Reducing the Cost of Governance: Alternative Policy Options for Economic Sustainability

Ikhide, Emily ; Onyimadu, Chukwuemeka (2021-06)

Working Paper

The Nigerian government has proposed to harmonise the salaries of civil servants as a measure to control the high costs of governance amidst the shrinking revenue base. While the harmonisation of salaries across MDAs is a reasonable idea, it is unclear how that would help to achieve government’s objective of cost reduction. However, the government may also consider other known alternative measures such as reforming the fuel subsidy regime, merging and consolidating MDAs, placing a limit on the number of political appointees and aides, scrutinising the budget to eliminate duplicated and frivolous expenditure, and revising the indicators for measuring fiscal responsibilities. Achieving the above will require the National Assembly to, (i) collaborate with relevant stakeholders to reform the fuel subsidy regime; (ii) amend or totally repeal the Acts establishing affected MDAs by the consolidation reform; (iii) sanction MDAs that include repetitive or frivolous items in their budget; (iv) amend the Fiscal Responsibility Act to include additional indicators of fiscal responsibility such as recurrent expenditure-total expenditure ratio.