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Jumbo Cost Of Governance: PMB’s Food Budget For Tinubu, Shettima Creates Ripples

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The economy is in a bind, inevitably spurring the call by the Tinubu administration for sacrifice on the part of the citizenry to pull the nation out.

On his inauguration day, President Bola Tinubu removed subsidy on petrol that had cost the nation trillions of Naira as part of the sacrifice.

He has since followed up with the merging of the multiple foreign exchange rates, a situation that has led to the depreciation of the Naira at the official window.

The implication is not lost on the citizenry who now have to cope with the attendant inflation.

And arising from the foreign exchange rates merger was the announcement last week that electricity tariff would go up as power distribution companies said the concession they were getting from the official window was gone and this would raise their cost of production.

The announcement has since been reversed but the hike is only a matter of time as the reversal came about because due process was not followed and the tariff had not been approved by the authorities

Also last week, indications emerged that vehicle owners will have to pay yearly for proof of ownership contrary to the outgoing era that makes the payment one-off in the life of a vehicle.

Other belt-tightening measures to free funds for government to meet its obligations may soon follow.

But amid the call on the citizenry for sacrifice to pull Nigeria out of the woods, many people are worried about jumbo cost of governance occasioned by what some call questionable budgetary allocations by government at different levels.

For instance, the Buhari administration made provisions of N11.92 billion for feeding and foreign trips of the President and Vice President in the 2023 Budget of the Federal Government which Tinubu and VP Shettima have now inherited.

A breakdown shows that N331.79 million would be spent on the President’s feeding while that of his vice is N176.92m.

When put together, the nation would be spending N508.71 on food and refreshments for their President and VP at the end of the fiscal year.

Local and foreign trips for the President and his vice would cost over N3 billion.

N2.49 billion was earmarked for the office of the President while his deputy gets N846.61 million.

Also included are N1.58bn earmarked for aircraft maintenance and N1.60bn allocated for overhauling of Gulfstream GV and CL605 aircraft engines.

10 aircraft

Sunday Vanguard recalls that in the heat of the criticism generated by the huge budgetary allocation for aircraft maintenance during the Buhari administration, then spokesman, Mallam Garba Shehu, said there were 10 planes in the presidential fleet.

They include two AgustaWestland AW 139 helicopters, two AugustaWestland 101 helicopters, two Falcons 7X, one Hawker Sidley 4000, Boeing Business Jet, Boeing 737-800 or NAF 001, one Gulfstream 550, one Gulfstream V and one Gulfstream 500.

It could not be established if any aircraft was added to the fleet between when the former presidential spokesperson made the disclosure and now.

Economists argue that even rich countries like the United States (US) and the United Kingdom (UK) don’t feed their President and Prime Minister respectively, saying it is an anomaly for a poor nation like Nigeria to vote humongous funds to feed its leaders.

They also contend that very few countries across the world maintain as many as 10 planes in their presidential fleet as Nigeria does.

For instance, according to them, when the leaders of some of these countries use planes in the presidential fleet for personal purposes, they pay.

Nigeria’s bureaucracy is also seen as bloated, thus consuming a large chunk of government revenues.

For example, the National Assembly, NASS, in the 2003 Appropriation Act, was allocated N328.1 billion, the highest in 23 years.

A breakdown shows that the funds were tied to several purposes, with some still generating ripples.

One such is N16, 520, 653, 763 budgeted for Senators and members of the House of Representatives’ aides.

There is also N8.5billion for National Assembly liabilities, the details of which weren’t spelled out.

Also, N100 billion was approved for Zonal Intervention Programmes, ZIPs, otherwise known as Constituency Projects.

The money, which is for the 469 federal legislators, has been an issue of controversy as lawmakers are often accused of mismanagement of funds meant for such projects.

Only last week, Speaker of the House of Representatives, Tajudeen Abass, appointed 33 aides, bringing the number of his appointees to 35.

Abass argued that the appointments would ensure effective delivery of his agenda for the House. The last occupant of the office had no fewer than 33 aides.

In 2016, a NAN report pegged the number of legislative aides at 2,570.

According to the National Assembly Act, each lawmaker is entitled to five aides.

The Act says the Senate President is entitled to 45 aides, his deputy 30 and 20 each for principal officers.

For the Speaker of the House, the Act provides 35 assistants for him, Deputy Speaker, 15, and 10 each for the six principal officers.

