Acting President Yemi Osinbajo will join other world leaders to witness the inauguration of President Paul Kagame of Rwanda in the country’s capital, Kigali on Friday, August 18. This was contained in a statement issued by the Special Adviser to the Acting President on Media and Publicity, Laolu Akande . Akande noted that the Acting…
Leakages are like the locusts of devastation spoken of by Prophet Joel, in the first chapter and fourth verse of the Bible book named after him. Wherever they occur undetected, they leave destruction on their trail, like the fabled palmerworm, cankerworm, and caterpillar. I feel so strongly about this subject that I was forced to do this article in two parts.
The thing about leakages is that they could be insidious in the stealthy ways they occur, and this could be through inflation of contracts, penny – pinching, organized theft, waste, fraud, ghost workers, corruption, bad spending habits, carelessness, profligacy, and inefficiency. Nowhere is this more evident than in the Nigerian public service, but my concern here is how leakages harm or impoverish us as a nation and as well as our private or public enterprises. Of course, I can’t rule out allusions to our corrupt polity in the course of this write-up.
Employers know to their chagrin, that procurement officers inflate cost of goods they buy for their companies. This is where the infamous ten percent kick-back on contracts awarded by government started. And President Olusegun Obasanjo tried to check-mate this age-long corrupt practice with the Public Procurement Act during his tenure. That is how the phrase, “due process” in the award of government contracts crept into our political lexicon. It was a bold attempt by government to sanitize a system riddled with pandemic corruption.
Leakages occur everywhere, including churches, where ushers are known to dip hands into offering bags when no one is watching, except God. In government, the Big Brother, (Due process manager) is watching, if that officer and his team have not been compromised.
Companies must set up efficient and highly effective mechanism to prevent or minimize the loading of bills if they are to maintain their competitive edge. They must also guard their products jealously because cleptomaniac employees steal products and sell to retailers at lower prices, thus undercutting their employers and damaging their markets. I see workers hawk these illegal products everywhere. Good marketing intelligence could arrest this trend.
Although, large corporations often use public tenders for their procurements to ensure they get the best offer from suppliers, smart officials still have a way of beating the bidding process.
Procurement, apart from corruption, is the biggest single source of leakage in Nigeria because dishonest workers will always find an ingenious way of loading costs on products or services. Yet, at least, a transparent open bidding process, if properly managed could significantly reduce inflation of costs.
Inflation of costs is part of our corporate culture and has been perfected into high art. It blunts the competitive edge of goods and services made in Nigeria at all levels and is a major reason we can’t penetrate foreign markets. It is the reason 80 per cent of our foreign revenue still comes from oil; although about 80 per of non-oil production contribute to our GDP. If we can’t compete at home against imported goods, how then can we compete abroad? Our economy is diversified already, but we can’t still penetrate foreign markets because of artificial, high cost of production.
Aside inflation of contracts because the contractors have to settle government officials with huge kick-backs, there’re the additional issues of severe environmental factors like unreliable power supply, bad roads and general infrastructural decay that shoot up production costs.
Since local manufactures have to produce their own power, water, security, continually fix damaged vehicles due to bad roads, deal with multiple taxation and expensive operational costs, the high unit price of our locally produced goods make them uncompetitive. This is a special kind of leakage, because they are unnecessary additions to production costs.
All of these mirror the ugly face of the local companies’ balance sheets and is the cause of poor Return on Investment (RoI) that is the lot of corporate Nigeria. Of course, this is also a major disincentive for Foreign Direct Investment (FDI). Former governor Peter Obi of Anambra State gave an excellent speech at a conference of on-line publishers in Lagos on August 9, 2017, that captures the predicament of the Nigerian economy. His comparative analysis of the development of newly industrialized Asian countries, vis-à-vis Nigeria, between 1980 and 2017 offers a food for thought for our economic managers. We’d deal with that some other time, God willing.
As we could see from the foregoing, inflation of contracts is a dangerous type of leakage, very much like the HIV-AID virus which slowly, but viciously destroys the human body, and sadly has no outright cure yet. Inflation of contracts cannot be eliminated, but we must devise ingenius ways to checkmate it.
One way to do that is to continue fine-tuning the public tenders system. Perhaps, by changing the rules of the bidding system and using different agencies per time could help bring some sanity into the contract award system, which is seriously riddled with corruption.
This is very much like recruitment agencies who hire workers for big corporate bodies, thereby reducing incidents of favoritism in the employment process. Small companies could also out-source their recruitment and procurement processes to get the best value for money. In the second part, I’ll deal with leakages as they affect individuals.
WEEKEND SPICE: There is no sin except stupidity – Oscar Wilde
Folks, thank God it’s Friday. Let’s do it again, same day next week. Stay motivated!
Ladi Ayodeji is an Author, Conference Speaker/Pastor and life coach. He can be reached at [email protected] and 09059243004 (sms only).