Showing posts with label Latest Reforms. Show all posts
Showing posts with label Latest Reforms. Show all posts

Wednesday, 14 September 2016

MUST READ - The Positive Impact of Ongoing Reforms; Cut in Bureaucracy, Speeding up Business Processes and @DrJoeAbah 's optimism.

President Buhari


Fulfilling the grand hopes for prosperity and security that greeted Muhammadu Buhari’s accession to the presidency last year will rest as much on his ability to galvanise the civil service as on high-table political deals with the bumptious national assembly and 36 state governors. The grim landscape of crashing oil prices and approaching recession has made the government all the more dependent on effective public administrators to eke out scarce state resources.

From the start, Buhari warned his officials that he would insist that the government’s more than 500 ministries, departments and agencies – which employ more than 250,000 Nigerians – are fully accountable in terms of implementing policy and managing its finances. One of Buhari’s first decisions as president was to cut the number of ministries from 42 to 25; he also dismissed all but two of the permanent secretaries that he had inherited from the previous government. According to an insider in the presidency, Buhari’s imperatives for civil service reform could be summed up as “lean, mean and effective”.

But those reforms have to be implemented amidst stark economic conditions, complicating the government’s planned shift to capital and development spending. Federal and state officials have been petitioning Buhari this year over funding; within months of coming to power last year, Buhari had agreed to a bailout for cash-strapped state governments.

But now is the time to hang tough, according to Lamido Sanusi, the Emir of Kano and former central bank governor: “Nigeria must drop the habit of borrowing to pay salaries and service recurrent expenditures.” On a visit to Kaduna on 25 August, Sanusi argued the current economic tribulations were more about government failure than market conditions: “We are not being sincere when we say we are in a recession because of the oil prices. What happened to the other sectors?”

Systems approach

All of the talk about the impact of the oil price crash highlights the country’s crude dependence. One of the ministers involved in economic diversification plans is solid minerals minister ­Kayode Fayemi, a close associate of power, works and housing minister Babatunde Fashola. “The President made it clear that he wanted constructive debate about policy,” says Fayemi. “But that once it’s decided, it was the minister’s task to implement it and [he/she] would be held to account accordingly […]. It’s a systems approach to government.”

Buhari’s view is that good government, like good armies, depends on robust systems and rules. Officials say he also expects all policy proposals to be backed up with fully researched position papers before they are scrutinised by the presidential secretariat at Aso Rock in Abuja.

For example, Fayemi, a former governor of Ekiti State and a security expert, has spent much of this year developing plans to boost gold and iron ore mining, and to reboot the country’s troubled steel industry. He is looking for $5bn in investments for the country’s mining industry, which he argues will diversify the economy away from oil dependence and speed up industrialisation at the same time.
In late August, Fayemi was due to present a mining plan to Buhari and proposals to set up an independent regulatory agency to oversee the licensing and monitoring of mining operations. It will be a tough case to argue under present financial constraints, but the plan fits with the government’s commitment to switch the emphasis to capital and development spending and prune recurrent budgets.

Senior civil servants in Abuja look nervously skyward when asked about the prospects of state projects getting financed despite the target budget of N1.75trn ($5.6bn) for capital spending this year. That budget is to be financed by a mixture of loans from the African Development Bank and the World Bank, while finance minister Kemi Adeosun is leading a team to float a $1bn eurobond on the international markets.

The civil service is key to the Buhari project, and the man running his civil service reform programme is Joe Abah. Abah likes to quote a glowing assessment of Nigeria’s civil service in 1960 by departing Western Region premier Obafemi Awolowo. This prompts him to ask where it has all gone wrong over the past half century. Currently director-general of the Bureau of Public Service Reforms in the presidency, he takes the long view.



Reforms and purges

Certainly, 33 years of military rule had played a big role in undermining the civil service. “The arbitrariness and command and control nature of military rule doesn’t lend itself well to a cautious, measured bureaucracy that seeks to ensure impersonality, predictability, accountability and due process,” writes Abah.

Some say the rot set in when military leader Murtala Mohammed sacked 10,000 civil servants in 1975 as part of a wider purge of the predecessor military regime under Yakubu Gowon. Others say it was the Dotun Philips reforms under Ibrahim Babangida’s military regime, which made ministers chief executives and accounting officers of their own ministries and tied the tenure of permanent secretaries to the government that appointed them. Other top civil servants say that with this Babangida irreversibly politicised the civil service.

