Fiscal Waste

Going back to the start of this blog, I have at various intervals repeated my belief that the Federal Republic needs geographical consolidation of its second-tir and third-tier administrative divisions. We should:

(a) have 6 states (instead of 36+1), 72 local administrative districts (rather than 774 LGAs), and 6 Land Use Commissions (in place of 36 state assemblies);
(c) downsize the FCT to the boundaries of the Abuja Metropolitan Area Council;
(d) amend the constitution do cahnge from an American-style bicameral legislature to a system that is both cheaper and more fitting to Nigeria's circumstances;
(e) replace the 360-member "House of Representatives" with a 360-member "Federal Assembly". Vest in this Assembly 100% of the constitution's legislative function;
(f) replace the 109-member "Senate" with a downsized 8-member (President, 6 Governors, Chairperson of Federal Assembly) "Council of State";
(g) abolish the National Defence Council and National Security Council and transfer their responsibilities to the Council of State, which will be permitted to invite the relevant security officials to sessions closed to the public/media;

And this is only the start. To truly address the issue of restructuring and reform would take more space than "Blogger" allows, but know that with other reforms and much restructuring, we can consolidate governance, improve planning coordination, and (crucially) cut the cost of government. Done right, we can reduce the number of political offices by sixty-two percent (62%), inclusive of "elected" positions in the various executives and legislatures, as well as first-line appointed positions like ministers and commissioners.

Since each of these positions is itself at the centre of a web of other positions (like assistants, special assistants, senior assistants and senior special assistants), of patronage-clientelist disbursements (legal and illegal), and of atomized and inefficient spending decisions (legal and illegal), we would have the chance of cutting spending by even more than is implied by the 62% figure above. Mind you, this is only "a chance"; it is quite possible that consolidating government would only give the men/women occupying political office greater "power" and scope for patronage-clientelist spending. However, it is better to have "a chance" in a more efficient administrative system, than it is to maintain the current system that guarantees wasteful spending regardless of the intent of the spenders.

We could save billions a year in fiscal waste, and improve our ability to plan and implement sustainable economic development policies.

Okay, now that I have offered a constructive solution, the point of this blog post is to alert you to the fact that Kebbi State is creating new local government areas.

You will note the official word from Kebbi is that they are creating local "development" areas, not local "government" areas. This is the same gimmick used by the Lagos State government to add 17 LGAs to their initial 20.

Under the 1999 constitution, creating new local "government" areas requires the approval of the people of the relevant LGA, the approval of the relevant State Assembly, and the approval of both Houses of the National Assembly. The state governors control the states' LGAs and assemblies the way sole proprietors control their one-man shops, so the main stumbling block is the National Assembly. The federal legislators are rightly concerned about the impact on the allocation of funds from the Federation Account to the LGAs (well, really to the states, who use their control of LGA funds to reduce LGAs to rubber-stamp irrelevance), and the concomittant pressure on every state to inflate its local government count to keep up with the Joneses. Mind you, the National Assembly is not looking at it from a sensible, pro-Nigerian point of view; they are more worried that their share from the trough will diminish if more mouths are allowed to suckle at the trough.

Lagos State and Kebbi State (now) seem to have concluded that the constitutional requirement for local government area creation does not apply to local development area creation, even if the two entities occupy coterminous borders. This essay circuitously makes the argument, the author recognizing the Supreme Court decision that the constitutional process of LGA creation had not been completed in Lagos, then arguing his belief that the consitution really asks the National Assembly to merely "recognize" facts that are to be created by the State Assembly, before concluding that the ruling didn't apply anyway because these are in fact LCDAs ("D" for "development") and not LGAs.

The article on Kebbi State says the state is adding 21 LGAs to the existing 27, for 48 total, but this should be taken with a grain of salt. Our media, unfortunately, seem to get mixed up sometimes with their numbers. Recently I had a heck of a time trying to decipher a media report on our federal government's debt portfolio. And in this particular instance, one can almost understand their numeric confusion.

When Lagos State created new LCDAs, certain news outlets reported Lagos was adding 37 new LGAs to the existing 20, for a total of 57 LGAs. Other news outlets reported Lagos was adding 17 new LGAs to the existing 20 for 37 in total. What I believe really happened is this: (a) Lagos created 37 LCDAs; (b) Lagos did not abolish the 20 LGAs because Lagos has no constitutional power to do so; (c) Lagos used it de facto control of the LGA system to make them "virtual" rather than "real", something which all 36 governors have done anyway; (d) Lagos now interacts with its 37 LCDAs the way it is meant to interact with LGAs, albeit controlling them in the same total fashion. So, depending on how you look at it, Lagos State either has 57 total local governments (20 of which are only "virtual", and lack any reality beyond de jure documentation), or Lagos State has 37 LGAs, oops, I meant constitutionally vague LCDAs.

