Wastes in government spending can occur through active wastes and passive wastes. In most cases and as proven over time in several federal and state governments all over the world, the significant portion of the waste is usually passive.
That is, the wastes are costs caused by inefficiency occasioned by government bureaucracy and red tapes.
While the wastes, which determines the enormity of the cost of governance and rendition of public services can be a combination of bribery and contract cancellation and padding for decision makers (active wastes), which the populace often make huge noise about, the bulk of the wastes is more than 80 percent through passive, bureaucratic wastes. This much is alluded to in the research, titled: “Active and Passive Waste in Government Spending: Evidence from a Policy Experiment,” carried out by the trio of Oriana Bandiera and Andrea Prat of the London School of Economics and Tommaso Valletti of the Faculty of Economics, University of Roma.
Wastes in government spending happen in different ways. Among these include projects mobilisation which are later abandoned unfinished, funds wasted on purchase of vehicles the government officials don’t need as well as votes for renovations and refurbishments that are unnecessary. What about provisions for social interventions that are hardly seen to make any impact despite billions being committed and allegedly expended over years. Each year, billions of taxpayer’s money are deployed and are literally wasted on activities that are duplicative, unnecessary and apparently without priority.
This has reduced the ability of the Federal Government to meet its constitutional responsibilities to the Nigerian people in terms of worth for the costs of governance. Without mincing words, this wasteful spending is nothing but outflows that do not return value, and in some cases cause harm. Proper analysis of the annual budget implemented in Nigeria, the wastes go as high as two-third of total money spent in the fiscal year without a corresponding gain in outcomes. This wasteful spending are those that could safely be eliminated without harming the quality of governance rendered to the over 200 millions of the population.
The “Budget of Renewed Hope” for year 2024 and its revelations have shown that the federal government is not ready to lead by example in the quest to give a new direction to the country with its call for sacrifice as the country wades through the challenges thrown up by the economic reforms necessary to reposition the country. Clearly the budget template needs a touch, a thorough overhaul, and not just slotting of figures. We are talking about Renewed Hope and a paradigm shift in government spending; therefore some items should be eliminated totally while some figures in the recurrent expenditures, especially emoluments and allowances paid to government officials, are cut down drastically.
Can one say that the government spending, as is at present, is focusing on the necessary public service and serving a clear national interest, and not avoidable luxuries? With the UNGA 2023 expense amount, the COP28 loaded delegates, and the amount budgeted for overheads in the 2024 appropriation bill, it is clear that the government wants to continue with its prodigious recurrent votes and spending attitude despite the dwindling internally generated revenues, the heavy borrowings and its attendant hefty debt servicing, and the hampered revenue generation.
With debt servicing swallowing almost hundred per cent of the generated revenue, clearly a chunk of the overheads are financed with borrowed funds. It is in view of this situation that the position of Senator Adams Oshiomhole during the defence of the Ministry of Trade, Industry and Investments budget becomes very instructive when it was discovered that the ministry had budgeted a whopping N1 billion in the 2024 budget for a trip to Geneva, Switzerland.
In the words of the Senator: “I see that you intend to travel to Geneva next year and you have budgeted over N1 billion for that. We can’t keep going on with over-bloated teams on foreign trips. Use the experts we have in your offices in the country to save costs… Let’s practise what we preach. We can’t talk about industrialisation and keep importing toothpicks and tyres. We must ensure that we have home-grown products. What is our balance of trade, especially with China? Those countries exporting things to Nigeria are expected to build factories in Nigeria. We have to take advantage of our population to grow our industries?”
But are the officials at the executive arm of the government ready to practise what they preach? Will they take decisive action to truly work on the balance of trade by ensuring that frivolous importations are curbed? How would they generate revenue to sufficiently fund the ever-prodigious recurrent expenditure template they always roll out every 12 months without putting the poor Nigerians through another round of unbearable policies?
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With the look of things, it will take more than a handful of Oshiomholes to check the spendthrift executive arm of government, its MDAs, and the legislative arm in this excesses. Quoting from the piece published by the govinfo.gov, taxpayers daily witness and have repeatedly watched the three-tiers of government “respond to challenges with the creation of new agencies, new programs, and new spending initiatives, instead of reorganizing, or repurposing what is already available within the vast bureaucracy. As a result, there are hundreds of programs in the Federal Government that have outlived their mission, duplicate efforts, or operate below peak efficiencies because of fragmented responsibilities between agencies. This wasteful spending has been a contributing factor to government’s deteriorating fiscal health”. Nigeria and Nigerians need a real change.
Emmanuel is a business planning consultant and founder of Leacent Incorporated Trustees, a network of entrepreneurs and group of cooperatives. He works with a team of international consultants to conceptualise and plan agribusiness and housing projects. As a certified trainer authorised to use the International Labour Organisation’s enterprise development modules, he trains entrepreneurs and organises workshops and seminars for potential and practising entrepreneurs as well as business managers and cooperatives. He also speaks and facilitates at leadership and management workshops on invitation. His book, Business Planning Made Easy: Step by Step Guide On How To Turn Your Idea To Profitable Business’ is the latest of the books authored by him. Tel.: +234(0)9068602954 (call and sms), +234(0)8023257707 (WhatsApp only).
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