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See Peter Obi’s guide to cutting cost of governance [must read]

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Ex-governor of Anambra State, Peter Obi outlined guides whereby federal & state govts could cut cost of governance and improve their respective economies

In the following analysis derived from his famous speech at the Platform on October 1, 2016, former governor of Anambra State, Mr. Peter Obi outlined guides for federal and state governments to cut costs and improve their respective economies.

The excerpts read in part:

Expected revenues for 2016 from both the States and FG is N7.2tn, while expected expenditure is N11.4tn, leaving a deficit of N4.2tn.

They will tell us today that Nigerian debt to GDP is 20%, and is small but this 2016, FG will use 38% revenues for debt servicing.

Because FG revenue is not enough, they have used 51% of revenues for debt servicing by June 2016, and they are still borrowing more.

You will hear words like we are going to spend our way out of recession, but the question is, what are you borrowing for?

The only way to come out of a recession is to spend for growth and you can only do this either from savings or borrowings.

There is nothing wrong with borrowing, but the question is whether you are borrowing for growth or borrowing for consumption.

The fear is that we are borrowing for consumption because we can’t see what we used the past borrowings for.

When you borrow for consumption when you have no savings, you are headed for disaster.

Japan has the highest debt to GDP at 246%, but also has the highest net asset of any country in the world with $1.33tn in savings

Greece has 180% debt to GDP but because they didn’t have money, they collapsed because they have no savings, that is the crisis we face in Nigeria.

I was against giving bailout funds to governors without first asking them to tell us what they are doing.

It is wrong of us to settle the bill of a drunk while he is still in the bar, he has to come out of the bar first and give account of what he has drunk.

Out of the N11.4tn expenditure expected to be spent this 2016 by government, the States will spend N5.4tn.

Out of the N5.4tn to be spent by states this 2016, we can save N1tn, and at least they won’t have to borrow that.

Out of the N5.4tn to be spent by States this 2016, 12-15% is used for running the Office of the Governor, that is between N600bn-N800bn.

If the cost of running the Office of Governor of States is reduced to 2-3% from 15%, we will save up to N450bn this 2016.

If states decide to do competitive procurement, they will save another N450bn out of the N5.4tn they want to spend in 2016.

Between cutting the cost of running Office of Governors and adopting competitive procurement, states can save N900bn.

If states decide to do away with the unconstitutional Office of First Lady which adds confusion, each state can save N2bn each (N72bn)

Most states have an average of 6 bullet proof vehicles each, and at N100m per vehicle and if you x by 6 x 36, it comes to N21.6bn.

Most states have an average of 6 bullet proof vehicles each, but this can be reduced to 2 bullet proof vehicles per state.

N14.7bn can be saved from states reducing the number of bullet proof cars to be bought from average of 6 each to 2.

The average government house in a state has about 25 jeeps with each costing N35m, which comes to N875m per state multiplied by 36 (N31.5bn)

If each state government house reduce the number of jeeps from 25 to 8, states will save about N15bn.

State governors convoys do not need dispatch riders, each of the machines cost N15m with most states having 8 each, which can save N3bn.

Traveling expenses of each state governor is N600m yearly multiplied by 36, this can be reduced to N200m each saving N14.4bn.

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