Maybe this is what Kebbi is doing, maybe not. As always we will find out the truth only after we see what actually happens. Either way, this is fiscal waste, and as I continue to reiterate on this blog, technically "legal" forms of waste are more damaging to the fiscus of the federal republic than criminal behaviour like "corruption". We are starving ourselves of funds for public services, public infrastructure and public investment, because we use too much of our fiscal resources for "legal" albeit unproductive purposes.

These new LGA and LCDA exist only to create new political positions for state governors (and their godfathers) to award to patrons and clients in the political system. It pays off past support, or pays for future support. Indeed, each of the new positions becomes in and of itself the centre of its own web of patron-client relationships.

Actually, while I am not a political scientist by training or profession, I do recall reading research that suggests that countries with our kind of politics tend to have to keep creating new political jobs in order to absorb ever-growing numbers of political and pseudo-political personages they have to keep happy to stay in office.

But it isn't just expansion of jobs for the political class. Lagos and Kebbi are also creating new bureaucracies to absorb some of the unemployed, thus earning the gratitude of said unemployed and their families, and genuine-if-misinformed goodwill from the populace for their "pro-people" policies. They can then rig elections in peace, while various voices say it is okay because they are "delivering" for the people.

Ironically (and sadly) one of the biggest reasons so many people are unemployed is the absence of the sort of infrastructure (hardware and software) that supports economic development and job growth. It is not just a question of hardware like roads and electricity, but "software" too ... an enabling environment that includes rule of law, constitutionalism, predictability of policy, stability of substantive democracy, etc.

The nature of our political system compels our political leaders to maintain the very "software" that has stunted our growth over the decades. Things like ethnic distrust, violence, weak policing and law enforcement, weak judiciary, low accountability, etc, etc are vital for the continuation of the system, so nobody lifts a finger to bring these problems to an end.

The citizens suffer for this state of affairs in many ways, one of which is the larger-than-necessary unemployment rate ... yet we are then grateful for the crumbs of bureaucratic jobs that consist of a small and irregular pay cheque in exchange for no substantive purpose, function or role. Having been unemployed myself, I know that a pay cheque of any kind is better than none, but you have done nothing to free yourself from the vulnerability you were trying to escape. In fact, the opposite occurs, and you are so exposed and so vulnerable that you become an enemy of yourself, constantly fighting against things that would improve your life, for fear of losing the tiny crumb you can barely grasp as it is. The Big Men and Big Women want you to be dependent on them for your daily bread; it gives them power over you. And the funny thing is a simple shift in the price of crude oil would be enough to start another round of "retrenchments" and you find yourself out in the cold again, having spurned the chance to fight for a more secure economic foundation when you had the chance.

We are hurting ourselves by allowing our federal, state and local governments to go deeper into debt every year just to meet the recurrent costs of their bloated bureaucracies. Every Olu, Eze and Aliyu in government is pumping money (usually borrowed) into a variety of flashy, eye-catching schemes, with no apparent research by anyone as to whether any of it is the most effective or efficient way forward. Some of the projects duplicate each other, with politicians preferring the "we must have our own of everything, and I must be able to take sole credit" approach over thinking about mutually-beneficial complementarities between the states and regions.

All in all, creating new states and new local government areas is an exercise in WASTE.

I have often said that it is not enough for Nigeria to be substantively democratic (which we are not), but that for substantive democracy to have any beneficial effects we must improve the quality and quantity of our analysis and discourse.

In terms of "quality", the truth is, as much as "new state" and "new LGA" creation is the opposite of our real strategic federal interests, if you it to a referendum anywhere in Nigeria, the affected people would probably approve it.

We have educated ourselves to believe that the path toward development lies in your village becoming its own state.

It doesn't help that our governments are not funded by taxes, but by oil revenues. If people knew they would have to pay more taxes to fund an unnecessary new political unit, they would be less likely to support its creation. Indeed, we would have 6 states and 72 districts today if people knew they were directly paying for the bloat. Unfortunately, no one has made the case to the population that even with oil revenues, the effect of creating new states and new LGAs is the same as if we had had a dramatic increase in taxation; there is only so much oil money, even in periods of boom, and the higher the proportion of it that is wasted on bloat, the lower the proportion that is available for things the people desperately desire like better hospitals, better schools, better roads, etc. We the people complain about the absence of these things every day of our lives, but nevertheless support one of the key reasons we never have enough money to pay for the things we want.

It is a paradox.