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Cost of Governance In Nigeria

Nigeria is a democratic country. Nigeria being democratic will suggest to any foreign reader that Nigeria often conducts election from time to time. Yes, this is very correct.

In 1999, when the military finally handed over to democratically elected government, a constitution was hurriedly drafted to guide the various ethnic groups that make up Nigeria as well as keep her one.

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The 1999 Constitution recognizes Nigerian government as a federal Ssystem of government. It further stipulates that there are 3 main tiers of government – Executive, Legislature, and the Judiciary, and that they must be independent of one another.

Over time people have complained that the cost of governance in Nigeria is extremely high because much of government earnings are used in paying salaries. But are they right? Well, we shall find out if they are.


Well, let’s get a better understanding of the Federal Executive structure in Nigeria and later relate it to cost implication especially in the areas of payment of salaries, allowances, gratuities, and pensions. This is an area where anyone who means well for Nigeria should seriously be worried about. Let’s look at the Federal Executive tier. The Federal Executive tier has Ministries, Departments, Agencies and Commissions.

Ministry: Nigeria has over 26 ministries and each ministry is headed by a minister assisted by a minister of state and they are politically appointed. In the ministry also there are permanent secretaries as well. Sadly, we have no idea how much these people earn as some information is still secrets in Nigeria. And federal ministries are scattered all over the country with staff working in them. It is alleged that Nigeria pays her ministers more than their counterparts in U.S. and U.K., thus this explains why many jostle for such position as a do or die affair. Examples of Ministries are Ministry of Works and Ministry of Finance.

Department: These are units established by Nigerian Federal Government to achieve some form of objectives. A department is often headed by a Director who has an Assistant as well. These people are handsomely paid as well. A good example is Department of Petroleum Resources (DPR). A Director at DPR earns over N2Million monthly with official cars.

Agency: Agencies are Federal Executive bodies that perform a wide range of functions. Examples of agencies are National Agency for Food and Drug Administration and Control (NAFDAC) and National Orientation Agency (NOA). The head of the agency is also a Director and earns millions monthly with official cars.

Commissions: Commissions perform the same forms as departments and agencies. They sometimes liaise with other bodies of Federal Executive arm to perform their duties. Example is Economic and Financial Crimes Commissions (EFCC). The head of EFCC is a Chairman who earns millions with official cars and security.

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Security: This unit is saddled with the responsibility of securing the lives and property of Nigerians. Examples are the Nigerian Army, State Security Service, Police and Nigerian Navy. They have official cars, houses, allowances, salaries, pensions, and others. They are well-paid too.

Cost Implication at Federal Level
Obviously, Federal Government of Nigeria is the highest employer of labor in Nigeria. This is based on the structure I have described above. President Goodluck Jonathan said in 2013 that 70% of Nigerian earnings are spent on recurrent expenditure and over 52% are used in paying salaries, pensions and gratuities.

This is rather bad for a developing country like Nigeria where over 70% of the population is poor. The high figure squandered in salaries and pensions is occasioned by the structure of our Federal Executive MDAs and Commissions.

Although some Agencies and Commissions are parastatals, they spend huge amount of their earnings in paying salaries instead of being a means of generating money for Nigerian Federal Government. Sadly, it is on record that Federal Government maintains 11 private jets.

Also, House of Rep members moved to probe Diezani Alison-Madueke in 2014 for using N10billion to service her private jet in 2 years before she got a court injunction barring them from doing so. This huge expense affects the cost of governance in Nigeria.

Current Annual Salary Structure of the Executive (For Approval)
Nigerian President = N14.04 million per annum
Vice President = 12.12 million per annum
But President of America earns $400,000 per annum
Obviously, the federal executive structure has even contributed in increasing the cost of governance in Nigeria by establishing MDA’s that duplicate their functions

Just like the Federal Executive, the State Executive has their ministries headed by Commissioners, and permanent secretaries who earn salaries, gratuities and pensions. Like State Ministry of Environment and State Ministry of Environment. State also spends huge sums paying salaries.

