The Federal Ministry of Finance has disclosed that discussions with local and international airlines to secure discounts for travel by government officials are yielding positive results.
A review of Government overhead expenditure for the period 2012 to 2014 showed that travel was the largest single expenditure item. A cumulative total of N248 billion, equivalent to about 18% of total overhead expenditure, was spent on travel during the period. This translates to N83 billion per annum. At a conservative discount of 5% on ticket prices, the estimated savings per annum is approximately N4 billion.
The Ministry explained that given the large amount spent on travel, and consequently the significant potential for savings, it is imperative that the Efficiency Unit prioritises travel as a key focus area for cost cutting and generation of savings. To this end the Efficiency Unit has engaged in negotiation discussions with local and international airlines for discounts commensurate with the large number of ticket purchases made by Government annually. The savings generated will increase funding available to the government for capital investment.
In a statement issued on Tuesday after a meeting with senior Arik officials, the Ministry reiterated its commitment to cut costs and promote fiscal prudence. The Ministry acknowledged the willingness of Arik Air to provide discounts on tickets purchased by the Government. In addition to reducing government spend on travel, the Efficiency Unit has made proposals to the appropriate government authorities for the introduction of guidelines that will reduce the need for travel by localising the activities that necessitate travel, where feasible, and encouraging the use of ICT.
Other overhead expenditure items including insurance, advertising and fuel, where the government’s bargaining power can be leveraged are also being reviewed.
In parallel, administrative controls are being strengthened through the issuance of circulars detailing appropriate guidelines and the implementation of measures to enforce compliance.
