Anambra State governor, Charles Soludo, says he has not received salary since he took office as governor two years ago, arguing that elected officials have to start earning minimum wage, while highlighting the urgent financial crisis facing Nigeria.
Soludo who spoke on Wednesday at a special edition of The Platform, an event organized by The Covenant Nation to promote national development, emphasised that Nigeria is financially strained.
He pointed out that Nigeria’s economic woes are exacerbated by the extravagant lifestyles of government officials, which are sustained at the expense of the nation’s wealth.
Soludo proposed that these officials should be paid the minimum wage to understand the harsh realities faced by ordinary citizens, stressing that the current system is in a state of denial about the nation’s financial condition.
“Let’s come clean and straight with Nigerians. Nigeria is very poor and broke but the lifestyle of government and government officials does not show it, especially with the obscene flamboyance in public display,” Soludo said.
“The poor are hungry and impatient, let’s not annoy them more with our insensitivity.
“In this case, I agree with reverend father Mbaka, who said elected governors should also earn minimum wage. I agree that we should be paid that so that we can feel that as well.
“In Anambra, I have not received a kobo as salary since I assumed office. I have donated my salary to the state.
“It is symbolic. It is not much. I think generally, the system is in denial. There must be some signaling, it is just the symbolism of this.”
Soludo called for a new code of conduct for public officeholders to enhance fiscal prudence while performing the core duties for which they were elected.
“That is why I proposed reinventing the new code of conduct for public officers,” he said.
“For the federal government, the actual projecting revenue comes to about N6,160 per Nigerian, per month.
“For the states, except Lagos and a few states, most states have revenues amounting to less than N3,000 per resident, per month.
“It is from this shares per citizen that we are expected to provide all the infrastructure, debt service, pay salaries and pensions, build schools and provide everything.
“For each of our wasteful spending, let’s be conscious about the fact how many citizen share we are squandering. Once we lose this consciousness about the public trust we bear, the society dies irredeemably.”
Read Full Speech Below:
Full text of remark by Gov Charles Soludo at The Platform; June 12, 2024; Lagos
I: Introduction
Happy Democracy Day Nigeria! Many thanks to Senior Pastor Poju Oyemade and Convener of The Platform Nigeria for the invitation and for keeping faith in providing this Platform for national dialogue. I am glad to be here again after five years.
This year Nigeria marks 64 years as an independent country and 25 consecutive years of democratic experiment in the 4th Republic. Within this period, we have professed to practise democracy and a free market economy. It is indeed a fitting period to undertake an evaluation of the journey so far.
In 2005, I delivered the National Democracy Day Lecture organized by the Federal Government entitled “The Political Economy of Sustainable Democracy in Nigeria”. Some 20 years later, I am here— on another Democracy Day Lecture, to discuss “Democracy and Free Market Economy”. As I perused through that lecture two days ago, I was struck and saddened by the fact that the key theses and recommendations of that Lecture are even more relevant and urgent today. Over those past 20 years, we have made so much efforts but still largely going in circles as a nation.
In the brief remarks below, I will argue that we need democracy and free market economy as two sides of a vehicle for maximizing liberty, freedoms, security, prosperity and happiness of the citizens. Neither democracy nor free market economy will endure if they don’t deliver these objectives. We will argue further that our democracy faces an existential threat of a potentially unsustainable economy, and we — all Nigerians– must brace up to save and sustain it.
Disclaimer: I am a serving State Governor and thus part of the governing elite. At a time when State Governors have become easy scapegoats for everything wrong in Nigeria, I will, by association, also take responsibility. It is not a good time to be a Governor in Nigeria. I know that many of us in government love our country to death and are spending sleepless nights trying to fix it within the permissible boundaries of our operations and resources, but here is not the place to offer excuses or defence. Furthermore, I have access to provide detailed advice and therefore won’t play to the gallery by attempting to advise on the pulpit (I deliberately resist a lot of invitations to speak on national public policy). Rather, I will try to speak as a citizen by calling fellow citizens to action— since the challenges are too big to be left to politicians or governments alone.