Consequently, there are fears that by the time Senate President Godswill Akpabio and other principal officers of the National Assembly finish appointing their aides, Nigeria’s leaders at the NASS level may end up having over 1, 000 aides.

Now add this to the cost of running the Ministries, Departments and Agencies (MDAs) at the federal level.

State level

Across the states, the situation is not entirely different as new governors have so far retained the bloated bureaucracy of their predecessors.

All these are happening in a nation facing a N77 trillion debt crisis.

Only recently, the Debt Management Office, DMO, warned the Federal Government against additional borrowing, saying 73.5 percent of revenue generated this year would be used to service debt.

According to the DMO, the projected FGN Debt Service to Revenue ratio of 73.5 percent for 2023 is high and cannot support higher levels of borrowing, and is also a threat to debt sustainability.

Consequently, it advised government to focus on increasing revenue generation.

Slim government

Some concerned Nigerians told Sunday Vanguard it would be wrong for the Tinubu administration to tell Nigerians to make sacrifices and still ignore the urgent need for reduction in the cost of governance.

The authorities, drawn from key sectors including the academia, however, suggested ways government can reduce the size of governance and plug leakages.

In an earlier interview with this paper, the Labour Party, LP, last Thursday, accused the ruling party at the federal level, the All Progressives Congress, APC, of showing early signs of continuing “the wasteful lifestyle” of its predecessor.

Acting National Publicity Secretary of the party, Obiora Ifoh, said it was an irony that the administration would ask Nigerians to “tighten their belts and make sacrifices” while living in opulence.

On his part, Chairman, HEDA Resource Centre, Mr. Olarenwaju Aregbabo, said there is no better time to reduce cost of governance but now.

Budget

Aregbabo said: “It is really a very serious issue that we must actually contend with. It is a concern. Unfortunately, we focus much on the Presidency, beyond what we also have at the state level. We have state governors who have allocations outside the security votes. At the federal level, apart from the budget for food in the President’s house, there is also an allowance given to the President and the Vice President to take care of whatever it is they have to take care of daily.

“In advanced countries, if a President is inviting anybody to lunch or dinner, it is from his or her pocket and not from the government purse. It is not for the President to create a situation where you have money going for everything.

“It is very important that we continue to bring this out in the open. A number of those who are meant to talk about this are not talking because they also benefit from it. So, for the few of us who are really concerned about it, it’s necessary that we keep raising questions.

Oronsaye Panel report

“As it is now, Nigeria cannot afford an increment in the salaries of public office holders, except government knows what most of us don’t know.

“I support to some extent, the implementation of the Oronsaye Panel report on merging of agencies. That is why many public servants can afford to stroll into the office and stroll out when they like. Most of them don’t have any purpose for being in the office. And, when you merge some of these agencies, they become better.

“There is a need for a complete and holistic assessment of the workforce in the country. The multiplicity of Ministries, Departments and Agencies creates room for ghost workers.

“There is a need to know the real cost of services because many parts of our budgets are heavily padded and this makes it possible for them to replicate what is in the budget every year without monitoring what was implemented and what was not implemented.

“If we can block the leakages and ensure that the services we pay for are needed, they will improve.’’

Wasteful spending

Making his position known, Executive Director of Civil Society Legislative Advocacy Centre, CISLAC, Auwal Rafsanjani, said: “If the new administration headed by President Bola Tinubu is committed to reducing the cost of governance in Nigeria, he must not repeat the mistake of wasteful spending and flamboyant governance in this country. We have suffered at the hands of some few political elites who have squandered the resources of this country at local, state and national levels. Therefore, if Tinubu is interested in reducing the waste and diversion of taxpayers’ money, he must cut wasteful spending.

“We expect that Tinubu will block those leakages and make governance more efficient by reducing the large number of unproductive political appointees. He must deal with this issue as quickly as possible so that government can deliver good governance to Nigerians. Doing this will make Bola Tinubu one of the best-performing Presidents.

“He has to minimize spending and make government effective as well as transparent. If he continues like the previous administration, it means there is no difference between him and the previous governments who failed to deal with these issues.

