Monday, September 01, 2003

Pension Liabilities in Nigeria

Here's a story that goes to show that unfunded pension liabilities aren't just a problem for European governments:

Constance Ikokwu

Despite efforts being made by the Federal Government to mop the pension backlog, about N2 trillion ($15.2 billion) is still being owed workers, said Professor Julius Ihonv-bere, a presidential adviser on policy and programmes monitoring.

Also, the recent reforms embarked upon by the Federal Government may have reduced the cost of running the administration by about N50 billion in the past 18 months through the "Due Process Mechanism," a system aimed at recovering money from wasted contracts.

Ihonvbere made the disclosure yesterday in Enugu while delivering a lecture titled: "The Obasanjo Second Term in Office: Reinventing and Repo-sitioning Nigeria for Growth, Stability and Development" at the on-going 2003 annual general conference of the Nigeria Bar Association (NBA).

He said the Due Process Mechanism introduced by the Presidency has ensured that wasted monies are put into capital development, while regretting that greedy contractors, politicians and bureaucrats have milked the country dry over the past decades. He said the recovered money has been channelled into education, water supply, health services, roads, technology and industrial development.

Ihonvbere also disclosed that the monthly pension bill of the Nigeria Railways which stands at N250 million and the monthly wage bill which stands at N210 million is a source of worry to the Federal Government. He added that the income from the corporation is a paltry sum. He also assured that the contributory scheme which will be sent to the National Assembly as a bill will "get the ball rolling."

The special adviser said major nations of the world built their structures and cities from pensions funds that are guaranteed and invested properly, while saying that Nigeria will do the same thing. He criticised politicians, businessmen and other Nigerians who evade tax and those who carry about forged tax payers. "This is ungodly and unpatriotic," he noted.

According to him, the fight against waste has been quite successful as wastage incurred through public officials has been curbed. He disclosed that the former Senate President Anyim Pius Anyim returned 38 cars to the government when he left. And over 78 officers and countless aides attended to him alone. He said there were over 10,000 policemen serving as orderlies to public and private citizens and that government will henceforth no longer pay for maids, drivers, personal assistants, and security guards of public officials. He said some individual and top government officials even had over 14 official cars, thereby constituting a problem whereby over 75 per cent of income is spent on overheads.

To give an idea of how much of a burden the $15.2 billion in pension liabilities is to the Nigerian government, keep in mind that Nigeria's entire GDP is estimated at about $35 billion (unadjusted for PPP). Given the sheer level of waste that goes on in the Nigerian bureaucratic apparatus, I'm willing to bet that the real proportion of spending that is squandered on useless activities is more like 90 percent. When this sort of gross mismanagement is going on, is it any wonder that first world governments look sceptically upon giving aid or cancelling old debts? What on earth does a "Senate President" need 38 cars and 78 officers for? I'll bet that even the President of the United States has nowhere near that many vehicles at his personal disposal, and he's only head of the wealthiest country on the planet!