Nigeria's Buhari Said to Approve U.K.-Style Cost-Cutting Arm

  • Efficiency group to report to Finance Minister Adeosun
  • Unit is part of plan to bolster growth, support budget

Nigerian President Muhammadu Buhari approved the creation of a waste-cutting unit within the finance ministry to bolster the government’s budget position and an economy battered by sliding oil prices, a person with knowledge of the matter said.

The group will report to newly-appointed Finance Minister Kemi Adeosun and be led by Patience Oniha, a director at Nigeria’s Debt Management Office, according to the person, who asked not to be identified because the details haven’t been publicly announced. It will also include Kunle Elebute, a partner at auditing firm KPMG, Seyi Kumapayi, the chief financial officer of Access Bank Plc, and Alhaji Kabir Mohammed, the former head of the Institute of Chartered Accountants of Nigeria, according to the person.

The so-called efficiency group will be similar to the U.K.’s Efficiency and Reform Group and will aim mainly to curb overhead expenditure, such as travel and entertainment, across all departments of the federal government. The ERG sits under the cabinet office and tries to save money by pooling suppliers to the U.K. government and ensuring projects are within budget and completed on time.

Slower Growth

Overheads accounted for 10.5 percent of total government spending in the first half of 2015, almost double what was put toward capital projects such as building schools and roads, according to the central bank. Buhari has said that improving Nigeria’s dilapidated infrastructure is vital for increasing economic growth.

Africa’s largest crude producer is reeling from plunging prices for oil, from which it derives two-thirds of government revenue and 90 percent of export earnings. Growth is set to slow to 3.3 percent this year from 6.3 percent in 2014, according to a Bloomberg survey of economists. That would be the slowest pace since 1999.

The unit will also work with Adeosun to stop state companies and agencies withholding money meant to be paid to the finance ministry as part of a broader plan to enable the government to increase next year’s budget and stimulate the economy, the person said.

While according to the constitution Adeosun is meant to present the budget to lawmakers, Buhari’s creation of a separate ministry of budget and national planning, headed by Udo Udoma, means she might not, according to the person.

Spending Boost

Nigerian Vice President Yemi Osinbajo told ministers this month that the government will consider raising spending in the 2016 budget by 56 percent to as much as 7 trillion naira ($35 billion), according to a person who attended his presentation.

“We think that the way out of this, what some have described as an impending recession, is actually to spend rather than to cut back in any way,” Osinbajo said separately in an interview last month.

Marshall Gundu, a spokesman at the finance ministry in Abuja, said in a mobile-phone text message that the group was being set up and declined to give more details. Oniha referred questions to the finance ministry. Kumapayi said by text message that his role would be part-time and that he would remain as Access Bank’s CFO.

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