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Of Pension and Ghost Workers

Mobolaji E. Aluko, PhD

alukome@aol.com

Burtonsville, MD, USA

August 31, 2003

Some Excerpts:

1. Defence ministry discovers 24,000 phantom names in pensions audit - says Defence Minister Kwakwanso

MORE than 24,000 ghost pensioners were discovered in the recent army pensioners audit by the Ministry of Defence, its minister, Alhaji Rabiu Kwankwaso, has said. Kwankwaso, in an interactive session with the senior civilian staff of the ministry yesterday in Abuja, said that the exercise would be extended to all the departments. He told the officers that the staff auditing was aimed at reducing cost for the government to enable the ministry concentrate more on staff welfare. Kwankwaso said that August salary and pensions would be paid to staff through a pay parade, and that whoever refuses to show up in person would be considered a"ghost worker."

2. Pension Backlog Stands at N2 Trillion - says Presidential Advisor Julius Ihonvbere

Despite efforts being made by the Federal Govern-ment to mop the pension backlog, about N2 trillion is still being owed workers, said Professor Julius Ihonv-bere, a presidential adviser on policy and programmes monitoring.....

Ihonvbere also disclosed that the monthly pension bill of the Nigeria Railways which stands at N250 million and the monthly wage bill which stands at N210 million is a source of worry to the Federal Government. He added that the income from the corporation is a paltry sum. He also assured that the contributory scheme which will be sent to the National Assembly as a bill will "get the ball rolling."

3. NIGERIA: The spectre of ghost workers - The Guardian

At a recent appearance before the Senate Committee on Finance and Appropriation, the Accountant-General of the Federation, Chief Joseph Naiyeju, reported that following a manpower verification exercise conducted by the Federal Government, personnel in the employ of the government were found to be 215,000 not the 255,000 which were in the official records at the inception of the Obasanjo administration in May 1999. This leaves a difference of 40,000 names, which in all likelihood, are non-existent. The Minister of Finance, Mallam Adamu Ciroma has also complained of difficulties being experienced in the payment of salaries to government workers because ministries do not have accurate figures of the staff strength of their departments. The Lagos State government has similarly announced the discovery of 4,000 ghosts in its "employ".

INTRODUCTION

In the Nigerian Federal civil service, according to a recent statement (July 2003) by Chief Ekaette, Secretary to the Government of the Federation, there 268,163 federal workers, 1,448 Federal political office holders, 1,152 members of staff of the Federal judiciary and 469 members of the National Assembly. Since Ekaette also put the total size of non-judiciary, non-National Assembly workers as 996,744, that means that there are also 728,581 members of the Police, the Military, Para-Military and Parastatals. Since the Militar/ParaMilitary is traditionally put at a strength of 80,000, the balance of about 653,581 must be of the Police and Parastatals. Back in May of 2002, a then newly-appointed Inspector General of Police Tafa Balogun boasted that the 180,000-strong police force would be increased in size to more than 500,000 by the end of 2002.

QUOTE

LAGOS: The Nigerian police is to increase its workforce from 180-thousand to more than 500-thousand before the end of the year to fight high crime levels. New police chief Tafa Balogun says President Olusegun Obasanjo has approved the hiring of more officers. Balogun, who took over as police chief last month following the sacking of his predecessor, says 397-thousand new officers will be recruited this year to compliment the current size of 180-thousand. The Nigerian police chief says measures are also being taken to improve the welfare of the badly paid, ill trained and indisciplined police.

UNQUOTE

Assuming that the number of police officers is now conservatively really 400,000, that puts the size staff of Parastatals at 253,581.

Thus, in summary:

Federal Workers - 268,163

Parastatals - 253,581

Federal political officer holders - 1,448

National Assembly - 469

Judiciary workers - 1,152

Military/Paramilitary - 80,000

Police - 400,000

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Total - 1,004,813

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That means that about 1 million workers earn their pay directly from the Federal government, which, out of a population of 120 million, brings that percentage of government workers to roughly 0.85% of the total population.

Now since about 56% on Nigerians are above 15 years old, the percentage of officially employable people (i.e. labor force) working for government is really about 1.5%. However with an unemployment rate of about 30%, the percentage of those employed who work for the Federal government is 2.3%. Personnel costs of this tiny fraction consume 50-60% of the Federation account budget.

