For nearly a decade, Nigeria has been grappling with economic turmoil that has called for stringent austerity measures to tame. This backdrop which has resulted in a high unemployment rate, high inflation rate, and mass exodus of professionals seeking a better life abroad, mirrors the situation in some other countries like Argentina and Turkey.
Nigeria, coming from a general election in February that produced a new president, Bola Tinubu, has unleashed a plethora of policy reforms aimed at revamping the economy. However, the reforms, which include the removal of the petrol subsidy and the floating of the nation’s currency, the naira, have only compounded the economic troubles.
Inflation in Africa’s largest economy climbed to 28.20% in November as the naira nosedives further to more than N1200 per dollar in the parallel market and above N800 per dollar in the official market. Although experts are projecting positive results from the reforms in the long term, the current economic situation in the country has fueled calls on the government, from both economists and opposition political leaders, to cut the cost of governance.
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“The bloated size of government comes with high cost of public sector expenditure and its negative impact on the development process in the country,” African Development Bank President, Akinwumi Adesina said.
“The cost of governance in Nigeria is way too high and should be drastically reduced to free up more resources for development. Nigeria is spending very little on development,” he added.
Last month, Tinubu presented a N27.5 trillion budget to the National Assembly for approval. “The Budget of Renewed Hope” follows the assent of the N2.18 trillion 2023 supplementary budget in November.
However, the 2024 budget has a projected deficit of N9.18 trillion.
With the treasury empty, the government seeks to finance the 2024 budget deficit with new borrowings of N7.83 trillion, privatization proceeds of N298.49 billion, and a drawdown on multilateral and bilateral loans of N1.05 trillion.
Besides this mammoth challenge, which has built up skepticism about the government’s ability to fully implement the budget, gushes out criticism over the multi-billion naira lavish items that made up the budgets.
Both the 2023 supplementary budget and the 2024 budget are filled with extravagant components that include office and residential house renovation, the purchase of cars for public office holders, and travel expenditures amounting to billions of naira.
“The government’s overall attitude does not indicate that it is aware that the country is in a huge crisis, nor is the government in tune with the plight of the generality of our people,” Peter Obi, the Labour Party’s presidential candidate in the last election said about the budgets.
Before the budgets were announced with their lavish controversies, the government had approved N57.6 billion for Senators and members of the House of Representatives for the purchase of SUVs, stirring anger among a large section of Nigerians who deemed the action insensitive to the nation’s current economic predicament.
Examples from Argentina and Turkey
Like Nigeria, Argentina has been battling with economic turmoil buoyed by toxic inflation that has risen to a record 160.9% as of November. However, unlike Nigeria, Argentina’s newly elected president Javier Milei has taken bold steps to change the South American nation’s misfortune.
During his press conference last Friday, Presidential spokesman Manuel Adorni announced a government initiative to cut chauffeurs for public officials by 50%. Additionally, he revealed plans to sell two planes previously owned by the state-owned oil company YPF, citing their predominant use for what he described as “political privileges.”
“This is in addition to the reduction the government had already decided earlier this week […] We will continue to inform about the reduction of privileges every day,” he said. Adorni referred to the decision made the previous Monday to decrease ministries by 50% and secretariats by 49%, aiming to curtail public spending.
These measures are expected to save nearly US$3 billion for the state.
In Turkey, where inflation has risen to 62.0% in November, government officials are taking pay cuts and making other personal sacrifices to help the country’s troubled economy. The newly appointed head of the country’s central bank, Hafize Gaye Erkan, revealed that she has been unable to afford a home in Istanbul due to soaring inflation.
The 44-year-old former finance executive, who assumed her position in June after spending two decades in the United States, told the Hurriyet newspaper, “We haven’t found a home in Istanbul. It’s terribly expensive. We’ve moved in with my parents.”
In stark contrast with officials in Argentina and Turkey, Nigerian officials, including the president, appear resolute in pursuing a path of luxury.
On November 2, Tracka, a civil society organization that tracks governments’ expenditures, made efforts, through a letter, to stop the Senate from approving the N2.18 trillion 2023 supplementary budget, citing frivolous allocations. The allocations include a yacht for the president, cars for the First Lady, and renovations for office buildings worth billions of naira.
Tracka also wrote the Office of the Secretary to the Government of the Federation, urging the president not to give assent to the supplementary budget. Despite Tracka’s efforts to prevent the approval of the supplementary budget, it was ultimately assented to.
Nigeria’s participation in COP28, held in Dubai, UAE, earlier this month, sparked criticism regarding the excessive number of delegates representing the country, particularly amid its ongoing economic challenges.
Nigeria sent 1,411 delegates to the event, a figure second only to China, which had 1,411 delegates, and Brazil with 3,081 delegates. The trip reportedly cost Nigeria a whopping N2.7 billion. However, compared to these nations, Nigeria’s economic performance lags. China holds a GDP value of N17.89 trillion, Brazil stands at N1.92 trillion, while Nigeria reported N477.37 billion as of 2022.
Despite the impact the high cost of governance weighs on the economy, it’s troubling that numerous Nigerian public officeholders staunchly defend the government’s extravagant spending, often asserting that these excesses will streamline their work.
For instance, in defense of the exorbitant funds allocated for renovating the office of the Vice President, Senator Jimoh Ibrahim (APC Ondo South) offered his perspective in an interview with ChannelsTV; “The VP’s house will cost ONLY $15 million dollars. Only $15 million dollars. You cannot put people in uncomfortable working conditions!”