The Government of Kaduna State has announced some measures it intends to take in order to manage the economic consequences the coronavirus pandemic would unleash.
In a statement signed by Muyiwa Adekeye, Special Adviser to Governor Nasir El-Rufai, the government said it arrived at the decisions after considering the report by its economic crisis response committee set up on 9th March 2020, by the Kaduna State Executive Council. The measures were described by the government as ‘belt-tightening measures’ to depress its recurrent costs and cope with the anticipated steep decline in revenues.
“The meeting noted 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.
“With some of the world’s largest economies on lock-down, there is significant uncertainty about what portends for Nigeria and Kaduna State over the short and medium term,” the statement read.
The committee noted that Kaduna state needed to urgently adopt measures to manage an extremely dangerous socio-economic situation. It added that Nigeria’s economic situation may become worst if unfavourable conditions persisted. It warned that with the decline in the prices of crude oil, the state’s revenue from the Federal Account Allocation Committee (FAAC) and the Internally generated revenue (IGR) would suffer.
Presenting two scenarios, the committee explained that if crude oil prices remained at $30 a barrel, the state’s total revenue could fall by as much as N17bn and that at $20 dollars per barrel, revenue could fall by N24bn in 2020. It warned that capital projects as well as obligations to personnel, pensioners and the functioning of government would be impacted.
It was therefore, resolved that the government would ‘aggressively cut costs of governance, prioritise capital projects, impose taxes on informal businesses and development levy by every adult in the state and land use charges on urban areas.
“The 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 measure, if necessary,” the statement read.
Below are the detailed measures the government is taking:
- Prioritise funding of capital projects: amidst the looming downturn, investments in the fundamentals for growth and development will be robustly pursued;
- Cut personnel costs and depress overheads: the government will cut overhead expenses by 50% and centralize expenses like purchase of equipment, vehicles, fuel and stationery. It will impose an immediate embargo on foreign travel;
- Use of debit cards for residual overheads: KDSG will introduce debit cards as the sole mechanism for funding those overhead expenses of MDAs that have not been centralized. This will promote transparency and limit expenses;
- Ensure and enhance payroll integrity: 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 not present evidence of their Retirement Savings Accounts (RSAs) will also be temporarily removed from the payroll;
- Restrict new employment: the government will continue its push to refresh and revitalize public service ranks by injecting new blood. While it will conclude its ongoing recruitment process, resumption of new recruits will be put on hold until the fiscal situation is clearer;
- Expand revenue base: by getting more citizens to pay ground rent, presumptive tax and development;
- Local government councils will be encouraged to adopt similar cost-cutting and revenue enhancement measures to preserve their to discharge critical obligations.
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