II: Symbiotic Relationship Between Democracy and Free Market Economy
In 1980, Milton and Rose Friedman published a book “Free to Choose” in which they espoused the symbiotic relationship between democracy and free market principles. Both are two sides of the same coin—underpinned by the principles of choice, freedoms, rule of law, and property rights. In operational terms, democracy is a form of civilian-led governance in which all citizens have fundamentally equal rights, votes, and privileges; where citizens enjoy liberty and freedom; where the ultimate legitimacy of actions, choices, appropriations and decisions rests with the citizens’ supreme power, or through their legitimate representatives elected by fair ballot”. Sustainable democracy on the other hand is one that stands the test and effusion of time; grows in basic legitimacy and acceptability irrespective of the political party in power; and yields dynamic dividends of justice and equity, good governance, peace and basic freedoms, rapid economic development; and promotes and protects private enterprise and property rights.
Given the few minutes allotted to my reflection, I won’t waste your time with a long treatise on the history of economic or political thought regarding the nexus between democracy and free market economy or the debate as to which political cum economic systems produce superior socio-economic and political outcomes. The jury is still out on such debates. The textbook laissez fair society or extreme free market economy hardly exists practice.
For those of us who value liberties, freedoms, voice/participation as ends in themselves, democracy (with all its imperfections) and market economy (with all its flaws) remain the best frameworks to organize human society, especially for multi-ethnic, multi-religious societies. Societies under the alternative extremes of dictatorship and communism still evolve or pretend to practise some doses of democracy and market economy. It needs to be emphasized however that democracy and market economy are dynamic and permanent work-in-progress, requiring constant contestations among interest groups in the struggle towards a more perfect society.
When we hear a former president of America claim that the election that ousted him was “rigged” or “stolen”, it is a reminder that even after over 250 years of democratic experiment, it remains a work in progress. On market economy, where a society is in the spectrum (between extreme laissez fair and complete state control) depends on the dominant ideology regarding the politics of wealth distribution and hence the role of the state versus markets in resource allocation. In Nigeria, it is fair to assert that there is an elite consensus that in broad terms, democracy and market economy are preferred systems, albeit that both require fundamental reforms especially as we muddle through politics without ideologies. There are still residual debates as to the kind of democratic or free market arrangement that will optimize the welfare and happiness of the citizens. Again, the jury is still out.
It needs to be emphasized that whatever intrinsic values bestowed by democracy, they mean little to the woman who has no food to eat or place to sleep. The state of the economy is therefore the determinant of enduring democracy, and for most people, democracy is a key pre-requisite for sustainable economic transformation. Democracy and, indeed, any form of governance must deliver tangible social and economic benefits to the generality of the citizens to be credible and sustainable. In a seminal article on “What Makes Democracy Endure” Prezeworski, etal, 1996, (Journal of Democracy, Vol.7, no.1, pp.39-59) found an empirical correlation between economic strength and sustenance of democracy:
“Once a country has a democratic regime, its level of economic development has a very strong effect on the probability that democracy will survive… Democracy can be expected to last an average of about 8.5 years in a country with per capita income under $1000 per annum; 16 years in one with income between $1000 and $2000; 33 years between $2000 and $4000, and 100 years between $4000 and $6000… Above $6000 democracies are impregnable and can be expected to live forever. No democratic system has fallen in a country where per capita income exceeds $6055”.
The above quote should make every Nigerian to pause and ponder. Yes, the empirical evidence might not be destiny. But if the correlation is as strong as stated above, then its predictive power implies that with Nigeria’s current per capita income of about $1,200, the sustainability of democracy in Nigeria will require an extraordinary effort.
III: Chequered Journey So Far: Making Progress While Standing Still
Let’s admit a fact which most Nigerians don’t seem to appreciate. Nigeria is a very poor country, and its public finance is broken. This admission is critical to any reasonable discourse on the road ahead. Space and time won’t permit us to provide full details.
For over 50 years since the first oil boom, Nigeria’s chequered economic trajectory has been largely defined by the booms and bursts in that sector. Right from the President Shagari’s Economic Stabilization (Austerity Measures) Act, 1982, Buhari’s extreme Austerity of 1984-85; the Structural Adjustment Programmes (SAP) of President Babangida (1986-92), the Obasanjo’s National Economic Empowerment and Development Strategy (NEEDS), and then the Buhari’s command and control regime, 2015-2023, Nigeria has been “reacting” to the volatility in the oil sector. Over the past 25 years, the structure of GDP has been fairly diversified but because we literally export nothing else, the forex supply and rates are tied to the chaotic fortunes of oil exports. And so also the value of GDP in US dollar terms: if you artificially keep the exchange rate low, bingo, you have a huge dollar GDP, and any day you can’t sustain the deceit, the exchange rate collapses and so also the GDP in dollar terms. With the re-basing of our GDP, its dollar value soared to $574 billion in 2014— and we became by far the “biggest economy in Africa”, even when FGN since 2010 was borrowing money to fund its recurrent expenditures, and public debt was galloping unsustainably.