Abah quotes from a federal government document of 2008 that reports that the public service had “metamorphosed from a manageable, compact, focused, trained, skilled and highly motivated body into an over-bloated, lopsided, ill-equipped, poorly paid, rudderless institution lacking in initiative and beset by loss of morale, arbitrariness and corruption.”

At the other end of the telescope, the picture is worse still according to governance activist Hamzat Lawal. As chief executive of Connected Development, a non-governmental organisation that runs the Follow the Money initiative, tracking government and aid spending, Lawal spends much of his time with civil servants in the ministries of education, health and environment as well as agencies under them.

Recently, Follow the Money submitted a freedom of information (FOI) request to Nigeria’s health ministry about a $500m grant received from the World Bank for primary health care in rural communities. Two weeks after the seven-day deadline for FOI requests to be honoured, Lawal was informed by officials at the health ministry that the letter bearing the FOI request had just arrived via the department of planning and statistics to the health minster’s office for further action.



Pillar to post

“It’s really frustrating because each time we go there, we are directed from one office to the other,” says Lawal. “They will tell you: ‘Go to the 3rd floor, it’s in this department.’ And when we go there they say: ‘It’s not here, go to this other department.’” The officials seemed to enjoy the confusion, he adds, partly because it was strange to them that citizens should dare ask for such information. Some of the officials claimed to have no knowledge of the FOI Act and even suggested that the ministry would be happy to meet Follow the Money in court if they chose to sue for its failure to respond within the deadline.

Standards of public service do not seem to have improved despite a succession of reform efforts. One such programme was Servicom – the ‘Service Compact for all Nigerians’ – introduced in 2004 under President Olusegun Obasanjo. Each ministry, department and agency would have a Servicom unit within it to monitor performance.

A decade after its introduction, Servicom units are barely functional. A civil servant who works in a ministerial agency in Abuja confirms this and adds that the quality of service is inconsistent because the system fails to enforce performance standards. The official, who requested anonymity, tells The Africa Report: “One of the rules here [in the ministry] is that a file shouldn’t spend more than two days on your table, regardless. But nobody pays attention.” He observes that the problem is not a lack of rules but the recruitment of incompetent individuals due to endemic nepotism.

Although President Buhari’s reputation raised hopes last year of a tough attack on corruption and nepotism, opposition critics have accused the government of cronyism. They point to the new head of the civil service, Winifred Oyo-Ita, who worked closely with Buhari during his time as head of the Petroleum Trust Fund (PTF) in the 1990s. The head of the Federal Internal Revenue Service (FIRS), Babatunde Fowler, is the former chairman of the Lagos state internal revenue service and is believed to be a nominee of Bola Tinubu, an influential leader in the ruling All Progressives Congress (APC).
To the customs agency, Buhari appointed a retired army colonel who had been his chief of staff, Hameed Ali. And more recently, he picked Hadiza Bala ­Usman, an activist leader of the Bring Back Our Girls movement, who was chief of staff to Kaduna State governor Nasir El-Rufai, as the managing director of the country’s ports authority.

While it is early days, the appointees have delivered some success. Fowler’s FIRS has shown progress at increasing the tax take. In June, 70% of the N500bn revenue received by the government came from tax and non-oil sources. The customs service was instrumental to this, as it increased collections by N12bn from the previous month. At the Ports agency, Bala Usman has been mandated to transform the agency, which is widely regarded as a cesspool of corruption. She had barely been in office for a month following her appointment in July when reports emerged that she had discovered N11bn of the agency’s funds stashed away in a number of banks, in contravention of the government’s treasury single account policy.



Ongoing reform efforts

Unquestionably, the civil service reform efforts are still on. A national council on reform was established with the President as the chairman, while Joe Abah’s Bureau of Public Service Reforms reports to the secretary to the government of the federation. Abah, who has worked on administrative reform in the office of the British Prime Minister, concedes that Nigeria’s civil service is a reflection of the worst aspects of the society.

Abah says the bureau uses technology to make government more accountable and efficient. It launched Nigeria’s first FOI portal, where requests can be submitted electronically and responses are issued within two hours of the request being lodged. The bureau is also working to cut bureaucracy and speed up business processes.

But the bureau’s main job has been piloting a performance management system for the six ministries that were merged at the inauguration of Buhari’s cabinet. Abah used the opportunity with the restructuring to pilot the system, which involves clarifying the roles of the ministries and linking these to job descriptions of officials within the respective ministries to measure performance more accurately.

