Nigeria’s undying love of multiplying parastatals

The Daily Trust of 30th January 2017 carried a report about the National Assembly’s plans to create about 25 additional federal agencies through laws that are being processed. Almost every draft bill has a proposal for the establishment of a new agency to run whatever is being proposed in the bill. The 25 mentioned are just those that are about to be finalized. There are actually about 150 new agencies being considered by our legislators at this time. The Daily Trust report shows that currently about N2.98 trillion or 40.1 percent of N7.28 trillion 2017 federal budget is being used to run 541 existing federal agencies, departments, commissions, institutes, bureaux and other bodies.

After an enormous effort, the Buhari Administration has succeeded in reducing the percentage of recurrent expenditure and raising capital expenditure to N2.4 trillion or 30 percent of the federal budget. The path we are on, of multiplying agencies, would take us back to where we were two years ago where over 90% of the budget is allocated to recurrent expenditure to run ministries and agencies. Most of the federal agencies that are annually guzzling trillions have duplicated roles; dozens hardly do anything apart from paying salaries and pretending to work.

It would be recalled that in August 2011, the Federal Government had established a Presidential Committee on the Rationalisation and Restructuring of Federal Government Parastatals, Commissions and Agencies headed by former Head of Service of the Federation, Steven Oronsanye. The Committee had recommended the reduction of statutory agencies of government from 263 to 161, the complete scrapping of 38 agencies, the merger of 52 and the conversion of 14 to departments in ministries. The Committee had also recommended the removal of all professional bodies and councils from the national budget in order to slash the exorbitant cost of governance. On assumption of office, President Buhari had established an implementation committee to ensure that the recommendations are executed but nothing has happened so far. It appears that the Government is worried that scrapping the agencies would mean less membership of boards would be available for the ruling party members who have been agitating for appointments. I am not sure what this means as we are approaching almost two years without the board appointments being made anyway.

Nigeria has a long history of establishing committees on restructuring and rationalisation of government agencies but the recommendations are never implemented. For example the Ahmed Joda Panel Report on the Review, Harmonisation and Rationalisation of Federal Government Parastatals, Institutions and Agencies in 2000 made recommendations about some parastatals and agencies which government should scrape, commercialise, privatise or be made self-funding. The recommendations were never implemented. Twelve years after Joda, Oronsanye was appointed to do a similar job. The latest recommendations have now been on the shelf for over six years and nothing is happening about implementation.

One of the reasons the reports never get implemented is that ministers rely on parastatals under their control as cash cows to secure slush funds. Ministers therefore do everything in their powers to ensure the reports never get implemented. Way back in 1995, the Allison Ayida Panel Report had seriously criticized the relationship between ministers and parastatals under their control and had proposed that ministers should not control parastatals. What has happened is that ministers delay the appointment of boards of parastatals so that they remain sole authorities in control. The Ahmed Joda Committee had also strongly condemned ministerial interference and control over parastatals and pointed out that their effectiveness is reduced by the greed of their ministers. When boards are appointed, the members are drawn from party members who see their appointment as payoff for political support and therefore spend their time seeking to milk the parastatals for personal benefit. One of the clearest reasons for the increasing cost of governance is therefore the system of multiplication of parastatals and their operations by ministers or boards who see their value as payoff rather than public service. The organisation of wasteful governance is therefore systemic.

The Buhari Administration is clearly averse to making political appointments. This means ministers remain in charge and in most cases chief executives operate in an acting capacity. The implication of this is that the process of setting targets and objectives by new boards does not happen and the organisations are run on a day-by-day basis. I believe that sometime this year; pressure from the ruling party would force the President to appoint boards. The new boards would realize that they would have a life span of two years or less and would be determined to get something to “eat” as quickly as possible. They would also realize that the next election would be round the corner. It is therefore difficult to see how focus on the public service function of parastatals would get any priority. Now that it appears the Oronsanye report whitepaper will not be implemented so all the wasteful organisations remain and the National Assembly is creating more of them, its difficult to see how rationality would return to the system.

The problem with implementation of the Oronsanye report, if it is attempted at all, is that many of the parastatals are established by law and would require the National Assembly to enact legislation to eliminate them. The current tension between the legislature and the executive would make collaboration on the issue very difficult. Meanwhile, it is really important to get the National Assembly to realize that the multiplication of agencies is not a sign of effective work; it’s a process of creating more difficulties for the future. Currently, many agencies get just enough budgetary allocations for salaries and maintenance of ministers or boards. The victim of the system is the citizen for whom there is no public service. Someone should remind the APC-led Federal Government that they did promise Nigerians that they would take the task of reducing the cost of governance seriously.