Kaduna adopts austerity measures over Coronavirus and oil crisis

With dwindling revenue staring Nigeria in the face over the world economic downturn occasioned by Coronavirus and falling oil prices, a state government is taking proactive, but painful austerity measures.
In a statement on Wednesday, the Kaduna State Government announced that it has adopted stringent measures to enable it to manage the unexpected economic consequences unleashed by the coronavirus pandemic.
A statement issued from the Government House and signed by Mr Muyiwa Adekeye, Special Adviser on Media and Communication said that the measures were adopted in anticipation of the steep decline in revenues.
Adekeye further said that the belt-tightening measures were adopted following a robust debate on the interim report of the Economic Crisis Committee, at a meeting chaired by Governor Nasir El-Rufai and attended by the Deputy Governor, Dr Hadiza Balarabe and senior government officials.
“Malam Nasir El-Rufai has received an interim report from the economic crisis response committee established on 9th March 2020 by the Kaduna State Executive Council. The Committee consisted of selected members of the Executive Council, with Economic Development Council chairman Jimi Lawal, assisted by Infrastructure Development Council chair Muhammad Sani Abdullahi.
“The interim report was discussed at a meeting chaired by the Governor and attended by the Deputy Governor, Dr. Hadiza Balarabe, and senior appointees of the state government.
“The scenarios reviewed indicated that Kaduna State’s gross annual revenues could fall by as much as N17bn if crude oil prices remain around $30 a barrel. The state’s annual revenues could fall by as much as N24bn in 2020 if crude prices fall to $20 per barrel. Either of these scenarios will imperil the discharge of obligations to personnel, pensioners and running of the government. Capital projects implementation will be severely curtailed if either of the two oil price scenarios persist except fiscal and monetary policy realism is adopted by the Federal Government.
The statement revealed that Kaduna State will now prioritise capital projects, especially those in the Health and Education sectors as well as infrastructure but will nonetheless uphold socal safeguards like the minimum monthly pension of N30,000.
“The state will also strive to remain afloat by cutting costs and expanding revenue sources such as presumptive tax, land use charges and development levy,’’ the statement added.
Adekeye also revealed that Government will cut overheads expenses by 50% and centralise expenses like buying of fuel and stationery.
The State Government “will also introduce debit cards as the sole mechanism for funding overhead expenses of MDAs. This will promote transparency and limit expenses,’’ he maintained.
According to the Special Adviser, ‘’measures will be taken to promote payroll integrity and ensure that the nominal roll of the public service is accurate. In the interim, the Head of Service will issue a circular that removes all cases of duplicate BVNs from the state payroll.
‘’Public servants who do not present evidence of their Retirement Savings Accounts (RSAs) will also be temporarily removed from the payroll,’’ the statement also warned.
Adekeye further said that ‘’while it will conclude its ongoing recruitment process, resumption of new recruits will be put on hold until the fiscal situation is clearer.’’
The statement further said that foreign trips have now been suspended.
The Special Adviser explained that the measures were necessitated by the“falling price of crude oil amidst depressed demand for the commodity worldwide and the shocks to normal economic flows and supply chains by industrial shutdowns imposed as part of emergency public health measures.’’
According to Adekeye, Nigeria may witness the biggest economic crisis in recent history if the problem persists.
‘’It is a matter of urgency that a sub-national like Kaduna State should seriously consider and adopt measures to manage a dangerous economic moment. The state will also broadly engage with the Federal Government on monetary and fiscal measures to that will be required to manage the shocks,’’ he added.
The statement also noted that Kaduna State gets its revenue basically from the Federation Account Allocation Committee (FAAC) and its own Internally Generated Revenue.
‘’With crude oil prices falling, FAAC will certainly shrink considerably in the near-term and the severity of the resulting contraction may significantly limit IGR as well,’’ it warned.
“Kaduna State Government will continue its effort to reduce dependence on revenues from FAAC. It will also continue to assess the financial situation of the state and will not hesitate to impose further belt tightening measures, if necessary,’’ Adekeye reiterated.