Contrast with the US: With a total population of about 280 million, Federal civilian workers population (agencies) was 2,704,015 in 2001; the military personnel strength was 1,384,812; 79% of the population is of age above 15; 5% unemployment rate in 2001; of total population, employed by Federal government is 1.5%; of the labor force is 1.85%; of the employed is 1.95%. Federal payroll ($10.5 billion) was about 0.54% of federal budget outlay 1,864 billion) in 2001. [Information from Time's 2003 World Almanac]

GHOST WORKERS

Back in October 2000, about 5,000 ghost workers - not pensioners - were discovered among military ranks, according to an "impressed" then Defence Minister Gen. Theophilus Danjuma. Then in April 2001, Chief Joseph Naiyeju, Accountant General of the Federation, reported to the Senate Committee on Finance and Appropriation that the number of personnel in government employ was actaully 215,000 rather than 255,000. The non-existent 40,000 names were ‘ghost workers’.

Now, in July 2003, the Defence ministry ALONE - courtesy new Defence minister Kwakwanso, has discovered 24,000 names in its pension audit.

No wonder a minister once estimated that ghost workers may be costing Nigeria as much as $50 million ( N7 billion ) per month - or N84 billion annually !

Imagine!

I do not know whether any one of you can run your own home and be paying a ghost worker, neither can you run your own private business and be paying ghost workers! In fact, you would be happy for those to be "workers," and yet be "ghosts", because ghosts don't need food, and hence don't need pay.

But not in Nigeria: "ghosts" even seem to need more housing and food than real humans. At the rate that we are going, there may be more ghost workers than human workers in Nigeria. With the upcoming monetisation program, those ghosts will also have their benefits "monetized" - including their housing allowances, despite the fact that ghosts live in "Iroko" and a few other kinds of trees, according to Yoruba traditional beliefs.

PENSION ISSUES

The pension issue is another time bomb in Nigeria, particularly in a situation where there has been no workers' contributory pension all of these years. Even in a country like the US, pension (social security) benefits and their actuarial implications pervade financial discourse in the polity - that is in a country where workers contribute to their own pension, and those pensions are invested in worthy ventures to yield even more money before they are touched.

In Nigeria, We are not only talking about pensions to ghosts, but pensions increased understandably to such new high levels so that the few who can receive it can enjoy a life commensurate to when they retired. The unfortunate result is that these new pensions are now paid in the breach, and there are now many more who have to go completely without.

In light of bastardized Naira, non-conscientious government payment of its contributions into the pension funds, and their insolvency/bad management, there is ABSOLUTELY no magic to solve this pension problem for those who have retired and paid no contributions: it is a hard word to write, but until they ALL DIE, their pensions will be uncertain from month to month, because workers and pensioners alike have to be paid from the same pool of oil money.

EPILOGUE

Nigeria owes international creditors $31 billion - or N4 trillion. It owes internal creditors, including the Central Bank, about N1.5 trillion. It now owes pension of N2 trillion to its citizens. This does not include unpaid salaries - maybe another N1 trillion?

Abuja, we have a problem here!

Luckily, some of those may be "ghost debts" that we will never have to pay, if we knuckle down to find them.

So, the quicker:

1. salaries and allowances of workers commensurate with our national income; and in general concerted financial discipline in ALL ramifications;

2. workers begin to contribute MANDATORILY to their own pension, with encouragement of worker-managed pension plans;

3. MANDATORY savings plans are instituted for workers;

4. information technology is deployed to eliminate the ghost-worker scourge; and those officials that must be aiding and abetting it severely punished for economic sabotage;

the better for the country.

BIBILIOGRAPHY

http://www.dawodu.com/aluko3.htm

Of Salaries, Pension and Unemployment in Nigeria

Mobolaji E. Aluko; March 3, 2002

_______________________________________________________

SOME NEWS REPORTS

ThisDay

August 30, 2003

Defence ministry discovers 24,000 phantom names in pensions audit

Friday, August 29, 2003

ABUJA— MORE than 24,000 ghost pensioners were discovered in the recent army pensioners audit by the Ministry of Defence, its minister, Alhaji Rabiu Kwankwaso, has said. Kwankwaso, in an interactive session with the senior civilian staff of the ministry yesterday in Abuja, said that the exercise would be extended to all the departments. He told the officers that the staff auditing was aimed at reducing cost for the government to enable the ministry concentrate more on staff welfare.

