will soon go bankrupt. It has happened before. It can happen again. Our leaders must begin to sweat profusely with every kobo they spend from the treasury, especially on the recurrent items that produce only personal benefits. Let’s put Nigeria first.

Simon Kolawole, 16 October 2011

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