In the run-up to the presidential election in early 2015, I published an article in which I warned that whoever won the presidential election would have a pyrrhic victory. I warned that the public finance was broken, and the economy was latently and structurally in avoidable crisis. The last administration chose to play populist politics with the economy (against all advice) by illegally printing more than N22 trillion and amassing public debt as its only way to stay afloat, and keeping an illusion of phantom subsidies—petrol, forex, and electricity. Now the chicken has come home to roost and Nigeria is paying the very high cost of delayed adjustment with escalating inflation, unsustainable debt service payments, depreciating exchange rate, rising interest rate/poverty and unemployment, a largely insolvent public finance, and compressed GDP in dollar terms. Our population continues to grow astronomically while insecurity threatens food security. Today the once “largest economy” in Africa is now the fourth, with dollar GDP lower than in 2010 or less than 50% of 2014, while per capita GDP is now about $1,200 (down from over $2,500 some years ago!). Our dollar GDP has become a highly volatile variable depending on the exchange rate one uses. We have taken many steps forward but seem to be standing still. What a journey!
Let me repeat this point: the size of government (its revenue and expenditure) is too miniscule to move the needle, and the so-called increased revenue due to the subsidy removal is nothing but money illusion.
Consider the FGN 2024 budget of N28.7 trillion (with projected revenue of N18.3 trillion and borrowing of about N10.4 trillion). This is just about $20 billion or 7% of GDP— one of the lowest in the world for a country of about 230 million people or about $83 per capita (approx. $6.9 per Nigerian per month). Compare to Kenya’s 2024 budget of about $31 billion for a country of 54 million (about $574 per capita). But even the N28.7 trillion is largely unrealistic as it would take a miracle to realize the projected revenue of N18.3 trillion (if current trends persist, it would at best raise about N17 trillion), and from where will it borrow the N10.4 trillion with the current state of the money and capital markets? Even at that, the understated debt and non-debt recurrent expenditure total about N18.1 trillion, meaning that at best FGN would still borrow to fund its recurrent expenditure. No mention yet of capital expenditure! In the lucky circumstance that FGN realizes N17 trillion as revenue, this would amount to N6,160 ($4 per Nigerian per month). It is from this amount that it would pay N8.25 trillion as debt service, other recurrent expenditure (including salaries) of N9.92 trillion, etc. It is our estimate that even with zero spending on capital projects, FGN would still borrow more than N2 trillion to fund recurrent expenditure in 2024. Add the new wage bill being negotiated, and the Maths gets more complicated. Capital budget (if FGN can find money to fund it) is merely 2% of GDP—can’t push a needle! Given the humongous infrastructure deficit, the consolidated public sector (FGN and States) capital spending should be at least 10-15% of GDP per annum. Currently, it is less than 5%. Indeed, the entire budget of the FGN is probably less than 30% of what we need to be investing in infrastructure per annum.
Beside the declining size of fiscal revenue (as % of GDP at market prices or US dollar terms), the aggregate receipts by FGN or the States constitute far less than 40% of historical receipts in US dollar terms or real purchasing power terms about a decade ago. By the way, for States the major source of current FAAC revenue is not from oil but VAT and exchange rate variation. For example, we know a State that received about N5 billion per month from FAAC when the exchange rate was about N118 to a dollar (or equivalent of $42.4 million per month)—and cement was a few hundred Naira a bag, while diesel sold for less than N100 per litre. In nominal terms, that $42.4 million today would amount to about N63.5 billion. But that State barely receives N10 billion today but would still need to construct roads/drainages and bridges, schools and hospitals, etc— with cement costing thousands per bag and diesel at over N1,600 per litre. In purchasing power terms, that State can’t buy more than 20% of what it did with N5 billion more than a decade ago. When people refer to quantum nominal values without appropriate scales, it is nothing but money illusion. Money is what money can buy!
