I have been discussing how inefficient government is related to ‘ease of doing business’ in Nigeria. Last week I stated that where we have duplicated responsibilities there is obviously duplication in cost: personnel, secretariats and offices, assets such as vehicles and computers. Moreover, such unnecessary multiplicity creates other opportunities for graft.
In 2011 the Federal Government introduced and tested the Integrated Personnel and Payment Information System (IPPIS) in seven of its ministries. The effect was immediate. A total of 45,639 ‘ghost’ workers were found in just those seven ministries including 9,463 in Education, 5,167 in Works and 2,934 in Foreign Affairs. We were told by the CME that this was an annual payroll saving of over N118bn! However, this raises yet more questions. Why, for example, despite President Jonathan’s deadline for full implementation by December 2013, has this system not been fully rolled out? (A subsidiary question would be: why have there been no criminal indictments for such widespread fraud?) Rooting out false ‘ghost’ workers would also reduce the pressure on retrenchment and redundancy resulting from a reduction in the number of MDAs.
Then, beyond the cost to government, we come back to our ‘ease of doing business’ issue. Where there is such duplication and inefficiency there is a requisite negative impact on business. Take consumer goods as an example. No one would argue against a widespread and effective regulatory environment that protects the health, safety and welfare of consumers. Indeed, such a system also protects and supports genuine and responsible companies against the anti-competitive activities of those that cut corners. Currently, three agencies (NAFDAC, SON and CPC) regulate FMCG companies and products. These should have clearly demarcated areas of responsibility but, in their desire for influence and funding, are duplicating regulations with a consequent multiplication of fees and administrative costs. If a consumer company wishes to have a promotion for one of its brands, it has to apply and pay fees to all of these agencies and more for permission. When we in Promasidor ran “Win Cash” in our “Loya, It’s what’s inside that counts” promotion, we had to have NAFDAC, SON, CPC, National Lotteries Board and Lagos State Lotteries Board at every event. Apart from the fees, we had to pay cost of “feeding and transport”. This is clearly multiple taxation and an enormous administrative burden and it provides opportunity for graft within those agencies. Desperate for “internally generated revenue” to pay bloated budgets, they are distracted from focusing on the key role of protecting Nigerian consumers from harm.
This is just one simple example of the negative impact of our failure to address the ‘ease of doing business’ issue. It provides the incoming administration with a clear opportunity to address the cost and effectiveness of governance AND create a more investor-friendly environment at the same time.
In addressing this issue, I have argued constantly for an improvement in dialogue. For this administration, dialogue and wide engagement is even more critical. Why? PDP has been in power ever since the onset of democracy. Virtually none of the APC team has experience of operating at the federal level. The best way to overcome this is to recruit capable ministers from the relevant sectors. Let us not have another banker or academic running industry; let us have someone with experience of the real sector. Then let him open genuine and meaningful dialogue with representatives of industry. Not a talking shop with the total OPS crammed into one room but meaningful, substantive dialogue. I was talking to the CEO of a multinational who shared his experience of running a similar business in Singapore. Representatives visited him from the government who asked him why he imported certain services and what Singapore had to do to change this. They asked other chief executives the same questions and built up a policy for specific measures to address these issues. They didn’t start banning or taxing or regulating; they took positive and encouraging steps. One example he gave me was that they found Thailand dominated the tourist diving industry in the region. While Singapore could not compete with the quality of Thailand’s beaches, they could compete technically. They then encouraged the development of high quality diving schools so tourists would stop in Singapore for their training and stay for a few days before going on to test their new skills off the beaches of Thailand. Singapore is now a centre for tourists to learn diving in the region, attracting investment and foreign exchange into the economy.
The CEO who was sharing this explained that one of the differences in the Singapore approach was the quality of the civil servants that he dealt with. They were young MBAs with ambition that were attracted into Singapore’s government service by good terms and conditions and strong performance-related pay. This would be a major cultural upheaval for us but one that can only ever be possible if we reduce unnecessary MDAs and focus on reforming the key ones. Total reform of our civil service will be a major undertaking, but by using the Oronsaye report as a starting point we can reduce recurrent expenditure, improve effectiveness in key MDAs and significantly improve our ‘ease of doing business’ record. I also believe there are other quick wins which I will outline in the final part of this series next week.
Keith Richards
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