The Federal Ministries,Departments and Agencies (MDAs), spent over N825billion in overheads between 2012 and 2014.
The Head, Efficiency Unit, Ms. Patience Oniha, who made this known in Lagos yesterday, said the expenditure represented over 61 per cent of the cumulative Total Overhead Expenditure of N1,353 billion for the review period.
Ms. Oniha said the Unit has carried out an extensive and detailed review of the Overhead Expenditure data of the government for the period and found out that the overhead spending pattern was concentrated on a limited number of items, including travel, maintenance, local and international training, welfare, office stationery and computer consumables
“The Cumulative Expenditure on these five items was N825 billion, representing 61 per cent of the Cumulative Total Overhead Expenditure of N1,353 billion for 2012 to 2014. This means that the average amount expended annually on these five items during this period was N275 billion. The estimate for 2015 showed a continuation of this trend,” she said, adding that the Overhead spending exceeded allocations to capital in all the years reviewed.
She said in furtherance of its commitment to re-prioritise spending and cut cost on recurrent expenditure, the Efficiency Unit is planning to introduce detailed price guidelines to ensure value for money in procurement by MDAs, stating that Ministerial Debit Cards would be issued to reduce the incidence of cash.
She said part of the findings of the review, was the large expenditure on honoraria and sitting allowances, refreshment and meals, books and fuel, among others.
With regards to procurement, which she said has been identified as a major source of potential savings for government, Ms. Oniha said the Efficiency Unit has prepared a list of goods and services which are regularly procured by MDAs, saying by pooling the demand of MDAs, “there will be opportunities to leverage the resultant bargaining power and secure price discounts and other benefits from suppliers.”
She said this strategy will deliver savings and reduce the administrative costs inherent in the current procurement process, which she admitted, “is fragmented.”
She said developed countries, such as the US, UK, Canada and Hong Kong, amongst others, have used this strategy successfully to manage their expenditure, pointing out that within Nigeria, large and diversified private sector organisations manage their procurement in a similar manner. ”As a country, Nigeria should be no exception, she said, adding “more so when resources need to be managed tightly to promote spending on capital projects such as infrastructure.”
She said the Unit has initiated discussions with suppliers of air travel services for the purpose of price negotiation, stating that this expenditure area was prioritised because local and international travel represented the single largest overhead expenditure item in the review period, “with an average of N83 billion spent annually,” stating that this presents a potential savings opportunity of N4.14 billion annually at an estimated price discount of five per cent.
Ms. Oniha pointed to honoraria and sitting allowances as other expenditure items where the Unit has identified potential for cost savings, saying this was one of the top eight expenditure areas with an average of almost N13 billion spent annually.
Ms Oniha assured that, with the support of the Honourable Minister of Finance, Mrs. Kemi Adeosun, she is confident that the Unit will pursue the implementation of its recommendations to deliver cost savings to government, while it continues its engagement with stakeholders in order to achieve its objectives.