As a person, I deeply feel the pains of all Nigerians at these challenging times especially the over 100 million Nigerians who are multi-dimensionally poor. Times are hard. Sometimes I wish that I can give every resident of my state N1 million each to cushion the effects of the hard times. But the reality is that if we were to share all the revenue receipts (FAAC plus IGR) of the state to all the estimated 8.5 million residents of Anambra, no one will receive up to N2,500 per month. It is from this less than N2,500 per person per month that the government will pay salaries, gratuities and pensions, build roads and bridges, invest in health and education, invest in security, tackle menacing erosion, etc. We recently recruited additional 8,115 teachers and over 1,000 medical professionals that will also need to be paid. We are all suffering the rising costs— governments also buy cement, diesel, fuel, bitumen, etc.
In summary, Nigeria faces stringent fiscal quagmire, and even technical solvency challenges. Tax revenue is one of the lowest in the world. Debt has pilled to a level that leaves little headroom for more borrowing (albeit at a very high cost). Yet, the needs of the citizens keep increasing in geometric proportions by the day. At the extreme, the FGN can resort to the easy way out by printing money. Sub nationals cannot. If the FGN resorts to printing of money as done by the last government, every citizen suffers the collateral damages in terms of spiralling inflation, exchange rate depreciation, rising interest rates, etc. Whether and how we finally confront and address the decade-long fiscal and structural crisis will be critical for the road ahead.
IV: The Road Ahead—
This won’t sound nice to some ears but it needs to be stated. President Tinubu did not cause the problem. It took more than 10 years of living in denial and kicking the cans down the road to get to this predictable sorry state. We are suffering the consequences of delayed and misguided adjustments. From a macroeconomic standpoint, the economy that President Tinubu inherited was akin to a dead horse but standing.
But he has the historic duty to mobilize Nigeria to clean up the mess for future generations. There is an emergency, and incremental changes won’t cut it. Intentional systemic disruptions are urgently needed but it requires mass mobilization and ownership by the public. From the tone of public conversation, it does not seem that Nigerians are informed about the magnitude of the crisis or prepared to join the solution wagon. The greatest threat is the conflict between the pressures for short-term populism for electoral purposes versus the medium to long term disruptions required for sustainable transformation. It is the conflict between pressures to be a good politician to win elections versus the demands for statesmanship for the next generations.
To be honest, the foundation for this house is cracked deeply, and the options for papering over the cracks are few. In my 2005 Democracy Day Lecture, I argued that “we now need three things to happen: get the ECONOMICS, the POLITICS, and the LAWS/INSTITUTIONS right, and then trust in God to give us the right people and the courage to implement the agenda”. Space and time won’t allow any detailed elaboration on these. In any case, I have access to share my thoughts on the economy with the federal authorities and won’t do so here. Suffice it to say that fixing the systemic insecurity, broken public finance and economy, broken oil and gas sector, infrastructure and environmental decay, rising social tensions, and restoring hope and confidence of the citizens would require us to try several roads not travelled— thinking and acting without any box!
I believe that President Tinubu (the man who fought the FGN to a standstill over the power of Lagos State to design the local government system of its choice, championed the fundamentals of true federalism 2003-2007, and tamed the Atlantic Ocean) has the knowledge and courage to mobilize Nigeria to cross over the current crossroads. There are no easy or quick fixes, and he needs our collective support.
Literally every sector requires a declaration of State of Emergency. We need working groups on Security; Economy; Oil and Gas/natural resources; food security, etc. Two others that will shape the future are working groups on devolution/building the foundations of a federation; and the Social Contract with citizens to give everyone a stake in the future. Let me make a few remarks on the last two.