“For example, we do not need to have this flamboyant and large number of aides that are unproductive and without clear roles. Some state governments have thousands of aides. What we need is the creation of a viable economy and job opportunities for people to be gainfully employed. We have seen how a former Rivers State governor appointed several aides. Today, they have all lost their jobs. If he had used the resources to put in place infrastructure, create jobs, boost industrialisation and manufacturing, it would have been useful for Rivers State people and government.”

Unnecessary expenditure

On his part, Chairman of Nigerian Bar Association Section on Public Interest and Development Law, NBA-SPIDEL, Dr Monday Ubani, said: “If we don’t change the idea of unnecessary expenditure on governance, we won’t have enough money to develop infrastructure. Currently, there is no standard road in Nigeria. One cannot take off from Lagos to the East on a smooth ride or Lagos to Abuja. The railway system is non-functional. There is no internet-connectivity. It is the same for electricity. The moment we don’t have money to make investments that would attract investors, we will remain where we are because the Dollar will always be higher than Naira.

“I thought this government would do something in terms of expenditure but I cannot see prudence. He has removed fuel subsidy, which has made prices of things skyrocket. The World Bank has also said that over 40 per cent of Nigerians will relapse into poverty due to the removal of subsidy. Our government has to be certain of what it does because a lot of people are living in abject poverty. Any position that has no relevance to our economic growth should be done away with.”

Economic analyst and Vice Executive Chairman, High Cap Securities Limited, David Adonri, said: “I am surprised that the cost of governance inherited by this administration has not been reduced and expenditure rationalised. If we intend to heal our economy or initiate a process that would enable it to recover quickly, the cost of administration has to be drastically reduced because policies that were recently introduced like the unification of exchange rate and removal of fuel subsidy are going to drive up inflation.

Financial stability

“The only means through which the Federal Government can manage the situation, especially as it affects its financial stability, is to reduce expenditure drastically. With inflation, government will have to pay more for a lot of goods and services. If expenses are not rationalized, government will go into debt, leading to an increase in economic deficit. The current administration needs to go back to the drawing board to see how it can cut costs in all areas.”

Lending his voice, a senior lecturer at Lagos Business School, Dr Austin Nweze, said: “Whatever thing a leader does is based on his personal value system. John Adams said there are two types of education: the first teaches a person how to make a living and the second teaches one how to live. The second type of education is based on one’s value system. If your value system is a life of opulence, it will show in your character, the same goes for being prudent.

“The government that we have is that of state capture, they are not interested in what happens to the economy and the well-being of the citizens. The cost of governance is high and people who invested in their elections want to recoup their money. To cut down the cost of governance, you have to invest it in health, education and entrepreneurship. Invest in those things that would generate wealth for the people, not what will take away wealth from the people. Currently, there is between 30 and 33 per cent adult unemployment and over 55 per cent youth unemployment. How does such an economy grow? By making sacrifices from the top, domestic production can be increased for the economy to take off. There has to be a deliberate attempt to revive the economy by cutting the cost of governance. The sacrifice has to come from the political class who live an ostentatious life or what I will also call a life of opulence.”

Don’t compound woes of Nigerians, CSOs warn

Meanwhile, some Civil Society Organizations, CSOs, who spoke to Sunday Vanguard, advised the current administration not to toe Buhari’s path.

Specifically, Convener, Nigeria Youth Coalition, NYC, and Yoruba Council Worldwide, YCW, Oba Oladotun Hassan, urged Tinubu to, as a matter of urgency, begin to stand by his campaign promises.

His words: “I will serve a strong note of caution that Mr. President shouldn’t go the same way his predecessor operated.

“And the reason we elected him is for him to heal our wounds. So, he should see himself as a healer, rather than adding more salt to our injuries. We need to reduce costs. The removal of subsidy is there and we are still bearing it because of his appeal for patience for us to be on the same page with him.

“He shouldn’t compound our woes. In as much as the out-gone President presented a budget, he should as a matter of urgency, review the budget as regards the cost of governance. ‘’

Also, the Convener, Concerned Nigerians, Deji Adeyanju, questioned why the President and political appointees spend so much money on things that do not improve the livelihood of Nigerians.

He said: “Nigeria is one of the poverty capitals of the world, which is very unfortunate. You saw the President’s convoy upon his return from London. Why should the President of the poverty capital be driving a 120-car convoy? It makes no sense.

“Why should we even be buying vehicles for politicians and civil servants in the country? Nigeria is too broke for our politicians to be living extravagantly. People are no longer going into public service for service. People are going into public service for luxury and leisure.

