Mrs. Kemi Adeosun, the Minister of Finance, has taken in her stride the job of managing the nation’s finances at a time of great financial strain. While national revenues have more than halved due to the steep decline in global oil prices with basically not much savings to fall back on, recurrent expenditure is pretty much same and the need for increased capital expenditure is ever present.

It is largely up to her to drive efforts at making up for the shortfall and providing the funds required to keep government running, fund a huge infrastructure deficit and finance the electoral promises of the Buhari administration amongst which is the N5000 cash handouts to about 25 million jobless Nigerians.

The spirited plans of the heads of top revenue generating agencies like the Federal Inland Revenue Services, FIRS, the Nigerian Customs and the Nigerian National Petroleum Company, NNPC, to expand the revenue base and explore smart ways of generating more revenues are commendable and if aggressively followed through will make appreciable difference and give boost to revenues. From the surveys done by several analysts and professional bodies, there is sufficient evidence and statistics to show that by simply strengthening tax administration, getting more people and companies to pay taxes as at when due, the government can successfully double its   revenues from taxes.

However, even if the efforts succeed in ramping up revenues to pre-crisis levels or even outstripping earlier revenue thresholds, that is not necessarily a guarantee that things would in practical terms, get any better in terms of real value for money. Simply increasing revenues is not enough if the revenues are not judiciously applied to areas with the most capacity to impact public life. There is always an opportunity cost to money, an area where it is most needed.

It is against this pressing need for prudent allocation of scarce resources that the establishment of an Efficiency Unit (E-Unit) by the Finance Minister is significant.

Nigeria at such a time as this seriously needs to maximise the value it can get from every single amount of revenue it gets. We simply cannot continue in the culture of waste and inefficiency. That is a recipe for exacerbating an already bad situation. The E-Unit is one strategic way to make strong impact at a time of serious financial challenges and dwindling revenues.

It is a brilliant, strategic and logical first move. Without first strengthening the system and closing out instances of waste, even if more money is brought in, not much will be achieved in the end. In fact, we are where we are not really for the lack of money, but largely because of the inefficient, wasteful application of our resources. Building a culture of cost consciousness, removing duplicate expenditure items, completely cutting out irrelevant expenses and refocusing money towards areas of high impact is the best possible way to deploy public sector funds. And it is a good thing that the Adeosun is leading the charge in this direction as a first major step as Finance Minister.

According to a statement from the Minister, the E-Unit will be established within the Ministry of Finance to “ensure that every single naira that government spends is necessary and that all expenditure represents the best possible value for money. To do this it will work across all MDAs to identify and eliminate wasteful spending, duplication and other inefficiencies in the system so as to enhance general efficiency and to promote a culture of cost consciousness across all areas of government”.

Bottom-line, the aim of the E-Unit is to reduce cost of governance by ensuring that wasteful expenditure is cut out and more money is freed and deployed towards financing strategic, growth enhancing projects that will create jobs and impact on Nigerians. According to the Minister “we must deliver more, but spend less”.

The E-Unit is designed to use the scientific methods of analysis to review overhead expenditure with a view to benchmarking costs, identifying wastage and curbing inefficiency. Considering the high skill set that will be involved to align the project with international best practices, implement the change program, and train civil servants to keep it going, the project will draw upon the knowledge of private sector players to complement.

The key focus areas of the E-Unit is the Personnel and Overhead Cost Segments which constitutes a large chunk of the burgeoning recurrent that takes over 70% of annual budgets. According to the 2015 budget total, overhead estimate was N360 billion, representing 8% of the total budget, while personnel costs together with pensions amounted to N2.172 trillion, representing 48% of the total expenditure budget. This is clearly unsustainable and there is no way government can make real progress in the area of infrastructure development if this figure is not pruned down.

In the area of personnel costs, the E-Unit will include continuation of the Integrated Payroll and Personnel Information System, IPPIS, rollout which uses technology to confirm the authenticity of pensioners and salary earners. The IPPIS system has been deployed in over 100 MDAs and has led to the discovery and elimination of over 60,000 ghost workers from the federal payroll saving the government an estimated N140billion.

The E-Unit is to aggressively push through a full compliance by all MDAs within the shortest possible time so as to totally eliminate ghost workers from the payroll and any cases of sharp practices.

On overheads, the E-Unit is to undertake a programme of reviews of common items of expenditure across all areas of operations to include printing costs, stationery, motor running costs, real estate, Information Technology (IT) services, and telephone charges amongst others. The E-Unit’s focus on overhead and Personnel related costs will complement the efforts of the Due Process Office which has largely concentrated on contract related expenditure.

The Unit will be coordinated by a Supervising Committee (SC) which will comprise of government officials and three members from the private sector who have chosen to donate their time without fee towards making the initiative a success. The SC will be chaired by the Minister of Finance, with the Head of Service, Accountant General of the Federation, Auditor General of the Federation and Director of Budget as members.

The three members from the private sector include Alhaji Kabir Mohammed – Former ICAN President, Mr. Kunle Elebute – Partner KPMG, Ms. Seyi Kumapayi – Chief Financial Officer, Access Bank.   The project is to be led by Ms. Patience Oniha, an experienced Chartered Accountant, who had worked with Citibank and Standard Chartered Bank is currently working as a Director with the Debt Management Office.

The Efficiency Unit initiative is a tried and tested solution to cutting down government spending and has been deployed in several other advanced countries like the United Kingdom and the Republic of Ireland   with the sharp drop in international oil prices, countries like Mexico, Brazil and Thailand are currently undertaking similar reviews with a view to cutting government expenditures and to more efficiently manage their dwindling resources.

Marshall Gunduis Director (Press), Federal Ministry of Finance Abuja.