To tackle poor service culture in agencies, the bureau has developed an agency improvement system with three components: a guide on how to run a government agency; a web-based self-assessment tool for agencies to rate themselves against good practices; and rapid institutional assessments, a diagnostic tool used to measure key organs of agencies to obtain a current state report.

An assessment of the Niger Delta Development Commission (NDDC), an agency under the Niger Delta ministry, revealed a contractual exposure of almost N1trn for uncompleted projects. The bureau subsequently recommended to the federal executive council that the agency be stopped from awarding contracts for two years.

Abah is optimistic that the government will root out corruption, particularly the widespread payroll fraud through which senior civil servants have found ways to collect pay cheques for thousands of fictitious workers. He tells The Africa Report: “We’ve computerised the payroll. We’ve computerised the accounting system. We’ve computerised the whole financial management system. And it’s now easier to track money.”

Before, it was difficult to discover who was collecting the ‘ghost workers’’ salaries, but that has changed, he said: “With the bank verification numbers, you know who collected the money. Technology is key for us to fight this bureaucratic corruption beyond the grand corruption of the politically exposed people.”




Tuesday, 6 September 2016

Freedom of Information (FOI): Don't Depend On The News Alone. You Can Access Info on Public Records Today. Find Out Here! cc @DrJoeAbah


At the Bureau of Public Sevice Reforms (BPSR), website, if you aren't aware, there is a link to the FREEDOM OF INFORMATION (FOI) PORTAL based on The Freedom of Information Act, 2011 which was signed into Law by former President Goodluck Jonathan on May 28, 2011 and came into force that same day.

The purpose and objectives of the Act, as stated in its preamble, are;

a. To make public records and information more freely available;
b. To provide for public access to public records and information ;
c. To protect public records and information to the extent consistent with the public interest and the protection of personal privacy;
d. To protect serving public officers from adverse consequences for disclosing certain kinds of officials information without authorization;
e. To establish procedures for the achievement of these purposes and for other related matters.

The passage of the Freedom of Information Act fills a huge gap which hitherto existed in the legal framework for citizen’s access to information held by public officers, authorities and institutions in Nigeria.

A few people have already visited BPSR's Website (click the link) and made requests. Posted below is an example of a request.

"I would like to know the salary scale of Nigerian senators, with their seating allowances inclusive. I also would love to know what it takes to get a civil service job as a graduate."

On occasions where the request can't be dealt with on the portal, BPSR will endeavour to point you in the right direction.

Also published on the website are related reports such as the following;

A. Freedom of Information Annual Report
B. BPSR Annual Report


NEWS FLASH!


Bureau For Public Service Reforms Publishes All FOI Request Received And Responded To.


Abuja 7 September 2016:  The Bureau For Public Service Reforms (BPSR) has today proactively published on its website (www.bpsr.gov.ng) a detail summary of the entire Freedom of Information (FOI) request it received and responded to since the launch of its FOI Portal.

The BPSR electronic FOI portal remains the first initiative of its kind developed by any government public institution in Nigeria for submitting e-FOI request and receiving corresponding response.

Through a joint partnership with Right To Know (R2K), Nigeria and supported by the MacArthur Foundation, the BPSR in March 2016 re-designed its website with a dedicated Freedom of Information Portal for fulfilling its FOI obligations and incorporated an innovative electronic platform for receiving and responding to e-FOI request.

To view details of the summary click http://bpsr.gov.ng/index.php/foi-requests-and-responses





Friday, 15 January 2016

PHOTO NEWS: DG, BPSR. Dr. Joe Abah in Kaduna State with Governor Nasir Ahmad El-Rufai.


DG, BPSR. Dr Joe Abah with Governor El-Rufai


Director General, Bureau of Public Service Reforms, Dr Joe Abah was in Kaduna State on Thursday 14th January 2016 to see the Governor of Kaduna State, Nasir Ahmad El-Rufai. Governance reforms was on the agenda for discussion.


Tuesday, 12 January 2016

MUST READ REPORT - 'How Nigeria Contained Ebola: Lessons For Institutional Reform'.


Dr. Ameyo Stella Adadevoh 
The largest Ebola Virus Disease (EVD) outbreak to date occurred in the West African sub-region - particularly in Guinea, Sierra Leone and Liberia - with a total of 7,178 reported cases, including 3,338 deaths, as of 1st October 2014. 


