AS part of Federal Government’s strategy to re-prioritise spending and cut cost on recurrent expenditure, the Efficiency Unit of the Federal Ministry of Finance has said it is planning to introduce detailed pricing guidelines to ensure value for money in procurements by its Ministries, Departments and Agencies (MDAs). To further reduce the incidence of cash, the deployment of Ministerial Debit Cards is being piloted.
The Unit, which said it carried out an extensive and detailed review of the Overhead Expenditure data of the government for the period 2012 to 2014, found that the overhead spending pattern was concentrated on a limited number of items including travel, maintenance, local and international training, welfare and office stationery / computer consumables.
Speaking at a media interactive in Lagos on Wednesday, the Head of the Efficiency Unit, Ms Patience Oniha, stated that “The Cumulative Expenditure on these five items was N825 billion, representing 61 per centof the Cumulative Total Overhead Expenditure of N1,353 billion for 2012 to 2014. This means that the average amount expended annually on these five items during this period was N275 billion. The estimate for 2015, she noted shows a continuation of this trend.” Overhead spending exceeded allocations to capital in all the years reviewed.
Another finding from the review, according to Oniha, was the large expenditure on honoraria and sitting allowances, refreshment and meals, books, fuel, publicity and adverts.
In relation to procurement, which has been identified as a major source of potential savings for government, the Efficiency Unit has prepared a list of good and services which are regularly procured by MDAs. By pooling the demand of MDAs, there will be opportunities to leverage the resultant bargaining power and secure price discounts and other benefits from suppliers. This strategy will deliver savings and reduce the administrative costs inherent in the current procurement process, which is rather fragmented.
She recalled that “developed countries such as the USA, UK, Canada and Hong Kong, have used this strategy successfully to manage their expenditure. Within Nigeria, large and diversified private sector organisations manage their procurement in a similar manner. As a country, Nigeria should be no exception, more so when resources needed to be managed tightly to boost spending on capital projects such as infrastructure.”
She disclosed that the Unit has initiated discussions with suppliers of air travel services for the purpose of price negotiation. This expenditure area was prioritised because local and international travels represented the single largest overhead expenditure item in the period under review, with an average of N83 billion spent annually.
Culled from: http://sunnewsonline.com/new/fg-spends-n825bn-on-travel-allowances-stationery-in-3-yrs-as-efficiency-unit-devises-strategies-to-manage-procurement-costs/