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EFFECT OF MONETIZATION POLICY ON THE COST OF GOVERNANCE IN THE FEDERAL MINISTRIES OF EDUCATION AND HEALTH IN NIGERIA
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The abuses, misuse and mismanagement of
fringe benefits such as residential accommodation, furniture allowances,
medical trips, motor vehicles and domestic servants among others have over the
years resulted in high cost of governance. This has been reflected in the
increasing recurrent expenditure as against the capital expenditure. Thus,
monetization was introduced to make amends to these abnormalities associated
with the administration of workers compensation in the Nigerian civil service
where the Federal Ministries of Education and Health are integral part. However,
the success or failure of any given policy depends on the level of its
implementation. Policy implementation thus, becomes the bedrock of any policy
assessment and analysis. Personnel compensation could thus, be seen as the
starting point of cost of governance in both public and private organizations.
This is because, compensation package consists of the wages and salaries as
well fringe benefits attached to them. The package constitutes large part of
organisational expenditure. Kurfi (2010) believes that workers compensation
constitutes about 60% of organisational recurrent expenditure. In the same
vein, Obasanjo, 2003 (in Shala2006), claims that, over 60% of the annual budget
goes to recurrent expenditure which is dominated by workers related
expenditure.
In the wake of global reform agenda
towards economic rationality, particularly during the 1980s, most public
organisations resort to the adoption of the newly found bride called the New
Public Management. This "paradigm shift" in the management of public organizations
is premised on the tenets of economic efficiency and market driven ideology.
Thus, concepts such as competition, customer relation, performance measurement,
budget cuts, user charges, leaner government, decentralisation, contracting
out, and among others constitute the basis of the New Public Management
(Osborne and Gaebler: 1991). There is this unanimous decision among scholars
and practitioners of public finance that cost of governance is measured based
on recurrent expenditure (Chigozie, 2013). The argument is that, capital
expenditure impacts more on the economy with respect to employment, investment
and other growth inducing activities other than recurrent spending. In a
similar vein, the Central Bank of Nigeria (CBN, 2005), states that: ― In Nigeria,
costs associated with the running of government have increased dramatically
over the years such that an increasingly reduced proportion of public revenue
is available to support and implement the primary functions of government. The
monetised fringe benefits in respect to federal civil servants are the
residential accommodation, furniture, utility, domestic servants, motor
vehicles, provision of drivers, fuelling /maintenance of transport facilities,
medical treatment, leave grant, meal subsidy and entertainment. These fringe
benefits are converted to cash payment using the basic salaries of workers as
the basis for the computation. In essence, they are calculated in relation to worker
‘s basic salary. The objectives of the monetisation policy as conceived and
expressed by Shala, (2006) are in the areas of minimisation of cost, waste and
abuse of public facilities; reduction of cost of running government machinery;
reduction of the huge rental costs, encouragement of ownership of private
personal housing, promotion of culture of discipline in the use of public
utilities and income regeneration to the government to prosecute capital
projects.
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