Why Nigeria Needs to Fix Its Government Spending

The truth is simple: We cannot improve Nigeria until we deal with wasteful governments. This is about our governments' preference for big projects like steel mills, refineries, and roads that lead nowhere. It is also about our ability to reconsider ideas that seemed good at first but failed when put into action, like import substitution industrialisation. If we are talking about the efficiency of the public sector, we must also look at how the government spends money.

Recurrent spending has been a big part of public spending for as long as I can remember. You might think that the government needs all this spending to manage a growing private sector. But that is not true. The lack of proper infrastructure is a major barrier to Nigeria's growth. This situation calls for much more spending on important projects. A big public sector, in this case, is a burden on private businesses.

The Babangida administration once said that the private sector should be the engine of economic growth, not the public one. This idea is the closest we have come to understanding how to boost our economy. It also shows how much we need to address the challenges that small, subsistence businesses face to grow. Yet, we have not really questioned whether the public sector can support a thriving private sector.

Even the Babangida administration focused on helping small- and medium-sized businesses. But those businesses often do not grow big enough to support manufacturing or shift workers from small farming to large industries. Some people say our leaders’ failure to accept the market as a tool for growth is hurting the economy. Allowing free entry and exit in the market for both suppliers and consumers would surely encourage innovation and economic growth. Sadly, this requires political leaders who focus on development instead of just buying votes.

A key requirement is a public service that can enforce laws against monopolies and unfair pricing while protecting the welfare of local consumers. Some say this is where the public service fails the most. We should also consider that the public service might not be as weak as it seems. Instead, it could be influenced by state capture, making it hard for it to promote competition and serve the public.

In 2014, the Report of the Presidential Committee on Restructuring and Rationalisation of Federal Government Parastatals, Commissions and Agencies, led by Stephen Oronsaye, looked into the many federal agencies. It noted the overlap, duplication, and rising cost of governance. The report advised the country to streamline its governance structures, remove unnecessary overlaps, and improve service delivery without creating new agencies for jobs already being done.

Occam's Razor applies here. William of Ockham, a thinker from the 14th century, said that when faced with competing ideas, we should choose the one that needs the fewest assumptions. This idea can help us assess how to organise the Nigerian state. We should remember that the efficiency of government is not just about cutting agencies. It is also about how much money the government saves from these changes, how well it performs, and whether those improvements last.

All of this raises questions about how to achieve the constitutional requirement that ministerial appointments must reflect Nigeria's diversity. The president is supposed to appoint at least one minister from each of Nigeria's 36 states, even though the current government has 47 ministers.

In the end, the failure of Nigerian governments to manage finances well may come from our past experiences with Cold War politics. Non-aligned, pro-independence movements on the continent often found themselves at odds with the United States. Just like political considerations often win over economic ones, the politics surrounding Africa's independence struggles have shown to be more about show than efficiency.