The concept of the use of Other People’s Money (OPM) in business has always been encouraged especially if the investor has no wherewithal to fund the business or such fund is coming at a cheaper cost to the business or organization as against other available sources. Likewise, when running a government leaders are on the look-out to keep the cash-flow system alive through income generated and when this is inadequate, it is augmented through internal or external borrowings or loans. However, when this becomes a government’s main source of funding its operation, the opposition, CSOs and the general populace are mostly less at ease.
This above analogy might not be far-fetched from the submission of the President /Chairman of the governing council of Institute of Chartered Secretaries and Administrators of Nigeria (ICSAN), Bode Ayeku, in a recent interactive session with the media. Mr. Ayeku in a situation akin to swimming against the tide, opposed the popular view that the Federal government is indulging in too much borrowings and loans which may not be too healthy for the nation’s economy, asserting that the situation does not call for alarm “as now is the best time to borrow” especially if such loan is judiciously used.
Fielding questions at the Institute’s Quarterly media parley at the Institute’s secretariat, the ICSAN president noted, “Personally, I don’t see anything bad in borrowing. If it is properly utilised. In fact, the best time for the government to borrow is now”. He asserts that the cost of such capital or interest rate is less than one per cent.
To underscore his position, Ayeku explained that the Bonds that were issued by government at 12 per cent, 14 per cent as at the beginning of the year, the government is now issuing at two per cent. Treasury bill used to be 18 per cent in the past, the last treasury bill was less than one per cent, so this is the right time to borrow”, he further clarified.
While he tactically encourages borrowing at current encouraging interest rates, he however warned the authorities, reeling out a caveat to guide such decision.
“It must not be borrowed for consumption, it must not be borrowed to maintain our bloated structure, it must not be borrowing for personnel, neither should we borrow to serve the personal interests of those in authority. The structure of the institutions must align with the current reality that things are difficult. So we must spend prudently if we must get out of the wood.
He goes further, “if the government wants to borrow to invest in technology, it’s a right investment, if the government is borrowing to invest in infrastructure, it’s a welcome development because they are borrowing at less than one per cent. So it is the right way to go considering our current economy but it must be spent most prudently”
Alluding to the new normal which has seen the definition of the work place drastically altered, with a plethora of people working from homes globally, Mr. Ayeku notes that businesses are doing well in this regard, better than government organisations. According to him, the difference is in the investments in digital technology and implementation.
The current COVID-19 pandemic has revealed the “cost implication for the government’s delay in implementing digital operations is obvious and colossal. It is innumerable”, he discloses.
First, what is the total amount of salaries of workers from level 1 to 12 who stayed at home during the pandemic in the public sector because they were asked to stay at home but no facilities were provided for them to work with at home?, he queries. Secondly, a lot of operations that would have generated revenue for the government were lost because I am talking from an opportunity cost point of view. For instance, for the government, if they were able to render services they would be able to make money because they charge fees on those services the personnel render. So while government lost revenues, they had to pay salaries for the upwards of the six month they had to stay at home because the staff were willing to work but their employers could not provide the digital platforms. The CAC and the Sea ports are just a few of the cases in point.
“Digitalisation is the minimum platform that government must put in place for it to have a seamless operation. This disruption, nobody knows another one, we’re talking about the global pandemic – COVID-19, we don’t know which one is coming after this, even the #EndSARS protest, nobody knew it would be more disastrous, than COVID-19”
Pointing out the way forward, which according to him is very simple, he asserts that the government must be very prudent the way and manner they spend the meagre resources.
“They can’t continue with this bloated governance structure where we have too many personnel with outdated structures if they are discreet in the management of every resource, they Will try as much as possible to reduce their expenses where the stakeholders will benefit from whatever that is left on the system but you cannot spend the bulk of that money in serving these bloated structures and systems we have, it won’t work because it has no major impact on the people”.
Making reference to COVID-19, the corporate government enthusiast explains that Nigerians must understand that the challenges are not peculiar to Nigeria only. “COVID-19 is a common denominator all over the world. So its impact is massive across spectra. But the good thing is the same corporate governance principles will still be required to stabilise and take off on a very sound note to keep the business thriving.
The principles are simple. It’s all about transparency. The truth is that before the COVID, during the COVID and after the COVID-19, the stakeholders remain the same however the expectations have changed but they should be informed in a timely manner of relevant changes in operations and the impact, so communication is key in times like this so that everyone will be in the same page. More so, corporate leaders must show fairness in decisions, policy design and planning in troubled time like this. Aside from that, there must equity, understanding and empathy.
For the ICSAN, “the principles of transparency, fairness, responsibility and accountability by private and public institutions on the current state of affairs to stakeholders and citizens would engender business continuity”.
