In the just concluded week, the Federal Government (FG) as part of measures to reduce the cost of governance amid its dwindling revenue, announced plans to reduce payrolls, cut down recurring project costs and merge some of its Ministries, Departments and Agencies (MDAs).
According to the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, the President stated that the Salaries Committee should work together with the Head of Service to review salaries and payroll of federal institutions in order to step down on cost.
She stated that FG would also review the mandates of some of its Agencies and Ministries with similar functions with a view to merging them. Federal Government’s move to cut cost, especially recurrent expenditure, appears to be a good one given its budget deficit of N5.92 trillion in 2021 – it planned to spend N13.9 trillion with a view to earning N7.98 trillion in 2021.
In a similar development, one of the Federal Government capital projects, the USD1.3 billion Zungeru hydroelectric power in Kaduna State, was reported to have reached 88% completion level. The new power project is expected to inject 700 Megawatt (MW) of electricity into the national grid when it becomes functional in December 2021.
According to the Minister of Power, Mr. Sale Mamman, the power project which is expected to generate 2,630 GWH annually, comprises a composite dam roller-compacted concrete, asphaltic core rockfill dam, diversion work, spillway and plunge pool, power intake and penstocks, as well as tall race channels.
In addition, the Zungeru works has 330/132 transmission lines evacuating power to the existing grid connecting Jebba and Shiroro power plants.
The project which is being handled by Messrs CNECC Sinohybrid Consortium is being funded by a counterpart financing mechanism, with the Federal Government fully paid up its share of USD309.25 million – having so far collected USD984.30 million from the Exim Bank of China to revamp the country’s power infrastructure.
Elsewhere, the CEO, Pension Fund Operators Association of Nigeria (PenOp) stated that the continued decline in Pension Funds’ Assets since the beginning of the year was mainly due to the falling prices of Fixed Income Securities (FISs) amid rising yields.
He noted that PFAs are currently eyeing other alternative investment options aside from government bonds and treasury bills to boost returns on investment. However, he mentioned that currently, the fund administrators cannot invest in foreign bills as there are regulations to be approved by the government.
According to the National Pension Commission’s (PENCOM) report, the total value of Pension Fund Assets fell month-on-month by 0.41% to N12.25 trillion in February 2021, from N12.30 trillion printed in January 2021.
Further break down of the report showed that most of the pension fund assets were invested in FGN Securities – both bonds and treasury bills; as their share of the total assets rose to 66.37% (or N8.13 trillion) in the month under review, from a 65.92% (or N8.11 trillion) recorded in January 2021.
However, total funds invested in bank placements and commercial papers moderated m-o-m by 1.81% to N1.62 trillion in February 2021 (lowering its share of the total assets to 13.22%), from N1.65 trillion in January 2021 (or 13.40% of total assets) while invested fund in Corporate Debt Securities as a percentage of total pension fund assets stood at 7.10% (or N0.87 trillion) from 6.80% (N0.84 trillion).
While we commend the Federal Government on its move to cut cost amid reducing frivolous expenditures in its budget and merging MDAs with similar functions, it is also imperative for FG to lead by example by reducing its salaries and allowances including that of the Legislatures. With this, we note that more funds would be freed up for capital projects, such as power and road infrastructure that are critical for economic growth.