We have a condition in Nigeria now where states depend solely on allocations from Federal Government to pay salaries, if Federal Government doesn’t send monthly allocations to states, state governments will owe their workers’ salaries until allocations start coming in.

Now this is bad because state government has refused to look inwards to explore avenues of generating revenue for its states. Also, Governors are entitled to what is called “security votes.” Sadly, nobody questions what they do with it. How funny!! All these practices affect the cost of governance in Nigeria.

The official 776 Local Government Areas in Nigeria have LG Chairmen and Chairpersons who are voted into office and lots of staff who learn salaries and allowances. Local Government also depends on allocation sharing formula and the allocation that is released to them by state governments.

The Local government just like the state cannot generate money for itself to pay workers’ salaries. They have learnt to depend totally on funds released by Federal Government supervised and sometimes given through the state.

LG Chairmen have luxury cars and often do not live in their LGA’s so they don’t feel the plight of their people. The frivolities of LG Chairmen have to be cut as a way of cutting the cost of governance in Nigeria.

On the other hand, the Constitution recognizes the Legislature as an independent arm of government. The legislature has the Federal legislature making up the Senate (Upper Chamber) and House of Representatives (Lower Chamber).

At state level, there States Houses of Assembly cutting across the federating states excluding the Federal Capital Territory which the Constitution doesn’t see as a state. The Upper Chamber has 109 members while the lower arm has 360 members.

They are all elected. The Nigerian Federal legislature allowances are the highest in the world. Also at state level, there are 36 states in Nigeria and each state has at representative at state legislature. This means we have about 776 Honourables across Nigeria representing the 776 LGA’s in Nigeria.

The legislatures both at Federal and state levels are provided accommodation, huge allowances, and they are paid whether they are working and on break. This is obviously not good for a developing country like Nigeria.

Breakdown of Allowances of Nigerian Senator
Basic Salary = 2, 484, 245.50
Hardship Allowance: (50% of Basic Salary) = N1 242, 122.70
Furniture Allowance (300% of Basic Salary) = N7 452 736.50
Constituency Allowance (200% of Basic Salary) = N4 968 509.00
Newspaper Allowance (50% of Basic Salary) = N1 242 122.70
Furniture Allowance (50% 0f Basic Salary) = N7 452 736.50
Recess Allowance (10% of Basic Salary) = N248424.55
Wardrobe Allowance (25% of Basic Salary) = N621 061.37
Utilities Allowance (20% of Basic Salary) = N828 081.83
Motor Vehicle Allowance (400% of Basic Salary) = N9 936 982.00
Accommodation Allowance (200% of Basic Salary) = N4 968 509.00
Entertainment Allowance (30% of Basic Salary) = N828 081.83
Domestic Staff Allowance (75% of Basic Salary) = N1 863 184.12
Personal Assistant (25% of Basic Salary) = N621 061.37
Leave Allowance (10% of Basic Salary) = N248424.55
Vehicle Maintenance Allowance (75% of Basic Salary) = N1 863 184.12
Severance Gratuity (300% of Basic Salary) = N7 452 736.50
A senator’s monthly earning = N2 456 647.70
Grand Total (for 109 senators) = N3 264 329 264.10

This means that while a Nigerian senator earns over N29million per annum his American counterpart earns $174,000 per annum. Now this is rather sad!

The former Governor of Central Bank and present Emir of Kano, Sanusi Lamido Sanusi said in 2013 that the Nigerian legislature takes 20% of Nigerian annual budget.

This revelation is rather shocking. The costs of maintaining our legislative arm both at federal and state levels are high and they have contributed to the increase to the cost of governance in Nigeria.

And finally, the Judiciary arm of government. This is another arm of government that the Constitution clearly spells out must be independent.

