Why salary payment is a major achievement by Ankat Tohomdet

Non-Payment of salaries for public servants has been a contentious issue in Nigeria, because states haven’t been able to meet this basic obligation to its work force.

At the onset of this administration most states were owing at least 5months -this naturally caused serious challenges to worker’s welfare, ultimately affecting their productivities.

 

Salary payment has been challenging for the federating units in Nigeria, due to the paucity of funds, which resulted from the fall in oil price.

 

Oil revenue is the major source of income for the federation accounts (from where such funds are later distributed to all the federating units). In addition to the drop in the price of crude oil, poor economic management has contributed in pushing the country into an economic recession (Present Recovery/growth is still driven by rise in oil price).

 

Also contributing are other enabling laws in the exclusive legislative list, which most governors claim have hindered them from harnessing the full potentials of the state.

 

This points to the fact that most states are totally dependent on statutory transfers from the federal government to meet its budget or public financial needs. It should be noted that a large part of the budgetary provision usually favours recurrent needs, which comprises of the salaries and wages of an over bloated/non-productive public service.

 

This puts a strain on public finance, as the public service yield of I.G.R cannot sustain the state because of the under-utilization of the value creation potential of the public service. While the capital side is filled with white elephant projects.

 

All these continue to re-occur because of the rent seeking ability and the political patronage system. Ideally most federating units should have properly utilized public funds gotten from the federation account and other statutory transfers over the past 30years. This should have been done to develop and harness the potentials of the state, thus generating additional wealth through viable and secure investments/projects to facilitate the diversification of their revenue base.

 

This would have contributed in fast tracking their development process and placed them on the path of sustainable growth and it would have ensured the federating units are also able to meet their long-term and short term budgetary/financial needs.

 

But most past and present executive’s of the federating units preferred to utilize public funds on expenses which as stated previously promotes rent seeking and political patronage, so as to consolidate their hold to power, empower  themselves and their cronies. All these were achieved through the expansion of the public service without any viable justification and expending public funds on white elephant projects that have little economic creation ability.

 

This has led to a situation where the federating units have over bloated, ineffective, inefficient and under-funded public service and therefore most public funds are used to maintain the public service. This has tremendous impact on the financial viability of the states and its economic outlook in the long run, as little money goes to managing the day to day running of public service.

 

The large personnel size of the public service has contributed to an increased budget size and budget deficit, such deficit is typically augmented by loans, which are not beneficial to the long term survival of the states.

 

It should be noted that the present wages of workers needs to be increased, because the present minimum wage paid to some public workers is no more responsive to economic realities.

 

The present minimum wage was above $100 when passed into law, but today that same minimum wage is barely an equivalent of $50 in an economy that is still import dependent and the inflation rate is in double digits.

 

This unfortunately is the sad reality of Nigeria’s political and administrative milieu to which every executive of the federating units must consider and contend with.

 

All executives are by default expected to expend public funds on the payment of salaries and the execution of white elephant projects but not constrained to it. But most executives prefer to retain the status quo, so as to benefit from the rent seeking and political patronage -given that most elected executive’s want to ensure the next election is guaranteed.

 

This has created a vicious circle that constrains development but continues to be re-enforced by every administration who maintain the personnel size or increase the wage bill.

 

Example a state like Plateau which had a Budget estimate of 139bn in 2017, to which 62.6% of this budget was funded from allocation’s gotten from various sources from the federal government. While the rest would be sourced from I.G.R which was not realised by the public service and both internal and external loans to an already indebted state and at high interest rates.

 

Out of the 139bn budgeted for by the state a total sum of 69.4 was to be spent on recurrent expenditures (Personnel cost and overhead).This is an indication to serious economic challenge (insolvency) that might befall the state in the long run, and if no allocation comes from the federal government in the short-term the budget won’t be funded.

 

Also it is an indicator to the social injustice that exist in the state, because almost 50% of state funds are going to be spent on less than 60000 citizen, who haven’t been properly mobilized for productivity, provision of public service and the promotion of inclusive/sustainable development.