A total of 20 Ebola cases (19 laboratory confirmed, one probable) were reported in Nigeria in 2014, with no new cases reported since the 5th of September of the same year. All 20 Ebola cases stemmed from a single importation by a Liberian diplomat, Patrick Sawyer, who was returning to Nigeria from Liberia. 


This book, therefore, chronicles the events leading to the first index case of Ebola in Nigeria, and the response of both the Federal and State Governments, and Development Partners in the country. The book also identifies and describes the systems, activities, resources and timelines at national, state and LGA levels for the pre-outbreak, alert, response and post- outbreak phases required to mitigate and contain any re-introduction of EVD in Nigeria using our national health institute and effective public health measures.

But more importantly, Nigeria’s successful response to the Ebola outbreak provides an opportunity to document the lessons learned, particularly for institutional reform purposes. This book, “How Nigeria Contained Ebola: Lessons For Institutional Reform”, details Nigeria’s successful response to the Ebola epidemic. The lessons learned serve three main purposes. 

Firstly, public health managers faced with similar challenges or outbreaks may use Nigeria’s successful response as a guide. 

Secondly, a reading of this book will reveal that although there were challenges, those challenges were successfully overcome and offer lessons for the future. 

Finally, it provides lessons for institutional reform, particularly in the areas of leadership, teamwork, inter-governmental relations, collective will and national unity.



ACKNOWLEDGEMENTS BY DR. JOE ABAH

Those that follow a particular interpretation of institutional theory will have you believe that countries are slaves to their history and culture, and that the path that a country follows depends on the choices and decisions that it has made in the past. This fatalistic view of the world frequently writes off Africa, given its history of colonialism, civil wars, military dictatorships, high indebtedness and poverty. Tackling epidemics require strong institutions and good governance, which it is claimed are lacking in many African countries.

Putting these two arguments together, the expectation was that in the case of an Ebola outbreak, Nigeria, Africa’s most populous country, would be overrun with catastrophic consequences on a biblical scale.

But it wasn’t! Why? Are the governance institutions in Nigeria stronger than many foreign commentators make out? Or were there other factors at play that ensured that Nigeria’s containment of Ebola became an example of good practice for the rest of the world? Or were a combination of factors at work? That is the subject of this book.
We wish to pay tribute to former President Goodluck Jonathan, Governors Babatunde Fashola and Rotimi Amaechi, and Professor Onyebuchi Chukwu, former Minister of Health, for their leadership. We are also grateful to the doctors and nurses who gave their lives to protect their fellow citizens and the scores of healthcare professionals whose professionalism, dedication and patriotism ensured that Nigeria defeated the virus.

In compiling this book, we wish to thank Mr Oronto Douglas (Special Adviser to the President in Research, Documentation and Strategy), who unfortunately passed away recently, for the primary research he undertook. We are also grateful to the Permanent Secretary, Federal Ministry of Health, Mr Linus Awute, not only for his management of the crisis, but also for his editorial contributions to this work.

I am grateful for the support received from Dr. Ngozi Azodoh, Director, Health Planning Research and Statistics, and her staff member, Dr. Chima Elenwune, both of the Federal Ministry of Health, for their useful contributions. Mr James Nicholls of the DFID FEPAR programme assisted with editing. I am also grateful to, and proud of, Mr S. Inyang Anyang, my technical assistant and a civil servant, who wrote most of this book.

Joe Abah, Ph.D.
Director-General
Bureau of Public Service Reforms 


Click to read the full report.

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

Click to view Compendium 

Monday, 23 November 2015

PAY: the Good, the Bad, the Reforms...

The Problem
The agitation for pay reform has been an important and recurring theme in the Nigerian public service as real salary levels have declined considerably in the past following high rate of inflation in the country. Workers have found it increasingly difficult, if not impossible, to survive on their monthly pay in the face of changes in market conditions and high rates of inflation. The concept of a cost of living wage has gained popularity, particularly where public servants pay levels are perceived to have fallen below levels necessary to meet their basic needs of life, e.g., food, clothing, shelter, and social amenities.

Matters were made worse by the gradual and steady distortions of the Unified Grading and Salary Structure (UGSS) brought about by the Udoji Commission in 1974. Again, the relativities between salary grade levels were substantially disorganised. The distortions have been further exacerbated by the emergence of several salary structures in the federal public service. Consequently, the issue of relativity among jobs within or between occupational groups in the public service has become one of the major challenges in Nigerian public administration. This development has generated a rash of agitation by occupational groups and institutions to migrate from one salary structure to another or for new salary structure. Over the years, the system has witnessed incessant strikes and threatened strikes as bargaining weapon for settling emolument relativity questions.

