Here we go again. Nigeria is set for a crisis over the implementation, or the non-implementation, of the new minimum wage. The federal government, empowered by the constitution to set the national minimum wage, had approved N30, 000 after consultations with state governors, who meet regularly under the aegis of the National Economic Council (NEC), followed by the enactment of a new law by the national assembly. The Nigeria Employers Consultative Association (NECA), the body of employers in the organised private sector, also consented to the new threshold. Basically, N30, 000 is a compromise; organised labour actually asked for N63, 000 during the recession of 2016.
Am I surprised that government is now unwilling, let us say unable, to pay the new minimum wage nearly six months after the new law was signed? I am not. At the time we agreed to move minimum wage from N18, 000 to N30, 000, many states of the federation were owing salaries, some for several months. A particular state was in arrears by over a year. Even the federal government, supposedly stronger financially, has had to borrow to meet its needs. It is not as if our treasury is very buoyant or as if wastes and leakages have been wiped off. We have a severe revenue crisis and I have been wondering where the money to pay the new wage bill would come from.
I will say this upfront: I do not know the financial implications of the new minimum wage for the three tiers of government. If we do things properly in this country, what government should have calculated and made public is how much the new wage would add to the personnel costs and how it hopes to raise the money to be able to pay. I did not see anything of such. It is common sense, I would say, to sit down and calculate the costs before reaching an agreement and passing a law. It does not make sense to agree to a wage increase and turn around a few months later to say you cannot afford to pay. But that is the way we do things in Nigeria, so that’s our normal.
This is a sample statement of what I would have expected from government: “With the proposed new wage, the monthly personnel costs will increase by X billion naira at the federal level, X billion at the states, and X billion at the local governments. To be able to pay, we intend to reduce the budget for duty tour allowances and estacodes by 50% to save us X billion per month, limit foreign trips to 1% of the expenditure of MDAs to save us another X billion, stop buying Tom Tom for government offices, cut the number of personal aides of political office holders by 50%, reduce the population of presidential jets and freeze the building of ultra-modern governor’s lodges.” That’s scientific.
In the history of Nigeria, we have never done this. What usually happens is that when an election is approaching, presidents and governors would announce at May Day rallies that a new minimum wage is on the way. Some would even announce an amount. From then on, we would start going back and forth about what figure is feasible and what is not acceptable — before we finally agree on an amount after threats and counter threats. After we have managed to agree, implementation takes forever. After more threats, states will be asked to pay what they can pay. So, nominally, we have a certain figure as national minimum wage but many states will pay less.
In my previous article, “Rhapsody of Subsidies and Realities” (September 30, 2019), I lamented the state of public finance in Nigeria. We are in a serious fiscal crisis even though we are burying our heads in the sands, like the famous Ostrich we joke about. We are not generating enough revenue but our expenses are going up. Rather than cut out the horrible wastes, we are desperately thinking of how to tax Nigerians to raise more revenue. The toll gates will be back shortly, CBN is seizing money from banks for not meeting loan ratio, charges for cash deposits are back, we are thinking of increasing VAT and someone is proposing tax on SMS and data use. The desperation is clear.
In the end, where does the money end up? I will tell you. We have so many presidential jets that we don’t need. We feed our president, vice-president, governors and deputy governors. Why? What exactly do they do with their salaries? The federal lawmakers want to buy “project vehicles” worth N5.5 billion. We spend billions on meaningless duty tour allowances (DTAs). Governors take chartered flights and travel with battalions of aides. A one-day trip to Abuja can cost a governor up to N20 million. We practically burn money. A country battling revenue problems must first tackle waste — before taxing the people to death. How much pain can the people bear?
I repeat: it is not enough to seek to raise revenue — we must first take a long look at cutting wasteful expenditure. Why raise revenue, including borrowing, in order to spend on buying kola nuts and bitter kola for government offices and paying DTAs for trips that add little or no value to our lives? It is all about priorities. How may we re-order these priorities so that we can allocate our resources in a more beneficial way to millions of Nigerians instead of the few fat cats? Customs can be going from house to house to tax imported chicken inside the pot of soup, but where does the revenue end up? Those are the critical questions we should be asking ourselves.
In fact, we need to start asking serious questions about fuel subsidy. We spend N100 billion a month subsidising fuel consumption in not just Nigeria but in West Africa. I understand we have extended our generosity to Cameroon. According to information, Cameroon’s refineries have been down for over three months but the country is not experiencing fuel queues at all. Cameroon supplies fuel to the Central African Republic and — wait for this — they too are not experiencing fuel queues. You and I can easily guess where both countries are getting their fuel supplies from. If we really want to mend our finances and prevent the economy from going under, we can’t ignore this.
