By Asmau Habeeb
Allegations are being made about how the Nigerian government has utilized Ways and Means which is an overdraft taken by the Federal Government from the Central Bank of Nigeria. One must however point out the risks this portends for the nation. One of such is that it can take our attention away from what leads to the current level of over-dependence on Ways and Means. It also misdirects us from the need to focus on how to get the economy running and that way reduce dependence on loans from the CBN.
As an observer of the economic situation in the country, I see that the dangers are many for the nation when the government takes so much loan rather than generate enough revenue to fund even its basic functions. Loans, internal and external, are what successive governments in Nigeria have been taking and the current administration is not exempted. Some challenges beyond control led to this situation, nonetheless we cannot continue this way. Dependence on CBN loans is not a sign of development, and this has both international and domestic implications. I recall reading a material which explained that one of the requirements for preparing for the take-off of the Economic Partnership Agreements that the Economic Community of West African States had with the European Union was to stop dependence on loans from their respective central banks. This requirement was meant to have been gradually met from 2000 till the present. But these were the same decades – especially 2009 till the present – that the Nigerian governments kept taking loans from the CBN due to lowered revenue amidst global economic challenges in their diverse forms.
Domestically, one implication is that loans from the CBN carry interest rate and it is heavy. The main loan itself must be paid back at specific time according to CBN law. This is a heavy burden for the government to bear since it is not even making as much revenue as it projects. On top of this is the reality that the government expends loans it collects from the CBN on the basic running of government functions. What this means in practice is that Ways and Means is expended for recurrent expenditure, payment of salaries and pensions across the three tiers of governments. In fact, public records show that much of the fund was used in settling interests on the loans taken rather than any tangible projects. Noteworthy also is that the lower tiers of government have depended on the FG that collects CBN loans to funds its own activities. It’s a complicated matter and I would assume we should focus attention on finding solutions to the challenges. This should be of interest to all well-meaning Nigeria. It is an aspect that should interest the intelligentsia as well, one we should have conversations around. It should also be of interest to the media.
I think the media should be asking relevant questions, calling attention to the different issues involved in the situation that has led to how government depends on Ways and Means for its basic operations. The media should strive to keep the conversation on some of the details that have led to how the FG gets less revenue from crude oil, its main revenue earner. Instead, attention has been focused on screaming headlines that may not lead anywhere beneficial. We have seen a section of the media interpreting the CBN’s special investigator report in ways not directly stated. This is happening at a time that even lawmakers declare they do not understand some details in the Ways and Means and have invited the current Minister of Finance, Mr Wale Edun, to come before them to explain. It is worth noting that none of the allegations that the media reports in this matter have been proven. But none of the media platforms has gone ahead to conduct any investigations on the issue. Those of them that saw “looting” where the special investigator didn’t report one had only looked at parts of the report and this was where they stopped.
These are areas I would be interested in seeing in the media space. But beyond throwing allegations, nothing has been done in the way of investigative journalism to establish whether Ways and Means had been looted by anyone or not. It is even an allegation that is more puzzling going by my knowledge of how Ways and Means is utilized in strict compliance with the CBN Act. It needs to be stated again that this development can take attention away from the real problems that the nation has created. There are real problems when a nation’s challenges are left unattended. Attending to them requires meaningful and intelligent conversations around the troubling issues. But what I see in online conversations especially is that attention has been diverted, focus being on allegations that the media that reports them does not investigate and even readers have not called attention to relevant questions.
For instance, I would be interested in knowing areas that contribute to the growing bills of governments in all the three tiers and how Ways and Means is used with respect to this. This is important as my reading is that this calls attention to the amount of loan taken from the CBN and how it is expended. As things stand payment of salaries takes a huge chunk of government expenditure but the government doesn’t generate enough revenue to foot the bill let alone finance the entire budget. It is public knowledge that an average of N250 billion to N300 billion was consistently required to meet salary pensions and statutory transfers to legislature, judiciary and all agencies that are by constitution on first line charge payments alone, without accounting for capital expenditures and other service-wide commitments.
Government equally pays interests on loans taken. Parts of the loans from the CBN are purposely taken to be used as interest payments in the first place. In the event all funds expended in Ways and Means do not go into physical projects that are directly locatable, yet they are part of government’s statutory obligations that must be met as at when due. Such include payments in terms of interests and reimbursements. For instance, and according to publicly available information, there are Reconciled Domestic Debt Service which refers to principal repayment on Treasury Bills, Government saving Bond and other Domestic debt instruments. These were in the sum of N13,535.572 trillion and they were all reconciled monthly by the CBN, OAGF and DMO. Notable also is that the FGN solely serviced its domestic borrowing through the Consolidated Revenue Fund (CRF), an account already in deficit and which must be funded. As such there were withdrawals which refer to drawings from the CRF to fund deficit in the budget due to revenue challenges. There was also reimbursement of Paris Club over-deduction refers to refunds to States. In addition was interest on Ways and Means which was in the sum of N4,218.121 trillion, making up part of the total sum the Senate is investigating and which refers to the interest charges by the CBN.
In addition, we see that often the FG borrows from the domestic scene to fund a few issues. What are these issues? Are the funds expended on them yielding the required results? How can the result feed back into the economy such that governments generate revenues from them? More than these, what are the various levels of government doing to cut down on bills as they relate to workers’ salary? It is a known fact that governments at all levels are bloated. There are too many workers in agencies and ministries than they actually need. There are government agencies replicating tasks. For this reason some agencies are recommended by a government panel to be either merged or scrapped completely. This is to cut the cost of governance at all levels. How far has this recommendation been implemented? What are the obstacles to the implementation?
There is the incident of ghost workers, supposed workers who collect salary when they are not employed by governments. Shouldn’t we be discussing how to address this? Have the books on members of staff in agencies and ministries been fully vetted to root out ghost workers? This is important in a situation where even the digital-based process of vetting staff has been reported to be compromised by some unscrupulous government officials. Other questions include what other areas should we be looking at in order to cut salary and other items responsible for the huge burden governments currently carry?
There is the cost of maintaining the politicians as well. It is well reported that the cost of maintaining politicians in public offices is too high for a nation with reduced revenue such as Nigeria. The funds used to maintain them has been criticized as constituting a drain on the finances of the nation. The controversy regarding purchase of SUV for lawmaker is the latest in this aspect. What should be the right amount to pay political office holders is a relevant question we need to answer and implement Are the various tiers of government working to ensure this is known and implemented? Is there even the will to embark on such an endeavour on the part of the various tiers of governments?
The level of corruption among politicians in public office is another area of interest. It should generate more debate and spur more investigative reports. The need for this is seen in how a serving minister and a service chief have lately been alleged to be involved in corrupt practices leading to lose of billions of naira to the government in revenue. Some commentators stated that what the accused minister did was just a tip of the iceberg. Addressing these issues and answering relevant questions are meant to ensure that even if Ways and Means is utilized to pay salaries at all, it is not wasted in payment of ghost workers and extra staff that the various tiers of governments do not need. Above all, stopping government’s dependence on Ways and Means is crucial and we should focus on it.
Habeeb is a public commentator.