Reform Actions
In an effort therefore to reform the pay structure in the public service, the federal government set up two committees. The first was the Wages, Salaries and Emoluments Relativity Panel under the chairmanship of Professor E. C. Edozien, (OFR), which was set up in June 2004. It was charged with the responsibility of addressing the problem of growing disparity in salaries and wages payable for work of substantially equal value within the public service, as well as between the public and private sectors. The second was the Presidential Committee on the Consolidation of Emoluments in the Public Sector under the chairmanship of Chief Earnest O. A. Shonekan, (GCFR, CBE), which was set up on November 2005.
The highlights of recommendations of the two committees were as follows:
  1. The Edozien Panel recommended that workers’ pay should be index to inflation and reviewed every two years.
  2. The Shonekan Committee recommended that public sector wage should be increased by 25% in 2007 and a further 10% annually (plus cost-of-living adjustment) for the next 10 years. Full implementation of the Shonekan recommendation was likely to result in significant growth of the payroll component of the federal government’s recurrent budget; the wage bill would have accounted for 35%, 45%, and 45% of the national budget in 2007, 2008, and 2009 respectively.
  3. The White Papers from both Committees recommended a comprehensive evaluation of Jobs in the public service.
In addition to setting up the two Committees, the federal government also set up a tripartite presidential committee on the review of a national minimum wage under the chairmanship of Justice Alfa Belgore in July 2009. The Committee was charged with the review of the national minimum wage and the Act establishing it. It was given the mandate to consult with all stakeholders on the desirability of a new national minimum wage in the context of the dynamics of national economy and to propose a realistic and practical national minimum wage to government. Similarly, the government constituted the Prof. V. P. Diejomaoh’s Presidential Committee of Experts in Parameters for Wage Fixing in the Federal Public Service (2010).

Main Achievements
The main achievements of the pay reform are as follows:
  1. The consolidation of salaries in 2007
  2. The implementation of salary pay rise of 15% in 2007
  3. Adoption of ₦18, 000 new national minimum wage through the New National Minimum Wage Act 2011
  4. Introduction of incentives for reforms through year-by-year pay review for those MDAs that had implemented reforms. Pay increase was only to be allowed for those MDAs that have been certified as having completed their reform process. The recommended reform areas that MDAs were to address include: (a) rationalisation of MDAs to eliminate overlaps and duplications; (b) privatisation of more federal government-owned companies; (c) improvement in the quality and reduction of the quantity of the skills in the public service; (d) improvement in revenue generation from non-oil sector, company income tax, VAT, etc.; (e) automation and centralisation of public sector payroll; and (f) compliance with government agenda for public service reforms.
  5. Increase in estacode and duty tour allowances
  6. Introduction of four new allowances; namely: Job-Specific Allowance (JSA) (recurrent); Risk-Related Allowance (RRA) (recurrent); Relocation Allowance (RA) (one-off) and Scarce-Skills Allowance (SSA) (one-off/recurrent)
  7. Government’s acceptance of the recommendation of the need for a comprehensive job evaluation in the public service. In order to actualise this project, the National Salaries, Incomes, and Wages Commission (NSIWC) in partnership with DFID-Federal Public Administration Reform Programme (FEPAR) had developed a strategy document on comprehensive job evaluation in the federal public service. As part of efforts to enrich the document, NSIWC in January 2013 held a retreat with critical stakeholders to elicit their input, which was to be used to update the content of the strategy document.
  8. Government’s acceptance of the Edozien Committee’s recommendation that the relatively low share of basic salary in total emolument should be addressed.
  9. Government’s acceptance of the Shonekan Committee’s recommendation on cushioning the effect of an anticipated higher personal income tax. The specific recommendations accepted are: (a) the introduction of a hybrid of an expansion of tax band, introduction of threshold tax, and a minimum tax; (b) partial consolidation of emoluments; and (c) introduction of tax exemption on gratuities and mandatory payroll deductions (such as NHIS and NHF). 
Reference:  Public Service Reforms in Nigeria (1999-2014) - A Comprehensive Review

Click to view Compendium 

Thursday, 19 November 2015

REFORMS: Privatisation of Government Enterprises.



