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Nigeria is obese 24 Dec 2015

A couple of months ago, I sat before a doctor who was reading out the results of my recent medical test. Everything was going fine, until she got to my weight. She said the results revealed that I was overweight and had high levels of cholesterol that I needed to manage and reduce. There was little or no medication that I could take to manage this. I just needed to effect a lifestyle change.
    
She reeled out dos and don'ts. She told me to cut my portion of food intake, do away with fatty and oily foods, stay clear of fizzy drinks, eat at predetermined times daily and get into an exercise routine.

I tried to negotiate my way out of what was looking like a strict regimen and lifestyle change. I asked when I had to begin this programme. She laughed. She had seen this act played out several times. She advised that there was no better time to start than right away. I then tried to bluff my way around. I told her that I supposed it was just an advice and I didn't have to strictly adhere to it. I figured I could continue with my unhealthy eating habits. Then I asked what would happen if I didn't effect this change. She said I was at risk of a heart attack, stroke, high blood pressure, and in the extreme case, death.

She couldn't have been any more emphatic. I walked out of her office determined to effect a total lifestyle change – cut the fat in my body and reduce my intake of harmful substances.

Nigerian obesity

In many ways, Nigeria is also at this stage; the country is obese. She consumes needlessly things that add little value. Her overheads are over-bloated, and she is consuming the wrong kind of economic supplements. Nigeria needs a total lifestyle change – a radical approach to financing development and spending of public resources is needed. Failure to do this will result in a possible heart attack, stroke and possibly death.

Going by Nigeria's current year (2015) federal budget, 70% of its revenue is projected to be used on recurrent expenditure. This will include things like travel cost, salaries for a huge number of civil servants (many of whom are not engaged), vehicle purchases, office stationaries, out-of-station allowances, hotel accommodation costs and the likes. Of course all these items are meant to ensure that the machinery of government is working well so that it can deliver service to its citizenry. However, when the machinery of government seems to exist just for itself, consuming the dwindling resources and showing little results for it, then this becomes a problem.

Global tightening

Recently, the Saudi Arabian government announced cuts to its 2015 budget and it is working to review spending in its 2016 budget. The country is reconsidering spending on items like fuel subsidies, new car purchases and other items that the government can do without. Its Finance Minister, Ibrahim Abdulaziz Al-Assaf, is quoted as saying that “unnecessary expenses” would be reduced.

The United Arab Emirates, the Oganisation of Petroleum Exporting Countries' (OPEC's) third biggest oil producer and the Arab world's second biggest economy, has moved to deregulate local fuel prices and remove subsidies which will save the gulf state about $29 billion annually.

The spending cuts by the Saudi and UAE governments were followed shortly by that of the Angolan government, which recently declared that it would cut spending in 2015 by 50% in response to the oil price slump. All these cuts have not been entirely arbitrary; they have been brought about by a drastic and uncontrollable fall in these countries' revenues.

Governments, the world over, are rethinking their model of operation, and Nigeria should be no different. Nigeria needs to place discussions on reducing wastages and diversifying revenue sources at the centre of national debates.

Recommended treatment

The issue of cutting the fat in government budgets and reducing the amount of wastage in governance is certainly on the front burner of the American political system. During a recent interview, U.S. Republican presidential candidate, Ben Carson, spoke about the need to reduce the cost of governance in America and the “enormous amount of overlap and inefficiency that needs to be gotten rid of.” The United States currently has approximately 4.1 million federal employees and about 645 government agencies and sub-agencies. Ben Carson has a number of recommendations which the Nigerian state can incorporate. For instance, he advises government agencies to commit to a particular percentage cut in their annual budgets over a period of time. He also advocates not replacing civil servants when they retire.

A number of years ago, the former Governor of Central Bank of Nigeria, Sanusi Lamido Sanusi, advocated a 50% reduction in federal civil service workers. His premise was based on the fact that the country would not have enough funds to spend on social services if about 70% of its budget was spent on payment of salaries and entitlements. He also challenged the government to stop investments on infrastructure that could be concessioned to the private sector. He questioned why the country needed 109 Senators and 360 members in the House of Representatives to make laws. He was vilified by a number of people for making those comments. However, it's imperative that we revisit those suggestions and others that will help reduce the amount of waste that the system currently carries.

Other areas of reducing fat and wastage include cutting down the number of federal agencies in Nigeria. There are many overlaps in the system which can be eliminated. Furthermore, many of these agencies can co-locate or operate from the same buildings. The current practice whereby some federal agencies have huge buildings in some locations (some of them lying idle) is not the most efficient use of these assets. Some of the agencies need to begin to share services. The buildings that are not fully utilised can be let out or sold, thereby increasing government earnings.

Some functions of these agencies can also be outsourced. Any function that doesn't have to do with core regulation can be farmed out to the private sector in a mutually beneficial arrangement. Even areas that have to do with core regulation, can still be outsourced under special arrangements. For instance, the Indian micro finance banks are supervised by a private agency in conjunction with the Reserve Bank of India.

In addition, there also needs to be a centralization of services and processes and movement to more modern bidding and procurement practices. A simple case in point would be the number of travels that officials of all the federal agencies and parastatals embark on in a year. The country should throw the process of buying tickets, making hotel reservations, sourcing of foreign exchange and the likes to a competitive tender that ensures that the country gets the best value and benefits from bulk purchases. It can then replicate this in other areas where bulk purchases are made.

Critical lifestyle-change

Some of these suggestions and proposals might seem radical and revolutionary, but the situation we find ourselves and the amount of fat we have accumulated calls for novel and radical ways to trim the fat and essentially effect a lifestyle change. Failure to do this will inevitably lead to a system collapse.

We've looked at one side of the coin, which is reducing waste, and cutting fat. The other side of the coin is the diversification of government sources of revenue. The most obvious lever to pull in this regard is to get as many individuals and businesses in the tax net. Nigeria's tax-to-GDP ratio of 12% is one of the lowest in the world. We need to look at creative ways of bringing people in the tax net. One recurring suggestion is to give tax rebates and tax breaks to small and medium-scale enterprises and start-ups. This would encourage more people to start and run businesses; it would also enable us to get up-to-date information on businesses and a steady tax income once their tax breaks have expired.

Whilst these suggestions are not exhaustive, they do give us a possible framework and a starting point to begin the conversations and journey toward effecting a radical lifestyle change in the financing structure of the Nigerian economy.

We need to be obsessed with ways to cut the fat, reduce the waste in the system and diversify the economy. Failure to do this will leave the economy in a bad shape, and susceptible to swings in the international price of oil.

How have I been faring with my own lifestyle change? I'll give an update at a later time.