Because of the huge difference in pricing between Nigeria and neighbouring countries, fuel smuggling is perhaps the most lucrative business in the land today. I understand that if you successfully make a trip across the border, you can make a profit of between N10 million and N15 million, depending on the size of the belly of your tanker. If you are making N10 million per tanker, you can afford to devote N2 million to bribe the security guys at the border. Dropping N50,000 at every checkpoint will make everybody happy. Imagine how much a security officer takes home per day from those checkpoints — and you want them to curb smuggling. It ain’t gonna happen.
The N1.2 trillion we spend on subsidising fuel consumption for West and Central Africa can actually help cover the new minimum wage. We could still have some change to spend on improving the infrastructure that the masses can truly benefit from — hospitals, schools and roads. President Muhammadu Buhari believes in fuel subsidy as much as I used to do before realising I was only campaigning for the fat cats to get fatter. Buhari was chairman of the interventionist Petroleum (Special) Trust Fund (PTF) set up in 1994 by Gen Sani Abacha to utilise the gains from fuel price increase. Buhari knows what I’m saying about how a realistic fuel pricing system benefits the poor.
But subsidy aside, we can even save more trillions of naira across the federation and pay our workers living wages — and still have change for infrastructure. I will briefly suggest other avenues, some of which do not require any change in law. We can save billions on recurrent expenditure without breaking a sweat. We all know that government is bloated. All of us know. I was disappointed that Buhari has created five new ministries and many more agencies at a time we should be having smaller government. He stuck to 36 ministers in his first term but, for reasons that look purely political, he now has 43 ministers — the largest in our history. He dropped the ball there.
We are creating many ministries that can, at best, be departments and directorates under a ministry. In times past, we used to have ministry of information, youth, sport, culture and social development — all in one. Over time, we have been creating ministries upon ministries while complaining that our recurrent expenditure is going up. Were we expecting expenses to come down? Really? It is not as if new ministries have tackled poverty or made Nigeria a better place. For every ministry and agency we create, we replicate personnel and expenditure. Many MDAs clearly ought to be merged. Anybody who understands public finance will just be laughing at our folly.
Let’s be frank with ourselves: we are not a serious set of people. We know what to do if indeed we want to free up our resources, block leakages, stop wastes, pay workers their N30,000 — and improve our roads, schools and hospitals to raise the quality of life of Nigerians. Those in government know what to do. They are not dumb. They know how they waste our resources every day. Let us stop deceiving ourselves. The truth is that we are not ready to do what is right. Unfortunately, no magic is going to change our situation. Doing the right thing is the only way forward. If we continue this way, we are only postponing the doomsday. Frightening.
And four things…
Former governor of Imo state, Senator Rochas Okorocha, fired a few rockets on the floor of the senate on Thursday when he queried why Nigeria needs 109 senators and 360 members of the house of reps. “What are three senators (per state) doing that one senator cannot do?” Okorocha asked, adding: “Over there (house of representatives), we have 360 eligible human beings. This country must begin to make sacrifices and cut down the cost of governance.” You don’t have to like Okorocha or be his fan, but we need to start asking ourselves the tough questions in this country. We are wasting too much energy and resources on a system that is not serving us well. Rethink.
Prof Chukwuma Soludo appeared to have wowed the audience with his lecture at the Platform on Independence Day given the way it trended. He said “the systems, the institutions that we have are for a bungalow [but] the new economy that we want to build is a 100-storey building” and asked: “Are we preparing enough to welcome the 400 million Nigerians in 20 years time or the 800 million Nigerians in 40 years time?” He also warned: “The world is not waiting for Nigeria. While electric cars are fast replacing petrol cars, many of our people are still building petrol stations…” You wonder why Nigeria has such brilliant thinkers yet our country is like this. Clue: we don’t respect brains. Paradox.
So Nigeria and South Africa have kissed and made up after the diplomatic row caused by the xenophobic attacks and reprisals? As part of the new way forward, both countries have agreed to grant 10-year visas to business persons and academics. I completely disagree with President Buhari’s statement that Nigerians should not do businesses — such as shops and barbing salons — that locals don’t want them to do. I doubt if any such thing can be enforced in a free world. I think the South Africans need to be taught competitive entrepreneurship so that they can do it better than Nigerians and other foreigners. Above all, they need to learn tolerance. It is in their interest. Counsel.
The federal high court in Abuja on Friday granted Omoyele Sowore bail on a seven-count charge of felony brought against him by the federal government. The bail conditions are considered tough, particularly the one restricting the movement of the #RevolutionNow convener to Abuja. He is also not to attend any rallies or talk to the media as he awaits trial. This is in addition to the little matter of N100 million bail bond to set him free temporarily. We should now hope that if he meets the bail conditions, he will be released from the cells of the Department of State Services (DSS) in the interest of the rule of law. We cannot pick and choose what court judgments to obey. Watching.