Amid calls to raise the national minimum wage, reports that civil servants may soon get a pay increase should be good news. Salaries in the national public service were last reviewed in 2010 when the consolidated salary structure was raised by over 50%, followed by a national minimum wage increase in 2011. Since then, prices have skyrocketed, and the naira has plummeted; it would be reasonable to expect salaries to rise as well.
Paying civil servants more money makes sense economically, too; if public sector pay is paltry compared to private employers, then the government will lose out on the best talent. However, a look at the Nigerian government's finances indicates that without broader payroll reforms, a civil service wage increase could do more harm than good.
Wage Delays, Work Deficiencies
The Nigerian government already struggles to pay its workers, and a pay raise would only make this worse. Just last year, several states owed multiple months, and even years' worth, of salaries and pensions, despite taking loans from Aso Rock. The Federal Government itself had to borrow ₦473 billion in 2014 to pay salaries.
This trend pre-dates the 2014 oil price crash. In January this year, federal civil servants were finally paid a backlog of salary increases that they had been owed. Even when oil prices were above $100 per barrel, the government did not fulfil its payroll obligations.
These delays in salary payments have a significant negative effect on the efficiency of the civil service. When public servants do not expect to be paid on time, they pick up side hustles to make ends meet – some during work hours, or outrightly demand bribes. It is easy to see the broader impact on society: public school teachers not showing up to work, absent doctors in government hospitals, and businesses unable to obtain permits or licenses because "oga is not on seat".
Promising public servants more money would only make things worse. Higher salaries mean a larger wage bill that the government may be unable to pay, therefore repeating the cycle. Once a culture of inefficiency is established, it becomes difficult to dislodge even when salary payments return to normal. If workers expect that they won't be paid on time, they will dedicate their efforts to their side-hustles instead.
Why does the government fail to pay salaries? The easy answer would be corruption. "Mainagate", which featured over ₦800 billion allegedly paid to non-existent pensioners and ₦5 billion awarded in fictitious contracts, is only the latest in a series of payroll fraud and embezzlement scandals that have plagued Nigeria. Perhaps, this is why headlines on civil service reform typically focus on the problem of ghost workers and how to eliminate them.
But, corruption aside, we must also consider the likely reality that Nigeria is saddled with an administrative machinery it cannot afford. Since 2011, combined personnel costs for all three tiers of governments have exceeded ₦3 trillion each year, much more than is typically budgeted for capital expenditure.
Payments to employees have taken up 25-37 percent of total spending at the federal level, 19-25 percent for the states, and more than 60 percent of local government spending. The opportunity cost is the investment in key infrastructure and social services that could lay the groundwork for many years of development and poverty alleviation.
A large civil service is not necessarily problematic. Money paid to government workers should make its way back into the economy as they purchase goods and services from Nigerian businesses. Moreover, many rich countries have large public sector wage bills to support the services they offer to citizens. Denmark, ranked in the 99th percentile on the World Bank's 2016 Government Effectiveness index, spends more than 30% of its annual budget on its public sector wage bill. But the fact that Nigeria was in the 13th percentile on the same index indicates that we are not getting our money's worth from the public service.
The deficiencies in our country's public administration are not just relative to other countries. SERVICOM is a federal government initiative created to monitor and improve service delivery in the public sector. Every year, the SERVICOM office evaluates a selected number of government offices and issues them a rating based on how well they serve the public. Of all 233 evaluations conducted since 2006, only the Federal University of Technology, Minna received up to 70%, while most institutions have scored below 50%.
Unfortunately, these evaluations have had too little impact on public service delivery, perhaps because the initiative does not have formal legal backing.
The situation at the state level is not much better. For every ₦1000 spent on personnel costs in 2017, the average state generated just ₦263 in revenue. Borno and Jigawa generated less than ₦100, and only Ogun, Kwara, Rivers, and Lagos generated more than ₦1000.
Altogether, Nigeria is faced with three problems: too many civil servants are underpaid, but we cannot afford to pay them more, and what we do pay doesn't buy us much. Clearly, promising pay raises and chasing ghost workers will not solve these problems. This is a strong argument against paying civil servants more – if public sector pay is increased, the clamour for public sector jobs will only rise and so will the government's temptation to hire beyond the country's needs or means to pay.