Kwankwaso said that August salary and pensions would be paid to staff through a pay parade, and that whoever refuses to show up in person would be considered a"ghost worker."

"The pay parade is necessary to enable the ministry cut unnecessary costs, and unless something is done on this issue, it will continue to affect all the staff as what belongs to you goes to some individuals", he said. He said that the programme would also assist the ministry in ensuring that salaries, pensions and allowances were not only paid to staff, but also as at when due.

On the monetisation of fringe benefits, the minister assured the staff that it would be implemented with "human face", adding that it was introduced to assist the public servants in the country. He said problems facing staff will be solved as long as these do not contradict the ongoing monetisation policy of the federal government.

"The monetisation policy is very critical. It affects everybody from the minister, down to the cleaner. It is the federal government’s policy which is beyond the ministry, but we are ready to do everything possible to push away its negative parts," he said.He solicited the support and cooperation of the staff to move the ministry forward. The highlight of the parley was the presentation of a position paper on monetisation by the ministry’s senior staff association to the minister.

The News Agency of Nigeria (NAN) reports that also in attendance at the interactive session, were the Minister of State for Defence, Mr Ronald Oritsejafor, the permanent secretary and the directors of the ministry.

_____________________________________________________

Pension Backlog Stands at N2 Trillion

From Constance Ikokwu in Enugu

Also, the recent reforms embarked upon by the Federal Government may have reduced the cost of running the administration by about N50 billion in the past 18 months through the "Due Process Mechanism," a system aimed at recovering money from wasted contracts.

Ihonvbere made the disclosure yesterday in Enugu while delivering a lecture titled: "The Obasanjo Second Term in Office: Reinventing and Repo-sitioning Nigeria for Growth, Stability and Development" at the on-going 2003 annual general conference of the Nigeria Bar Association (NBA).

He said the Due Process Mechanism introduced by the Presidency has ensured that wasted monies are put into capital development, while regretting that greedy contractors, politicians and bureaucrats have milked the country dry over the past decades. He said the recovered money has been channelled into education, water supply, health services, roads, technology and industrial development.

The special adviser said major nations of the world built their structures and cities from pensions funds that are guaranteed and invested properly, while saying that Nigeria will do the same thing. He criticised politicians, businessmen and other Nigerians who evade tax and those who carry about forged tax payers. "This is ungodly and unpatriotic," he noted.

According to him, the fight against waste has been quite successful as wastage incurred through public officials has been curbed. He disclosed that the former Senate President Anyim Pius Anyim returned 38 cars to the government when he left. And over 78 officers and countless aides attended to him alone. He said there were over 10,000 policemen serving as orderlies to public and private citizens and that government will henceforth no longer pay for maids, drivers, personal assistants, and security guards of public officials. He said some individual and top government officials even had over 14 official cars, thereby constituting a problem whereby over 75 per cent of income is spent on overheads.

Talking about reforms in the civil service, he said the mind boggling stealing of public funds going on will be curbed within the system. He questioned the rationale behind an arrangement in which the Federal Ministry of Works for instance should have 48,000 workers, with more than 60 per cent technologically illiterate, while laziness, inefficiency, ineffectiveness, demotivation and "I-don't-care" attitude were the order of the day. According to him, the reforms proposed by the government in this sector would be comprehensive and would be directed at introducing new technology, redefining its mission and creating growth and stability.

He emphasised that the implementation of these radical reforms will be costly and painful but that "there is absolutely no going back on this and with time it would cover all government departments and parastatals."

"We hope the state and local governments would follow the example set by the Federal Government. This is one of the best policies ever initiated in Nigeria since political independence," he said.

Ihonvbere said the president has set up an economic management team consisting of technocrats and experts. The team, he said, meets every Wednesday before the Federal Executive Council meeting. He explained that not all members of the team are members of the council as less than five per cent of the members attend FEC meetings. "Economic and management issues are subjected to vigorous debates and strategies for moving the economy forward and related sectors are addressed by the team," he said.

He noted that many of the technocrats owe no debt to any political party or godfather as their appointments were solely based on merit and past records of commitment.

