Monday, 30 November 2015

Monetisation Policy and its REFORMS.

The Problem
Nigeria had faced severe socio-political and economic problems, as well as high cost of governance at the inception of democratic governance in 1999. At the end of 2001, it was found out that greater percentage of public sector expenditure went to overhead costs and that the cost of running government at all levels was gulping a disproportionate amount of government revenue. The revelation showed that it cost government a lot of funds to construct, purchase, or rent residential accommodation for public servants. Furthermore, large amounts of resources were occasionally spent on renovation, maintenance, and furnishing of these residential accommodations as well as on the purchase, fuelling, and maintenance of official vehicles for public servants. It was also evident that some public officers maintained many official vehicles. 

This system was liable to various forms of abuse, apart from the high costs of maintenance.
Closely tied to the high costs of maintaining residential accommodation, was the fact that telephone, electricity, and other utility services in the official quarters of public servants maintained by government were similarly open to various forms of abuse and misuse. Government then noted that the cost of running governance at all the various levels was gulping a disproportionate amount of revenue. It then became clear that the structure of government’s expenditure would have to be thoroughly re-examined in light of this startling revelation, to get a reasonable balance between overheads and recurrent expenditure and capital spending. 

Reform Actions
In order to reduce the pressure on public resources arising from government involvement in the physical provision of fringe benefits for public servants, government introduced the monetisation policy. The overriding aim was to cut the cost of governance and entrench efficiency in the allocation of resources in order to meet up with the growing demand for capital and socio-economic development of Nigeria. 

The objectives of the monetisation policy were to:
  • -Reduce the high cost of governance.
    - Make public servants adopt a more productive approach to public property.
    - Enable government to get the true picture of what it costs to maintain a political office holder or public servant in office and, therefore, lead to a more realistic budgeting and budget implementation - Provide the most transparent avenue for disbursement of remuneration and fringe benefits from employers to employees.
    - Curb the excesses of public officers.
    - Correct the wrong public perception of government utilities (such as telephones,
  • electricity, etc.) as limitless resources which hitherto were used without caution
    - Ensure equity in the allocation of scare resources.
    - Encourage public officers to own their vehicles, houses, and furniture and thereby assist them to plan better for their retirement.
    - Enable public servants to plan for a more comfortable post-service life.
    - Encourage increased productivity as a result of enhanced pay.
  • The main components of the monetisation policy with respect to fringe benefits of the public servants include residential accommodation, utility allowance, motor loan, transport allowance, medical allowance, leave grants, medical subsidy, and entertainment allowances. The computations of these components were based on the percentage of the annual basic salary of workers.
    In order to establish the financial implication of the monetisation programme, salary Grade Level 5 (step 8) was used to calculate the monetisation entitlements. The calculation estimated that the policy would cost government between ₦300 and ₦500 billion. Consequently, the government took the following measures to finance the programme:
    • The spreading of monetised benefits over the 12 calendar months of a year, instead of the earlier decision to pay it en-block to workers
    • A directive was given to workers who desired vehicle loans to arrange such with their banks
    • The utilisation of revenue accruable from the outright sale of the government property like houses and vehicles, which had been monetised for workers
    • Government parastatals that were self-financing or not drawing from the government annual budget were directed to service the payment of the monetisation of benefits of their staff, e.g. NMA, NNPC, and CBN, etc.
    • Mass retrenchment of workers at the lowest grades, including gardeners, cleaners, drivers, and clerical assistants. Other criteria, such as consistent failure of promotion examinations and disciplinary issues were used to disengage other cadres of Grade Levels 08 and above from the public service. 

Main Achievements
By far, the most important advantage of the policy on the economy is that it has reduced the cost of governance (compared to what it was before) and helped to reduce government’s spending on the maintenance of facilities and equipment for public servants. The fact that the revenue realised from the savings occasioned by the monetisation policy was invested in capital development to improve the well being of the citizenry is a major achievement.

Other key achievements of the monetisation policy were:
- Consolidated salaries and enhanced the personal emolument of workers
- Provided government with the most transparent avenue for disbursement of remuneration and fringe benefits to workers.
- Curbed the excesses of public officers in the use of government resources for private comfort.
- Encouraged efficient allocation of resources and equity in the provision amenities for public officers.
- Encouraged public servants to plan for a more realistic post-service life in terms of living within their means.
- Strengthened and improved the delivery of basic services through the outsourcing of services such as gardeners, cleaners, drivers, and security.
- Stopped the culture of waste in the guise of maintaining government housing estates 

Reference:  Public Service Reforms in Nigeria (1999-2014) - A Comprehensive Review

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