Devolution/Building the Foundations of a federation
Going back to the first National Anthem might be a pointer to the fact that our future is in our past. Our founding fathers negotiated competitive federalism as the appropriate framework for Nigeria. Since the military incursion, we have tried hard to develop with unitary federalism and still moving in circles. It is an oxymoron to repeat the same thing and expect a different result. At my last appearance here at the Platform, I argued that Nigeria “can’t build a 100 storeyed building on the foundation of a rickety bungalow”. For years now, discussions around “restructuring”, “devolution”, “true federalism”, etc have refused to go away. Almost all the socio-cultural groups (Afenifere, Ohanaeze Ndigbo, PANDEF, Middle Belt Forum, etc) agree that there is no sustainable future without addressing the issue of Nigeria’s structure. The Patriots recently reaffirmed the same stand. The APC in its 2015 Manifesto identified the obtuse and inefficient Abuja as the constraint and promised to “restructure Nigeria”. Consequently, the same APC set up a Committee on Restructuring with far reaching proposals on fiscal federalism, state police, and even proposed the scrapping of the local government system from the constitution since, according to the APC, no federation has three federating units. (Funny enough, more recently, some people including some APC members are routing for “autonomy of the local governments” which will take Nigeria back many decades on the road to a true federal structure). We have tried to transform Nigeria from Abuja and it has not worked. Let’s try radical devolution of powers and resources to the base and promote cooperative competition and see how far we go. We need to tinker with the fiscal powers of the federal and state governments, devolve much of the responsibilities under the Exclusive List to the States and at least 60-65% of the revenue to the States (of course with each state deciding on the appropriate local government system for it as in every federal system in the world). Why not consolidate the National Assembly into one with no more than five representatives per state? Do we need a National Assembly costing over N300 billion a year to maintain?
What is delaying action? A friend remarked recently that everyone is a federalist until he/she gets to the centre. Well, some of us have been unrepentant federalists before, during and after holding offices at the centre. Nigeria has an opportunity now, with APC (which espoused federalism) controlling both the federal government and most of the states. Truth be told: the road to a new and sustainable Nigeria begins with bold and historic actions on building a competitive and compassionate federal system. Otherwise, we will continue to move in circles!
The Big Tent/Inclusive Society Agenda
This will be akin to a combination of the “New Deal” by President Franklin D. Roosevelt (1933-38); the “Great Society” Programs of President Lyndon Johnson (1965-67) and the European Recovery Plan (“the Marshall Plan”) after the World War II. This will require a fundamental reordering of national priorities to invest massively in social programs (especially health, education and social protections) as well as infrastructure to give everyone a stake in the national cake, thereby securing the future. Chapter Two of Nigerian Constitution on the Directive Principles of State Policy provides a template. It is time to seriously work out a national agenda to make Chapter Two of the constitution justiciable. I am an Awoist and a true progressive on this front. In Anambra, our truly free basic education has raised school enrolment by 18.7% and out of school children now the lowest in Nigeria out of the 36 states plus FCT. Our free antenatal and free delivery services (including free CS operations) for pregnant women in all government health facilities has seen more than 60,000 beneficiaries, with near zero mortality rate. If there was one thing that the Military regimes spent the oil boom on in the 1970s to early 1980s, it was investment in qualitative education, and many of us were beneficiaries. For that roadside pepper seller or hawker, even if we can’t do anything to improve her condition, we must ensure that her children don’t end up like her. That’s how we must build the big tent for everyone and a truly inclusive society. It is the greatest way to break the dynasties of poverty and inequality and groom future stakeholders in the Nigerian project. Without this, soon the rich won’t be able to sleep or walk the street because the poor and excluded are hungry and angry. The resources we generate from the emergency turn-around in oil and gas sector as well as more tax revenues must be reinvested in the people and infrastructure.
Re-Inventing MAMSER and new Code of Conduct for Public Officers
Let’s come clean and straight with Nigerians. Nigeria is very poor and broke! But the lifestyles of governments and government officials don’t show it, especially with the obscene flamboyance in public display. A time of socio-economic strife is not a good time to be in public office. The poor are hungry and impatient and let’s not annoy them more with our insensitivity. For the FGN, the actual projected revenue comes to about N6,160 per Nigerian per month. For the States, except for Lagos and a few others, most states have revenues amounting to less than N3,000 per resident per month. It is from these paltry shares per citizen that we are expected to provide all the infrastructure, service debt, pay salaries and pensions, build schools and hospitals, provide security, etc. Thus, for each of our wasteful spending, lets be conscious about how many citizens’ share we are squandering. Once we lose this consciousness about the public trust we bear, the society dies irredeemably. We are not expecting our public officials to be saints nor are there saints anywhere in the world. It suffices for us never to lose empathy for the poor and always conscious that the resources entrusted with us is their money—not ours! Just that sensitivity is an important beginning. We must be seen to embody the change we preach.