 

While the remaining public funds of 50% is spent on projects with little value creation potential. A tweet from Dr. Joe Abah the immediate past director general of the bureau for Public Reform states that

“At some point Ekiti state which has about the smallest allocation from the federation Account has the largest civil service in the country:60000 people. Even the federal civil service is only 82,000… and some people say its bloated. You take over as  a governor in shock”  

 

while data from National Bureau of  Statistics as 2017 puts the figure at 89,511.

Presently the public service is more of a social welfare program rather than an instrument for development, this is because its contribution to the national G.D.P is less than 3% as at the 4thquarter of 2016 as stated by National  Bureau of Statistics.

 

But most public funds are expanded on the recurrent side of the annual budget,

which is basically the funding of the public service.

 

To re-enforce this point the Annual State Viability Index of Economic Confidential released in 2018 showed that 17 states in Nigeria were not able to generate up to 10% of what the got from the federation allocation accounts through I.G.R.

 

Thereby restating the fact that many states cannot survive on their own without federal allocation and their state of  insolvency.

 

The situation will be worst when done for local governments not considering the fact that their funds are always tempered with by the state government.

 

This tries to explains a major reason why most federating units can’t pay salaries regularly especially during challenging economic situation.

 

Therefore in such a dysfunctional system payment of salaries especially during economic challenging periods is an achievement, and such funds are also relatively impactful when pumped into the economy because it tends to touch some members of the society that are embedded at various levels in the political patronage system,and this helps to drive demand for goods and services in most states that don’t have a thriving private sector.

Public service management processes have changed around the world, using new management models that make the public service as efficient as those of it’s private sector especially when it comes to the generation of wealth and creation of value.

 

Such public service has been properly structured and it personnel rightly mobilized to create wealth through the provision of public service and the provision of an enabling environment that allows the private sector to thrive through because of favourable governmental policies.

 

This enables development to take place example by allowing private investment and businesses to run profitably if properly managed, from where public funds would be generated for the sustenance of the state and public service.

 

Also viewing the public service as an organisation, we see that in an ideal organisation where workers skills and talents are properly engaged and managed by the leader of the organisation, the organisation becomes productive, therefore the employer of labour has no choice, than to settle the workers for the service he has provided that enabled his organisation generate value or wealth.

 

Workers salary in this situation is a running cost and an investment, which  has to be spent by the organisation for the generation of value(profit, goodwill).In this organisation the leader has the power to properly deploy workers to perform duties he believes will contribute to the derivation of value for the organisation, the organisation could easily be restructured in such ways that the workers skills will be properly engaged. Also workers will be periodically trained so they could learn new skills that will be necessary for achieving the organisations goals and anytime a worker is not performing well he could be disengage from services based on the labours laws of the country .Basically staff size is reflective of the organisations needs while merit is the major recruitment and selection criteria.

 

But some this cannot be achieved for our public service due to some obsolete public service provisions/rules,poor management and rigid standard operating procedures among other things.

 

The Political system and Public service of Nigeria especially those of the federating units need to be urgently right-sized, rationalised, reformed for development and e-governance needs to be embraced for better public service delivery. If not the vicious circle that is created by our political and administrative system will fast-track the incapacitation of the state and country at large.

 

The creative destruction to be caused by the right-sizing, rationalization, reforming or restructuring may or may not lead to mass sack of public personnel, but public personnel will have to be retrained and redeployed to places with skills/personnel need for it to be impactful. Majorly the creative destruction that will be caused by the right-sizing, rationalization, reforming or restructuring will ensure the public service is more productive and more funds will be gotten for the service and the federating units through I.G.R or public service delivery. The availability of funds in the medium and long-term will ensure public services are upscaled, some vast untapped potentials could be harnessed and the private sector thrive and in the short-term will make funds available for funding of inclusive developmental projects and the public service if properly utilized.

 

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Why salary payment is a major achievement by Ankat Tohomdet

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