CommentaryDebtEconomy

Federal Government and Its One-sided Austerity

The current administration led by President Bola Tinubu has, since its first day in office, embarked on some laudable measures to rein in government spending. They by nature imply austerity. Two major policies have been implemented to help achieve this. One was the removal of the petrol subsidy which was announced on the day the government was inaugurated on May 29.

Every four years, the National Assembly buys expensive brand-new cars for its members which are then sold off to the same members at ridiculous prices at the end of their four-year tenure.

This removal, which sent petrol prices from around N165 to over N600 per litre, is now on course to save the government more than six trillion naira in subsidy payments per year. This is despite the fact that the petrol subsidy removal has become partial since August when the government decided to intervene again in the sector to limit the increase in petrol prices across Nigeria.

Also Read: High Oil Prices, Low Government Revenue: A Nigerian Paradox

 

The second policy was the Central Bank of Nigeria’s attempt to gradually float the naira by removing the unrealistic peg that was put in place by the previous government and central bank leadership. As many analysts have argued, the unrealistic naira rates set by the central bank in the last few years of the President Muhammadu Buhari administration amounted to a subsidy for those who were able to get foreign currencies at those rates. At some point, the official rate was only 60% of the market rate. The forex subsidy was not without cost to the government purse.

 

One has to be clear here that it is impossible to effect the changes the government is implementing without causing some suffering.

While these two policies have allowed the current government to begin to get federal government finances in order, they are not without impacts on the Nigerian people. The increase in prices of petrol and the further depreciation of the naira have contributed to Nigeria’s spiralling inflation. One has to be clear here that it is impossible to effect the changes the government is implementing without causing some suffering.

It’s true that the inability of the government to bring in significant forex supply to support its forex reform policy also exacerbates the suffering. Nonetheless, austerity measures hurt but they are often necessary to reset government finances especially when the government has spent years behaving as if money was no object to its subsidy and infrastructural ambitions.

However, what could have secured some elements of support from Nigerians for these policies would have been an austerity programme that includes the cost of governance. There is no doubt that Nigerians are sacrificing for the economy by paying more for petrol and other goods and services. What is in doubt is the government’s own readiness to sacrifice alongside the people it’s leading. The new N2.1 trillion supplementary budget hurriedly approved by the National Assembly tells a worrying story.

The Federal Government is spending money on its own luxuries as if money is no object and the country is not in a fiscal and monetary mess. Over the last four years, the Buhari administration reportedly budgeted more than N37b for refurbishing the State House in Abuja. Earlier this year, the FG spent an undisclosed amount of money contracting Julius Berger to refurbish the State House for the incoming president.

It seems all the refurbishment that was done was not up to the taste of President Tinubu who has now earmarked another N4b for the refurbishment of his residential quarters, N2.5b for the refurbishment of the residential quarters of the Vice President, N8b for the renovation of Lagos residences for him and his Vice President. All in all, the president is going to spend N28b on renovation of official quarters and official vehicles. Should one even mention the ridiculous idea of a N5b presidential yacht proposed in the budget?

Not to be left out, the National Assembly on its side is proceeding with an outrageous expenditure of N57.6b on cars for its members. Members are already entitled to an interest-free car loan, as well as car maintenance and fuelling allowances, in their compensation structure. While the National Assembly claims that the cars are the property of the assembly and would be used by members for official duties, the past conduct of the National Assembly tells a different story.

Every four years, the National Assembly buys expensive brand-new cars for its members which are then sold off to the same members at ridiculous prices at the end of their four-year tenure. The average Nigerian does not own a car, the privileged Nigerian owns a car in its teenage years, but Nigerian leaders all use brand new cars that are discarded every four years.

Also Read: Four Trillion Petrol Subsidy: How Much Subsidy Is Too Much Subsidy?

For Nigerian leaders to credibly ask Nigerians to sacrifice for the sake of the economy, they must show they are embarking on austerity in their own offices. Spending billions on refurbishing a recently refurbished State House or buying expensive brand-new cars for ministers and national assembly members does not send a good message to the public.

Nobody, anywhere in the world, needs a $200,000 car to perform his or her duty as a legislator or minister. The fact that the people leading a poor country in crisis are willing to spend this much on cars belies the unfairness of the current cost-cutting moves of the federal government. Surely, our leaders can understand the bad optics of buying top-of-the-line vehicles when Nigerians are battling extremely high inflation.

Austerity cannot be one-sided. It must affect the leaders more than it affects the led. The executive and the legislature must immediately begin to display true leadership by cutting their luxury expenses.

Sodiq Alabi

Sodiq Alabi is a communications practitioner and analyst who has experience in leading and supporting communication processes. He has expertise in organising media events, preparing reports, creating content, and managing websites and social media platforms.

Related Articles

Back to top button
Arbiterz

Subscribe to our newsletter!

newsletter

Stay up to date with our latest news and articles.
We promise not to spam you!

You have successfully subscribed to the newsletter

There was an error while trying to send your request. Please try again.

Arbiterz will use the information you provide on this form to be in touch with you and to provide updates and marketing.