(THE WAY FORWARD) Step 1: Adopt fiscal conservatism as a policy

Fiscal discipline -CartoonI had made a promise (yes, I know) in my last blog which is now long overdue to fulfill and as such, this will be the first in a series of articles where I will be suggesting, addressing and proffering solutions and policies aimed at resolving national issues and moving the nation forward. Since I intend to start this series by suggesting the adoption of fiscal conservatism as a policy, let me take the time to define the term ‘fiscal conservationism’. Fiscal conservationism is a political/economic philosophy that calls for lower levels of public spending, lower taxes and lower government debt. Fiscal conservatism advocates the avoidance of deficit spending and ensures balanced budgets. It also calls for the reduction of overall government spending (mostly wasteful expenditures) which in turn reduces or even eliminates national debts altogether. Fiscal conservatism is simply concerned with the demonstration of fiscal responsibility and as such, is not such an oddball or a strange approach to governance as one might suppose. It is actually the proper way to run a nation and a government – private companies and corporations practice it everyday to ensure profit and growth!

An interesting thing which is worthy of note is that the current government of Nigeria, Muhammadu Buhari’s administration, has so far demonstrated an attitude and a propensity which gravitates towards this very fundamental ideology. It is most certainly something which I believe is worthy of commendation. It is my sincere hope that such policies will be formally pursued, developed and deployed in a meaningful and wholesome manner so as to ascertain that the nation makes a full economic recovery and thereafter continues to reap the long term benefit and reward of responsible management.

Fiscal healthAs mentioned earlier, fiscal conservatism calls for lower levels of public spending and waste, lower taxes and a lowering of government debt (where outright elimination of such debts is unfeasible). If the current federal government were to formulate policies in this direction, the main thrust of such policy should first of all deal with a drastic reduction of the overhead and cost of running the Federal Government of Nigeria. Recently, the Federal budget for the year 2014 specified a N911.96 billion in deficit spending. In the preceding year, the story was no different. To cover these deficits, the Federal government took on an external debt of N577 billion in 2013 and borrowed N571 billion the following year (2014) – this, despite record earnings from petroleum export in the last five years! In 2013, the recurrent expenditure spending accounted for 68.1% of the entire federal budget. In 2014 the same accounted for 72.71%. One has to wonder where that leaves us in regard to our quest for development? With the fall of Oil prices and the consequent reduction in government earnings, Buhari’s administration must make the necessary adjustment and rein in unnecessary government expenses and expenditures. In developing a process to shrink such overhead cost, the FGN must also ensure that recurrent expenditure is also reduced to a more practical and palatable figure of 60% or less of the total Federal budget.

Secondly, the process for the appropriation of budgetary allocations for all Federal departments should be structured to demand a well-defined and laid out appropriation process whereby annual objectives and plans are laid out for each department, proposals are reviewed and defended by each of the federal department’s head before appropriate budgetary allocations are approved. Approved allocations should ideally comprise of budgetary tranches which have been specifically purposed within the various budgetary subdivisions and which shall demand strict adherence in its implementation throughout the fiscal year. Considering the fact that past governments in Nigeria have had an abominable track record and a long history of failure with regards to fiscal discipline and the implementation of budgets, this requirement which calls for stricter micro-management measures should not come as a surprise to anyone.

FGN expenditureThe quest to shrink the Federal government’s overhead and reduce recurrent expenditure is a fundamental strategy that is vital and key to the central objective of achieving economic growth through the demonstration of fiscal responsibility and discipline. This strategy is necessary for boosting the nation’s capacity for capital investment thus inducing fast paced development which could be engendered through tailored policies and sound investment decisions. As it is, Nigeria requires and demands a massive injection of investment capital in order to bring its infrastructure to 21st century standards. The most sensible and feasible way for the Federal government to achieve this is through a demonstration of fiscal discipline which not only frees up critical funds and capital for crucial development initiatives but also boosts private investor confidence thus leading to an inflow of needed private capital.

In order to achieve its twin objective of reducing overhead cost and shrinking the annual recurrent expenditure, the current administration must necessarily develop and adopt policies which are not only effective in attaining the end objective but are also quite simple and straightforward to implement. It is my opinion that the aforementioned fiscal objectives could be achieved by implementing a three pronged process which is summarized below:

  • The first aspect to achieving this objective calls for a drastic reduction in the FGN’s size through the elimination and merging of unnecessary cabinet portfolios. I believe cabinet portfolios should be reduced to include only necessary Federal Ministries which in turn demonstrates and reflects the administration’s priorities and focus. Along with numerous existing Federal Agencies and Commissions, this ministries should cover all vital areas of Federal oversight. I propose the approval of the following ministry portfolios for Buhari’s administration:
    – 1) Ministry of Justice
    – 2) Ministry of Finance
    – 3) Ministry of Defense
    – 4) Ministry of Health
    – 5) Ministry of Education
    – 6) Ministry of Agriculture
    – 7) Ministry of Foreign Affairs
    – 8) Ministry of Home Affairs (Internal Affairs)
    – 9) Ministry of Petroleum Resources
    -10) Ministry of Telecommunication
    -11) Ministry of Trade & Commerce
    -12) Ministry of Power & Energy
    -13) Ministry of Transportation
    -14) Ministry of Works & Infrastructure
  • We cannot forget the Federal capital Territory (FCT). So let us make that the 15th ministry cabinet.
  • The second aspect of this objective should entail the development and implementation of a Federal Employee Identification Program (FEIP). FEIP is a program which when adopted will allow the FGN to identify and assess the ‘true’ size of its workforce so that a commensurate estimation and projection of the overhead cost could be made. It is also critical to note that FEIP is designed to eliminate all redundant claims, criminal claims and Ghost-workers from the balance sheet. This program shall also serve as a test-bed and a first step towards the implementation of a proper National Identification program
  • The third and final aspect of the objective entails the implementation of a program called Federal Employee Re-Qualification Initiative (FERQ). The premise and essence of this initiative is simple and absolutely necessary. For the past 30 years, Nigeria has had to contend with the detrimental and negative impacts of corruption, nepotism, cronyism and the gradual erosion of standards to the point where, quite frankly, the nation is in crisis with low expectations being ubiquitous. Mostly, our affairs are constantly at loss and in complete disarray simply because of the prevalence of unqualified or untrained personnel, quacks and charlatans being put in critical positions. it goes without saying, that standards must be restored before the nation can start moving forward! The objective and aim of the FERQ initiative shall be to raise the standards of performance in federal positions, to eliminate unqualified personnel and to prevent shoddy and substandard outputs by re-qualifying all federal employees. This policy shall pave the way for building strong national institutions which will in turn usher in an era of professionalism, high standards and strong work ethics!

It is my sincere belief that If the current administration were to adopt and implement the policies and initiatives listed above OR ones similar to these, then the nation will be well on its way to full recovery from years of debilitating social malaise and unmitigated decadence. Without any equivocation, I make bold to say that with committed and dedicated leadership, Nigeria could most certainly make a turnaround and be well on its path to regaining the respect, admiration and high regards that has been accorded it in the past with the full restoration of its leadership role in the African continent, which has of recent been questioned. Just my two cents……

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