A new code of conduct is required for public officials. Some signalling is required. Perhaps government officials should mandatorily go back to a more secured equivalent of Peugeot 504 of the Murtala Muhammed days…Yes, I agree with Rev Fr. Mbaka that all elected public officials should be paid the National Minimum Wage. In Anambra I have not received a kobo as salary since I assumed office. I have donated my salary to the state. Even the symbolism of it signals our preparedness to sacrifice.
We need to reinvent something akin to the Mass mobilization for self-reliance, social justice and economic recovery (MAMSER) of President Babangida and a new code of conduct for public officers. Both government officials and other citizens need to be constantly reminded of our respective sacred citizen civic duties and obligations, as well as the accountability requirements. We need to break the transactional bargain between politicians and voters that has become a debilitating circus. We all complain about corruption but clap and bless the same public officials when they make a public display of the proceeds of corruption, while the one who does not do so is considered “wicked” or “not generous” or even “useless”. In some sense, the citizens expect and even demand of public officials to be corrupt and those who behave otherwise are considered “insane” or “stupid”. Let’s have this frank national conversation, because we all seem to be culpable, but we must break this cycle to make sustainable progress.
We must rebuild a sense of nationalism and patriotism and reinvent the old slogan of “black and proud”. Let’s mainstream pride in everything Nigerian: lets drive only made in Nigeria vehicles and wear only made in Nigeria fabrics, eat only made in Nigeria foods and drink only made in Nigeria drinks, etc. That’s what we do in Anambra! When you see me always wearing the Akwete fabric, hand-made by the women of Akwete in Abia state, or driving Innoson vehicle as my official car, or wearing the Eagle on Nigerian Cote of Arms on my cap, etc I am proudly advertising that “I am Nigerian and proud”. We must intentionally build a sense of “nation”—not just a slogan but an attitude. We must promote merit-based recruitment in our public sector. In Anambra, we have recruited 8,115 teachers strictly on merit and drawn from about 18 states of Nigeria. The interest of the Anambra child is to be taught by the best teacher in the world, and not by a mediocre teacher from her village. We just appointed permanent secretaries and indigenes of Abia and Osun were among them.
We must drastically cut the cost of governance. In Anambra, “Doing More with Less” is our slogan. Extreme prudence is the reason we are delivering historic results on infrastructure and all other sectors and still refused to borrow a kobo in over two years (State Assembly approved for us to borrow N100 billion since 2022 but we insist that we will only borrow for projects that will pay back). Our budget is restructured with 23% on recurrent while 77% goes for capital spending. We have cut cost of governance to bare bones. For example, it used to cost about N137 million monthly for facility management, and we cut it down to N11 million; we don’t have Office of first lady and no appropriation for that. My wife drives my personal vehicle I came into government with. We don’t do these to impress anyone but out of personal conviction, and knowledge that Anambra can’t afford the waste. Currently, Anambra is ranked among the top five states with fiscal sustainability. We have a target to pay for our recurrent expenditure with IGR so that we can invest FAAC receipts in our future. In sum, we must reorder our priorities if we must maximize value for the people given the paucity of resources. These are some of the issues, in addition to broad citizen civic duties, that the new MAMSER will help to mainstream.
V: Conclusion
Let us now conclude. The twin vehicles of democracy and free market economy are threatened by the challenging economy. As President Clinton once said, “it is the economy, stupid!”. How can we sustain democracy in the coming decades, especially with the estimated 440 million Nigerians in the coming 26 years?
I am an incredible optimist in the potential greatness of this blessed country. That’s essentially why I have persisted in public service and applied for my current job. I believe in the infinite possibilities and opportunities that Nigeria presents. Our youthful population, if unleashed, will definitely conquer the world and the 22nd Century will be Nigeria’s century.
Building the next Nigeria will require a very determined and strong pull—by all Nigerians. It is good to complain, but better to do something positive about it. We must turn the current challenges into opportunities. As I ponder the lamentations and possibilities, I just remembered the song by the late Sonny Okosun “Which Way Nigeria?”— sang exactly 40 years ago in 1984. Though depressing that 40 years after, the song’s lamentations are even more pungent today but its admonition for collective action may yet be the pep we require for a call to action.
Let’s build the greatest black nation on earth, together!
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