The Problem 
During post-independence, the dominant economic wisdom was for government direct intervention and control of the commanding heights in the economic sector through the vehicle of public enterprises (PEs). This was justified mostly by the need to promote rapid industrialisation against the backdrop of dearth of local entrepreneurial class and indigenous capital at this time. In order to actualise this objective, the federal government invested over a US$100 billion in establishing PEs. More importantly, the aftermath of the civil war in 1970 promoted the federal government to pursue a ‘Reconciliation, Reconstruction and Rehabilitation’ policy, equivalent to the George Marshall Plan of 1948- 1952.

This policy, aided by the oil price boom of the early 1970s, saw government investing in massive industrial and infrastructural facilities in Nigeria. Thus billions of money were, therefore, spent in the construction of refineries, steel plants and rolling mills, establishment of development/industrial banks, oil companies, telecommunications companies, electricity plants, airports, sugar companies, cement companies, paper mills, fertiliser plants, glass industries, breweries, railways, river basin development authorities, dams, shipping lines, etc. These were managed as government-owned companies and enterprises.

In 1972, the government enacted the Indigenisation Decree that stipulated increased participation of Nigerians in companies/enterprises. Arising from this economic philosophy and huge oil revenues, government established PEs in every sector with over US$100 billion was invested to create over 600 ventures, employing less than 500,000 workers and creating more than 5,000 board seats.

However, over time it became evident that the PEs, which had been established with noble and egalitarian objectives, had failed in the country with their dismal performance. It was estimated that PEs were consuming about US$3 billion of national resources annually by way of grants, subventions, subsidies (both direct and indirect) through import duty waivers, tax exemptions, etc. Tax deductions at source were not remitted to appropriate authorities. Additionally, the PE's became avenues for political patronage, rent seeking, and parasitism, with more than 5,000 board appointments that control funds in excess of ₦1trillion. Cumulatively PEs never served their customers, their employees, or the taxpayers well.

Reform Actions
The federal government soon became disenchanted with the dismal and poor performance of PEs and could no longer continue to support the monumental waste and inefficiencies of the PEs. Government commissioned several studies to find the factors for this dismal performance. These included the Adebo (1969), Udoji (1973), Onosode (1981), and Al- Hakim (1984) studies. A summary of the findings from these studies showed that the PEs were inefficient, corrupt, misused monopoly powers, depended heavily on treasury, had defective capital structure, and suffered incessant political interference, etc.

In 1985, the federal government set up the Presidential Study Group to review the Al- Hakim (1984) Committee Report. The main conclusion arising from the Committee’s recommendation was the need for radical measures to be taken to address the problems of the PEs. Consequently, government began to take steps to address the problems associated with PEs. The federal government commenced a programme of liberalisation and established the Technical Committee on Privatisation and Commercialisation (TCPC) by enacting the Privatisation and Commercialisation Decree No. 25 of July 1988. The Committee was inaugurated on 27 July 1988 and charged with the responsibility of withdrawing government from business while making the private sector the main driver of enterprise ownership and management. The TCPC began the implementation of the inception phase of the privatisation programme (1998-1992).

In furtherance of the implementation of the programme and the need to operate along the line of international best practices, in 1999, the federal government restructured the implementation modalities by enacting the Public Enterprises (Privatisation and Commercialisation) Act that established the National Council on Privatisation (NCP), and the Bureau of Public Enterprises (BPE). The new institutional structure ensured that NCP determines political, economic and social objectives of the programme, approves policies and public enterprises to be privatised or commercialised, and issues directives to BPE, while the BPE implements Council’s policies and directives.

The Public Enterprises (Privatisation and Commercialisation) Act of 1999 provides various strategies for BPE to carry out the privatisation policy. These include:
  1. Public offering
  2. Private placement of shares
  3. Core investor sale
  4. Commercialisation
  5. Concession
  6. Sale by willing seller/willing buyer
  7. Sale of assets and liquidation
Following the enactment of the Act (1999), the National Council on Privatisation (NCP) and the Bureau of Public Enterprises (BPE) have been implementing subsequent phases of the privatisation programme of government from 1999 to date. The privatisation programme is a key aspect of government’s economic reform programme as enshrined in the FGN Transformation Agenda. The programme is designed to:
  1. Diversify the economy
  2. Strengthen the private sector as Nigeria’s engine of growth
  3. Assist in restructuring the public sector in a manner that will effect a new synergy between a leaner and more efficient government and a revitalised, efficient, and service-oriented private sector
  4. Ensure government concentrates resources on core functions and responsibilities of governance
  5. Improve efficiency and reduce waste in the public sector
  6. Modernise technology in Nigerian industries
  7. Dismantle monopolies and service arrogance
  8. Reduce debt burden and fiscal deficits
  9. Resolve massive/perennial pension gaps
10. Promote transparency in corporate governance
11. Attract foreign direct investments
12. Promote competition
13. Enthrone sound corporate governance in public and private sector
14. Institutionalise social accountability and efficient use of public resources.

