CUTS AT TOP NEEDED TO ACHIEVE PARADIGM CHANGE FOR NIGERIA

PRESIDENT GOODLUCK JONATHAN

On Saturday 7 January, President Goodluck Jonathan announced, in a television broadcast, that government officials’ salaries – including his own – would be cut by 25%. Additional expenses such as travel, he said, would be reduced to the barest minimum.

The message – which does not yet seem to have penetrated into all areas of the population – is that this is a time when austerity measures are needed, across every single sector. Of course, it’s hardly surprising that this is a difficult message to swallow. Around the world, governments are facing similar reactions from their citizens, as they implement the cost-cutting policies needed in order to weather the global financial recession.

Most of those governments, it should be noted, have not announced cuts to their own salaries and expenses.

Jonathan’s announcement shows that he is willing to practice what he preaches, taking the lead on the cuts that are needed to get Nigeria’s economy back on track and build a more equitable society. He turned down calls for a reversal on the fuel subsidy removal with the words, “We must act in the public interest, no matter how tough, for the pains of today cannot be compared to the benefits of tomorrow.”

More action needed

Jonathan’s words and actions so far show he is willing to continue in his quest to bring about that better tomorrow. He has had the courage to face the fact that the fuel subsidy is quite simply economically unsustainablein the short, medium and long term, and he has taken the first steps in paving the way for a more prosperous and balanced future for all.
But more measures are  needed in order to ensure that the fuel subsidy removal does not punish the lowest-earning sectors of the population – those 160 million who take home less than $2 a day. This means more cuts at the top.

Back in December, the Centre for Social Justice called on the National Assembly to reduce its N150 billion budget to N100 billion – a significant saving, but one that CSJ Director Eze Onyekpere says is entirely realisable. He points out huge areas of waste, in overheads, poor procurement policies, and in departments such as security – which, despite accounting for around 25% of the National Assembly budget in 2011, has not given value for money.

Time for change

The National Assembly certainly does not have a good track record when it comes to making socially conscious decisions about its budget. In May 2010, the Senate approved a 100% pay increase for National Assembly workers, to be implemented over an eight-year period.
The initial 50% increase cost Nigeria some N4.65 billion – increasing the National Assembly payroll from N6.3 billion to N11 billion.

The pay rises were defended on the grounds that they would encourage hard work and dedication, and reduce corrupt practices. This is all very well, but the move exhibits a callous disregard and insensitivity towards the plight of the vast majority of Nigerian citizens.
With good reason, Nigerians are angry and resentful about bearing the brunt of cuts, when they see those with power focusing only on taking care of themselves. Nigerian law makers are among the highest paid in the world, while the majority of those working in the public sector (who are still better off than many in the private sector) do not earn enough to meet the needs of their families.

The world’s ninth largest exporter of oil, Nigeria remains among the least developed nations in terms of quality of life – ranked 142 out of 169 countries on the Human Development Index.

A new paradigm

This is the contradiction President Goodluck Jonathan and his government are trying to reverse. In announcing salary cuts for themselves, they have taken the first step in showing that the fuel subsidy removal marks the beginning of a complete paradigm change. The “tomorrow” Jonathan promises is one in which national wealth will for the first time translate into real benefits for everyone, not just the top 1%.

The government’s 2012 budget proposal includes measures to streamline agencies with overlapping mandates, but there is still much more that can be done. Recurrent expenditure (salaries and other expenses for federal government and National Assembly employees) still accounts for an incredible 72% of the budget.

This is clearly unsustainable if Nigeria is to become a truly developed nation. More needs to be channelled into capital expenditure, with priority given to key development areas such as education, healthcare, agriculture and transport infrastructure. Whilst all this is being planned and implemented at the National level the federating states will also need to look inwards to determine area’s where efficiencies can be made.

To put into perspective the possible impact of this redistribution, a Nigerian lawmaker earns approximately ten times the amount taken home by their Ghanaian counterparts. If the difference – around $2.6 billion – was diverted into capital expenditure, Nigeria could build four new refineries, in addition to rehabilitation work on the existing four. The same sum could be used to increase the nation’s electricity capacity, currently about 3,500 megawatts, by an additional 2,600 megawatts.

As the fuel subsidy debate continues, the conversation needs to focus on how Nigeria can use its wealth with greater wisdom and social equity. With the support of the people, President Goodluck Jonathan must continue pushing through cuts and reforms at the top, to ensure subsidy removal is part of a nationwide transformation for the better.

Written by Mike Tsawah