“Everything should be sacrificial. You should stop paying salaries to politicians. It makes no sense. We should not be buying official cars for public servants. Except maybe the Ministry of Health where they need an ambulance and police where they need patrol cars to chase armed robbers and the Ministry of Works where we should have heavy-duty vehicles to repair our roads”.

On his part, Professor, Williams Ijoma, said: “Nigeria’s present reality requires nothing short of a holistic reform of its governance structure, system and process. Such efforts must, of necessity, begin with drastic reductions in personnel and overhead costs. If we are to survive as a nation, we must turn this moment of profound crisis into an opportunity to make the hard choices we have long deferred but can no longer avoid.

“As part of the cost-cutting measures, federal and state governments should reduce the size of their cabinets through amendment of the constitution and limit the number of advisers and assistants. Bills pending before national and state assemblies seeking to set up new agencies of government should be rejected. The report of the Steve Oronsaye Panel should be revisited and strictly implemented.’’

***Sourced from Vanguard

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Job Losses, Factory Closures Loom As Unsold Goods Pile Up — MAN

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AGAINST the backdrop of sustained pressure in the foreign exchange market and high cost of production, the Manufacturers Association of Nigeria, MAN has indicated that inventory of unsold goods is escalating to levels now threatening the existence of companies operating in the production sector of the economy with attendant job losses.

Findings show that as of the weekend the foreign exchange market had recorded over 254 per cent plunge in the value of the naira since flotation of the currency by the Central Bank of Nigeria (CBN) in June 2023.

Recall that the naira traded for N471 per dollar in the official I&E market on June 13, 2023 before the floatation of the currency, but exchanged for N1,665.50 to a dollar as at February 23, 2024 on the Nigerian Foreign Exchange Market (NAFEM), indicating a depreciation of more than 253.6 per cent over the eight-month period. The forex crisis is also stoking inflation, and coupled with high energy costs, purchasing power has continued plummet, stifling demand for goods.

Speaking on the impact of this development on the manufacturing sector, Director General, MAN, Segun Ajayi-Kadir, said: “There are reports that across the board, many warehouses and plants of many manufacturing firms are stockpiled with unsold goods manufactured last year. “The development is as a result of the devastating effects of the exchange rate crisis, inflation, fake and sub-standard goods, smuggling and other macro-economics challenges.”

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CBN Lifts Ban On BDCs, Introduces New Operational Mechanism

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In a major development aimed at financial stability and strengthening the naira, the Central Bank of Nigeria (CBN) plans to resume its weekly intervention in the country’s foreign exchange (FX) market through the Bureau de Change (BDC) operators.

In 2021, the central bank, in a bid to achieve its mandate of safeguarding the value of the local currency, ensuring financial system stability, and shoring up external reserves, announced the immediate discontinuance of foreign currency sales to Bureau de Change (BDC) operators in the country.

However, the resumed intervention, which would reportedly commence today for funding as well as Tuesday for collection, will see the apex bank inject FX into the subsector in a bid to rescue the naira from further depreciation against major currencies, particularly the US Dollar. The collection will be at designated CBN branches in Lagos, Abuja, Kano, and Awka, while details of the naira accounts to be credited for funding bidding will also be made available today.

CBN is also expected to publish the list of eligible BDCs to benefit from its funding using certain compliance criteria.National Executive Council of Association of Bureau De Change Operators of Nigeria (ABCON) hinted on the latest developments through a memo to its members over the weekend.

The association also warned members that it will no longer be business as usual under the new supervisory regime of the central bank, as any infringement or infraction would result in outright revocation of license and prosecution.

ABCON said through the association’s various engagements with the central bank, in conjunction with ABCON’s strategic partners, CBN had agreed to its request, under the bank’s supervision, to inject liquidity into the market through a weekly intervention beginning today.

CBN assured ABCON that the new circular on the Revised Regulatory and Supervisory Guidelines to BDCs, which was introduced over the weekend, was only a draft exposure that required the association’s inputs before the release of the final guidelines by the apex bank.

To that effect, the letters of the guidelines were not cast in stone, the association’s leadership told its members, who had been worried over the sweeping reforms in the document, which, among other things, prescribed N2 billion and N500 million minimum capital for national and state BDCs, respectively.

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