On the local government reforms, he said the report of the committee set up to look into the issue will be made available to Nigerians to study, debate and make further imputs. Ihonvbere said privatisation of government owned enterprises will continue and that the Independent Corrupt Practices Commission, the Economic and Financial Crimes Commission will continue its work aimed at sanitising the country.

On the budget office, he said efforts are being made to eliminate deficit financing of projects and that a procurement commission is being established to eliminate over-invoicing and duplication of purchases.

He charged lawyers to use their special knowledge and training to promote development in the country. According to him, law in Nigeria has become a weapon of domination and exploitation and implored the judiciary to desist from all sorts of criminal activities that taint the image of the country.

__________________________________________

NIGERIA: The spectre of ghost workers

www.ngrguardiannews.com/editorial2/en817901.html

The Guardian, April 9, 2001

The Minister of Finance, Mallam Adamu Ciroma has also complained of difficulties being experienced in the payment of salaries to government workers because ministries do not have accurate figures of the staff strength of their departments. The Lagos State government has similarly announced the discovery of 4,000 ghosts in its "employ".

These reports give cause for concern about the public administration system in Nigeria and the integrity of its procedures. In December last year, the payment of wages of federal civil servants was delayed for weeks because a verification exercise had not been concluded. A number of disturbing questions arise. Who are these ghost workers? How are they created and how are the funds used for paying them approved and then funnelled away? What are the records generation and preservation procedures that permit this level of fraud to persist for so long? It is axiomatic to think that these records are cross-checked at source periodically. If those who conduct the checks are transparent and honest, they should have found the "mysterious" trails of the vouchers for the payments. Why is it that no culprit has been caught and exposed in public or taken to the Mustapha Akanbi anti-corruption commission to discourage "ghost cloning" officials from pursuing their nefarious motives?

The fact that these normal bureaucratic measures of accountability have been taken two years in an ostensibly open, democratic government, casts doubt on the efficacy of the instruments for good governance. We acknowledge however, that it is the government´s determination in this regard that has brought the scandal to the open. The phenomenon of ghost workers may have been long with us. But, the variety that has blossomed into a huge scam apparently developed in the fertile minds of members of the pay roll corps of the military during the 1967-70 civil war. Taking advantage of the war-time tactic not to publicly disclose the names of soldiers killed in action in the course of the prosecution of the civil war, the officers in charge of pay kept the money for themselves. In public service throughout the country, there have been instances where names of people who left employment as a result of death, change of jobs or pursuit of further education were never properly reflected in the records. Some corrupt officials continued to draw the emoluments of such people. Over months, these amounts ran into millions of naira.

The affected staff on behalf of whom the payments were made are innocent of the crime. But it ought not to be so difficult for the government to uncover any such past scams. The recovery of looted public money from Gen. Abacha and his cronies is a result of the kind of retrospective search that is required here. The epidemic proportion that the matter of ghost workers seems to have assumed demands that government tackle the challenge with all seriousness. The manpower audit conducted by the Federal Government last year was a step in the right direction.

The government should not relent on its efforts. The manner in which the Lagos State government was able to unmask 4,000 ghost names within the ranks of its work force raises the issue of the possible culpability of government audit departments in the perpetration of this economic crime. The discovery resulted from the use of external consultants in the conduct of manpower surveys in government departments. Apparently, the government´s internal audit units became compromised. This is a very frightening negligence of duty. There are clear laws to deal with such criminal conducts. The size of the government work force is not a justification for the existence of "ghost workers". Some multinational companies operating in the country have a work force of more than 50,000 including contractors and auxiliaries. The companies have not suffered losses on account of unidentified persons called ghosts. In most case, the accounting superintendents of these firms are Nigerian professionals. The government should take more decisive steps to exterminate this fraud. There should be regular, systemic and widespread audit of personnel in the employ of government institutions.

These exercises should be supplemented with quarterly data forms to be filled by government employees. The data should contain the recent photograph and finger prints of every member of staff. The information accessed from these forms should be fed into computers and made available to the finance and national planning ministries so that staff wage data can be matched with financial allocations. This practice should also take place at the state and local government levels. External consultants should be hired for this purpose if the Nigerian ones do not believe enough in the oaths of their profession to deliver transparent service in this regard.

In an age when details about the minutest matter can be got through information technology, a government in Nigeria should have no excuse spending public money to pay non-existent staff.

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