The administration of Governor Babatunde Fashola of Lagos State, says it is introducing austerity measures in its bid to pay the N18,000 minimum wage and further deliver democracy dividends. GEORGE OKOJIE examines the circumstances that demand such severe spending cuts by the government and if it could be relied upon by other governors.
For three months, after being re-elected to a second term in office in May, it seemed as if Lagos state Governor Mr. Babatunde Fashola could do nothing drastic to shock its teeming residents , especially the civil servants that gave him an overwhelming victory in the last general polls.
On assumption of office he handled adroitly the problem of state executive cabinet formation by insisting that the race for the highly exalted offices should be a survival for the fittest and by refusing to budge from that position even when the powers that be in the state objected.
For this and other decisions he had taken in the past, the British Prime Minister, David Cameron, remarked when he delivered a lecture at the Pan-Africa University recently in Lagos that the governor had shown what strong and accountable governance can achieve in a democracy, given the major progress recorded during his tenure.
Cameron did not just appraise Fashola’s government during his one-day visit. He spoke on the huge responsibilities of African people to make their government accountable.
He also dwelt on the need for Nigeria to provide the required leadership that can bring about desired growth and development, of which he said African states have respectively been in need since the dawn of their independence.
Cameron cited instances that led him to make a conclusion that Fashola “has shown what strong and accountable governance can achieve”. He pointed what Fashola was doing in building critical infrastructure, which he said, could make life better and enabling in the future. He cited the on-going Eko Atlantic City Project and aptly referred to how Fashola had transformed Balogun Market.
The prime minister only mentioned few cases of socio-economic transformation, which he observed in Lagos metropolis under Fashola’s administration. And these become Cameron’s example of what African states can truly witness in the future under purpose-driven leadership. The kind Cameron said Governor Fashola had provided since he assumed office in 2007.
Now there is problem. The government seems to be enduring the worst financial crisis in its over four years in office. The problem started when the Federal Government approved the sum of N18, 000 as minimum wage in the country.
Ahead of every other state in the country, the state government was quick to announce the sum of N18, 700 as its own standard of the payment of the minimum wage. It did not take people time to calculate that some civil servants may be booted out of their jobs , given the financial burden such payment would bring on the state.
Although Professionals in the state’s public and private sectors were less surprised by the prompt approval by the governor to pay the minimum wage because of the huge Internally Generated Revenue of the state, they were nonetheless indignant about the sustenance of the payment without stepping on toes.
As expected the rude shock came last week when the governor announced some austerity measures as a prelude to some other austere measures to come in the state.
The governor in an executive order announced new austerity measures such as discontinuation of oversea trips for government officials ,Television set, TV decoders subsidy on petroleum products, money spent on frills and jamborees T-shirts, caps food which characterizes functions in the state , car maintenance, among others have been banned in the state.
The executive order dated July 12 sent to the Lagos Head Of Service Mr. Adeseye Ogunlewe , Ministries , departments and Agencies specifically stated that the measures are first in the series of more head racking measures to be introduced by the state government.
The governor who lamented the measure said “It has become expedient for the state government to strictly monitor the way money is spent on governance as the impact of the minimum wage would no longer permit excessive spending by the government.
“The minimum wage has depleted the fund available to the government for social services by N2 billion every month.
“From all computations, the Lagos government will need between N5.5 billion and N7 billion to pay its over 50,000 workers and political appointees against a monthly revenue profile of between N18 billion and N20 billion, salaries will gulp about 40 per cent of the state’s expenditure” .
He continued by affirming that , “The overall impact is that government spending on wages and emoluments have increased to about N2 billion.
“ The implications are that government is deprived of financial resources that were hitherto deployed to the funding of social services such as schools, water supply, waste management security and other amenities which helped to improved the lives of citizens.”
To this end, the governor has also scrapped the grants for supports for private or individual problems or sponsorships , except for very deserving educational and medical causes.
He explained that the austerity measure does not affect bursary and scholarships to deserving students but warned that conscientious efforts would be made to reduce the training of personnel home and abroad.
“While it will be necessary from time-to-time for us to commission projects, there must be a conscious effort to reduce cost related thereto by absolutely cutting down on frills, T-shits, caps and souvenirs and managing the cost of refreshments for guests in a justifiable manner.
“All ministries, departments and agencies must pay more diligent attention to the cost, management and audit of products such as fuel for vehicles and generators including the cost of maintenance and repairs of vehicles,” Fashola ordered.
Since the state is not operating in isolation of other economies vulnerable to global economic crisis , the Lagos financial crisis may be deeper that people think.
Speaking on half year Lagos state budget performance recently , the Lagos state Commissioner for Budget and Economic Planning Mr. Ben Akabueze said the budget performed 62 Percent second quarter and 52 Percent in the first quarter ending up at 57 .3 percent on disaggregation index in half year assessment.
He categorically said the budget perform poorly compared to the feat recorded last year blamed the lapses on some indices which he said were beyond the control of the state government .
As the governor later captured the whole scenario himself when he said, “Of course this is below what we did last year .Many commissioners and Special Advisers involved in the budget implementation were involved electioneering campaign and election process . But we will catch that up as we go on .
“There was general slowdown in national economy . We had increased overheads expenditure in our recurrent expenditure as a result of salary and wage increases .It has gone up to 17 billion that is approximately N2 billion per month .When you add this to the escalating cost of diesel and other expenditure this is the situation you get,’’ Akabueze stated.
He explained that the main priority of his administration in the second term is to conclude the implementation first and in that order to complete all the projects, adding that they would conclude work in the entire project stated in the last administration before opening up a new major areas.
“The electorate voted for continuation that is exactly we must give them. That means we would continue what we have started in term of road infrastructure. We have started construction of inner city roads as soon as the road subsides.
“We have started evaluating how many of the roads to start with ,to know what we want to do. We have started in some part of Victoria Island ,Saka Tinubu , Our immediate environment , Ijesha ,Isolo , Ilasa- Maja , Idiaraba and some parts of Agege . There will be more concentration on inner city roads as we go on.
Fashola said he had also given order for a review of some policies of the state government to cut the cost of running the state , while sustaining the recurrent expenditure and promises to the work force in the state.
The issue at hand right now is that the civil servant are divided on the measures so taken by the government to remain afloat in the turbulent financial deep sea.
While some of the civil servants told LEADERSHIP that the austerity measures were welcome development, others simply dismiss the measures as mere punishment from those at the top.
According to a senior Civil Servant in the state government service, “The austerity measures introduced by the governor will kill the Lagos state civil service. They have been claiming to have the most vibrant civil service in the country. Now that they have removed all the incentives let them watch and see. Who advised him to do such thing . Well let us wait and see”.
For another civil servant the governor had taken the right by stopping the spending on frills in the state, adding that many civil servants were seriously feeding fact on the expenditure.
He told LEADERSHIP that , “Many of these top civil servants are very wealthy . They own many houses in every part of the state. When you look at their pay slip you continue to wonder how the amassed such wealth. Now that the governor have stopped these spending on fake oversea trips, cooking of jollof rice , cap , T- shirts and all kinds of nonsense with which they steal money , they have been deflated” .
The impact of the austerity measures newly introduced in Lagos state may form the policy thrust of so many governments in the Nigeri . As many had before now see Lagos state as an institution where they come to learn the art of governance. Is this the needed measure to solve the impasses created over the minimum wage policy of the government?