The Judiciary has Federal courts of appeal, state courts of appeal, Magistrate courts and others. The constitution also defines the nature of crimes and cases that will be tried in such courts in Nigeria, and the highest court in the land being the Supreme Court of Nigeria.

The Federal government manages the Supreme Court, Federal Courts spread across states including National Industrial Court, and states manage the state courts in all 36 states in Nigeria, Sharia Courts (in some northern Nigerian states) and magistrate courts which are considered the least on the level of courts in Nigeria.

Federal and State judges are paid salaries, and so is the magistrate. Here monies are also spent in form of salaries, gratuities and pensions. The quest to cut the cost of governance in Nigeria doesn’t necessarily have to affect the Judiciary.

Understanding the structure of the Nigerian state gives a better understanding as to why government spends billions monthly in salaries.

It is rather regrettable that the system is fashioned in a way that doesn’t allow for capital projects development, but to provide for excessive spending of taxpayers’ money to maintain the luxury of government officials. A government that really wants to carter for her people shouldn’t be running on such huge cost.

To cut running cost, Nigeria as a country doesn’t need to increase salaries for now – Nigerian government has to liaise with Revenue Mobilization and Physical Commission to slash salaries of all lawmakers and executive members including directors of MDA’s so as to save money for the development of Nigeria especially now the price of crude oil has fallen.

It is true that the constitution is well defined as to the limits of the president, but the president must seek ways to save the country some money by reducing the cost of governance in Nigeria.

There is also need for the presidency to send a bill withdrawing all constituency allowances given to legislatives because it’s another wastepipe.

All projects should be awarded through Federal Ministry of Works and legislatures can then occasionally supervise it as oversight function. Still on cutting down spending, the constitution should be amended so that the security votes given to governors will be stopped.

Also, there is a need to merge MDA’s that duplicate their functions as a way of saving money to develop Nigeria. We don’t need ICPC anymore when we have EFCC. That’s right! There are better ways of improving the lots of Niger Delta people than having Ministry of Niger Delta and Niger Delta Development Commission (NDDC).

They duplicate their function and have subsequently become wastepipes. They can be merged. MDA’s are established to provide service not to serve as wastepipes – these are hard times and we no longer have enough let alone wasting the little we have.

We have to merge many MDA’s. Re-structuring doesn’t just end in MDA’s – we need to scrap either the senate or the House of Rep. This is because they duplicate their function. If Senegal’s Senate President could approve the scrapping of the same senate he chairs to save money for his country, why can’t we in Nigeria do the same?

Any country that really wants to succeed has to make “tough choices.” If Nigeria successfully achieves this, Nigeria will pump the recovered money (excess allowance and salaries) into meaningful ventures and projects. The bi-polar system of government hasn’t done us any good so we have to do it as a way to cut cost of governance in Nigeria.

Finally, ordinary Nigerians should stop expecting politicians to dash them money during election campaigns. This is because many politicians see leadership as a way of recouping all the money the spent to win some public positions in times of election. Also, politicians often challenge anyone who seeks downward revenue of their salaries to come on board and contest so that the person would have a better understanding of how they invest almost all their life savings to clinch to the positions.

It is said that they spend millions visiting traditional rulers just to declare their intentions to run for elective positions and seek their support. All these practices must be stopped if we really want to build a Nigeria our founding fathers dreamt about; doing this will help to reduce corruption amongst them.

All Nigerians need serious value re-orientation in this area as when this is achieved, politicians wouldn’t mind letting go some of their allowance which they hold on to, to recover the money they spent during election period. When Nigerians would have achieved this, Nigerians would have cut the cost of governance in Nigeria.

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Ifeanyi Nwaokorie

Ifeanyi Nwokorie is a Business Analyst and Content Developer at InfoGuideNIgeria.com. InfoGuide Nigeria is a team of Resource Persons and Consultants led by Ifiokobong Ibanga. Page maintained by Ifiokobong Ibanga. If you need a personal assistance on this topic, kindly contact us.

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