People & Money

Shall we restructure the public sector?,

…in determining the purpose of MDAs in the run up to their restructuring, it would matter how well each promotes private sector-led activity and or protects consumers… The problem is how to get our governments to understand this and to arrange their operations and processes in a way that helps optimise its achievement.

That the Kaduna State government and organised labour came to blows over the former’s attempt to tidy its budget by trimming the number of civil servants in its employment is no longer news. Nor is the fact that both parties resorted to pretty unconventional tactics to advance their cases. Even as each side rolled out tear jerkers to underscore how untenable the opposing case was, the consensus is that the State’s economy will be the worse for the events of the past two weeks. The economy was ailing anyway.

As with most governments in the country, Kaduna State does not earn enough to cover its daily spend. Dwindling oil export earnings and a rapidly growing population have ensured this for quite a while. An addiction to oil export earnings has also meant that since the early 1970s, our governments forswore the investment in domestic capacity required to support private sector economic activity enough to generate non-oil revenue for government. In the absence of the personal income taxes that thriving private sector activity would bring, most have imposed levies on informal sector activity that have further throttled commerce.

Meanwhile, the Federal Government continues to build up liabilities against future generations of Nigerians by borrowing huge sums in foreign currency to support shortfalls in its budgets. Now this would not have mattered that much if the borrowings led to a boost in domestic productivity. Government could then continue to argue that the increased output from its spend would pay for itself. Instead, a large part of our burgeoning debt portmanteau goes to meeting recurrent spending.

Also Read: https://arbiterz.com/debts-of-nigerian-36-states-hit-n5-3tn-rises-by-162/

Reforms to other MDAs should, of course, start with a statement of purpose. Not what they do. But how this feeds into the national goal of growing the economy by eliminating poverty? At this point, the newly-laid off staff may be paid their salaries and wages for the first five years…

The Kaduna State governor may have detonated a nuclear bomb under this dynamic in his State, but in truth the core of the civil service was already heading for a far more severe meltdown. Given the generally poor outcomes (health, education, security, etc.) for the economy, it was inevitable that the question would be asked whether spending two-thirds of the public sector’s budget on recurrent items is value for money. Arguably, an efficient bureaucracy is a non-negotiable requirement for effective policy outcomes. In the Nigerian example, though, dirigiste impulses, especially over the last six years, and a longer tailed incompetence in government have meant that we favour public sector supply responses over private sector ones. This is as much a structural problem – easy funding for start-ups and easier listing requirements for small stock IPOs – as it is an ideological one. Our governments simply loathe the coming together of youth, new ideas, and entrepreneurship.

And so in the communication sector, to take but the most obvious example, we have about five agencies of the state at the federal level saddled with helping government make its case. You can only wonder how bad this case is that it needs so many cooks brewing its broth. Beyond that, however, there is the worry that salaries and wages are but a small share of what passes for “recurrent” spending in our public expenditure. In other words, the spend of ministries, departments and agencies (MDAs) of government on providing their own infrastructure might make up a bigger share of what currently masquerades as the recurrent spend.

This possibility opens a window for reform and invites conversation on the design of an appropriate safety net. A clear reform path would eliminate the overlaps between the Federal Ministry of Information, National Orientation Agency (NOA), Federal Radio Corporation of Nigeria (FRCN), Nigeria Television Authority (NTA), and the News Agency of Nigeria (NAN). And without cutting down on these institutions’ staff’s wages and salaries, the country could still save a prince’s ransom. Reforms to other MDAs should, of course, start with a statement of purpose. Not what they do. But how this feeds into the national goal of growing the economy by eliminating poverty? At this point, the newly-laid off staff may be paid their salaries and wages for the first five years after the reforms that eliminated their workplaces, or for as long as it takes each to get a new job, whichever comes first.

Asked how governments may square the cycle of rising expenditures and falling revenues, most people will argue for an increase in the tax base, and the boosting of internally generated revenues. These, of course, are not ends in themselves.

The latter part of the design of this quasi-safety net is the nub of the problem, though. Asked how governments may square the cycle of rising expenditures and falling revenues, most people will argue for an increase in the tax base, and the boosting of internally generated revenues. These, of course, are not ends in themselves. Rather, they presuppose a thriving private sector able to pay both company income and personal income taxes, and of unrestrained interstate commerce. If we attend to our infrastructure deficit, we address the latter. But by far the bigger need is how to make real that shibboleth around which we have couched successive governments’ commitment to economic growth and development.

Also Read: https://arbiterz.com/nigeria-labour-congress-a-poverty-dissemination-powerhouse/

In other words, in determining the purpose of MDAs in the run up to their restructuring, it would matter how well each promotes private sector-led activity and or protects consumers. Which, truth to tell, are two sides of the same coin. A competitive market structure is the best protection for consumers. The problem is how to get our governments to understand this and to arrange their operations and processes in a way that helps optimise its achievement.

Uddin Ifeanyi, journalist manqué and retired civil servant, can be reached @IfeanyiUddin.

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