Main Achievement
The enactment of the Telecom Act (2003) and the licensing of several service providers has created many new jobs in the country and revolutionised the country’s telecom sector. From a teledensity of 0.42%, representing 450,000 telephone lines in 2001, the country’s teledensity has grown to 82%, representing 123 million telephone lines as at June 2013. The enactment of the Pension Reform Act 2004, establishment of Pension Commission, and entrenchment of a stable pension policy in Nigeria are notable achievements.
The establishment of the Debt Management Office (DMO) is also one of the outcomes of the reform works of the Bureau. Previously, PEs and government agencies borrowed arbitrarily without looking at the national picture. How much Nigeria owed then was unknown, but this problem was addressed with the establishment of the DMO.

The transport sector reform that led to the unbundling of the Nigeria Ports Authority (NPA) and the eventual concession of the Port terminals to various concessionaires has greatly reduced the cost of doing business in the Ports, increased revenue to government and enhanced operational efficiency, with drastic reduction in the waiting time for clearing of goods and services.

Similarly, the Power sector reform that led to the unbundling, privatisation/concession and handing over of the ownership/management of the PHCN successor companies, an exercise that has been described by the World Bank and the international community, as not only most transparent and credible, but also the single largest privatisation transaction in the world, has become a reference point globally.

Other achievements of the privatisation programme include:
  1. The sum of ₦251.5 billion was realised as gross proceeds (excluding power) and over ₦147 billion (net) has been remitted to the Privatisation Proceeds Account with the CBN.
  2. 66% of the privatised enterprises are performing well as against 34% that are not doing well.
  3. No treasury allocation to privatised PEs – drain pipe plugged.
  4. Proceeds utilised for other socio-economic objectives.
  5. New operators pay corporate taxes.
  6. New owners are investing heavily - e.g. ports, oil marketing companies, cement plants, etc.
  7. Neglected and under-utilised assets being more efficiently utilised.
  8. Oil services companies have expanded: Oando, ConOil, etc.
  9. Nigerian truck manufacturing company that was shut down is back and producing.
  10. An improving agro-allied sector: Notore (Nafcon), Okomu Oil palm, sugar companies like Savannah Sugar Company, etc.

  1. Eleme Petrochemical Company that was moribund has grown to become the highest dividend paying company in Nigeria
  2. NAHCO that was moribund has more than tripled its share value since privatisation.
  3. Federal Palace Hotel was dilapidated and is now functional and expanding.
  4. Remarkable improvement in investments and ports operations.
  5. Cement companies like Cement company of Northern Nigeria, Ewekoro Cement Company, Benue Cement Company, have been refurbished, expanded and serving the cement requirements of country compared with their initial dismal performances.

  6. Privatisation of the power sector with the following essential elements:

- Power Sector Policy, 2001: Aimed at ensuring electricity supply by creating a conducive investment environment for private sector investment and managerial expertise
- Investor-friendly Power Sector Reform Act: Enacted in 2005
- Breaking the monopoly: Introduction of a competitive electricity market
- PHCN unbundled into six generating companies, 11 distribution companies, and one transmission company (6-1-11 configuration)
- 18 successor companies were incorporated and assets, liabilities and employees of PHCN transferred to the successor companies.
- Privatisation and concessioning of the successor companies from which over N400 Billion was released as proceeds.
- Full settlement of all labour benefits to the ex-staff and Pensioners of the successor companies amounting to over N410 Billion.
- The Nigeria Electricity Supply Industry regulator, Nigerian Electricity Regulatory Commission (NERC) was established in 2006.
- The Nigeria electricity Bulk Trader (NBET) has been established and its board inaugurated, to play the vital role credit assurance to critical players in the industry.
- The Nigeria Electricity Liabilities Management Company (NELMCO) has been established, its board constituted, and it has taken over the stranded liabilities and legacy debts of the old PHCN. 


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

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