Oil revenue is the backbone of the Nigerian economy and provides the bulk of government revenue as well as foreign exchange earnings. Crude oil exports account for about 90 percent of the nation’s foreign exchange earnings and 80 percent of government revenue, pushing other sectors like agriculture to the background. But the sudden decline in the price of crude oil in the international market has exposed the country’s mono-product economy to volatility. The IMF and the Central Bank of Nigeria (CBN) earlier in the year agreed that the Nigerian economy had plunged into recession.
Recession means a negative real GDP growth rate for two consecutive quarters. Experts therefore say Nigeria is experiencing economic recession since her first and second quarters growth in 2016 are -1.7% and -2.06%. The declining federal revenue has in turn, led to reduced monthly allocation to the states, most of which are currently unable to pay workers’ salaries or meet other obligations. Our correspondents take a look at how some of the states are coping with the recession.
Anambra State has been depending largely on its Internally Generated Revenue (IGR), as well as domestic borrowing, estimated at N1.2billion monthly and N10 billion respectively for survival. It was also generating revenue through tax until its suspension following the advent of the economic recession with the introduction of the Economic Stimulus Package targeted at cushioning the impact, and to help the local economy weather the storm.
The state governor, Willie Obiano, while presenting his 2017 budget address to the state assembly, said the state had continued to honour her financial obligations and was paying salaries and pensions as at when due, despite the challenges caused by the current recession. He also disclosed that the state had attracted $4.5bn from over 29 firms, as well as over $494m through the Anambra State Investment Promotion and Protection Agency (ANSIPPA).
Other areas the state explores to make up for the paucity of funds is proceeds from agriculture, including the production of rice as well as exportation of produce to the US and the UK.
A few weeks ago, Oyo State Governor Senator Isiaq Abiola Ajimobi announced a slash in the salaries and arrears of the state’s political appointees by 50% following the continued drop in federal allocation. The state government equally announced that it had succeeded in blocking all tax holes with the physical verification exercise embarked upon recently, exposing ghost workers.
According to the Secretary to the State Government, Mr. Olalekan Ali, the political office holders’ salaries and arrears cut is part of the measures put in place by the administration to reduce the cost of governance.
Ali assured the people of the state that the hope for a quick recovery from the economic recession is expected was the administration was not relenting in its efforts at food security through its Agric-Oyo programme and establishment of 10,000 metric tonnes of silos in Oyo township.
The Adamawa State government has reduced the salaries of political appointees to reduce the cost of government. Although the measure was announced at the beginning of the administration, Governor Muhammadu Jibrilla recently said he would be flying commercial aircraft due to the current recession.
Martin Dickson, the Special Assistant on Media, said the governor had reduced the number of his entourage to consist of only one to two aides. He noted that the measure allowed government to save a lot of money to cope with the economic recession.
Jibrilla told journalists that his trips outside the country were justifiable and were in the interest of the people. Despite the thrifty measures, the state government owes primary school teachers four months salaries and three years leave grants while the pensioners association in the state has complained that its members were dying of frustration over non payment of monthly pensions.
In Borno State, Governor Kashim Shettima had since anticipated the possible decline in Nigeria’s fortunes. The Governor’s Special Adviser on Communications and Strategy, Malam Isa Gusau, recalled that as far back as 2013, Shettima was already preparing Borno to respond to difficult economic situations.
“Not just because he is a trained economist, he also imported agricultural machinery worth nearly N50 billion and had some savings for the state in preparation for tough times,” Gusau said.
On the specific toll recession took on Borno State, he said, “I think in the case of Borno, the issue is rather about the Boko Haram insurgency, not recession. The unfortunate situation made Borno to have almost nothing as IGR, while at the same time dealing with the crisis of managing victims of insurgency and rebuilding communities. But like I said, the governor anticipated the fall in oil revenue and was able to prepare for it.”
From inception, the Abdullahi Ganduje-led administration in Kano State adopted various measures for managing the ongoing economic recession including slashing the salaries of political appointees by 50 per cent and boosting IGR, among others.
The government also employed the services of nine private revenue-generating firms to enhance revenue collection. According to the Director-General of Media and Communications to the governor, Alhaji Salihu Tanko Yakasai, the IGR has improved from less than N1billion to N3billion per month.
Also, the Chairman of Kano State Board of Internal Revenue, Alhaji Sani Dembo confirmed that the state had from January this year to date generated a total of N18bn internally. Another measure taken by the state to minimize the impact of the recession is reducing the number of the ministries from 18 to 14.
In Bauchi State, the administration of Governor Mohammed Abdullahi Abubakar, has faced the challenge of paying-off a four-month backlog of salaries and unpaid pension arrears running into billions of naira. These challenges prompted the administration to adopt cost-cutting measures, block leakages, cut spending and encourage prudence.
However, the first move by the state government to save money was the verification of workers to ascertain the number of staff on the state and local government payroll which the government thought had an astronomical drain on its finances without a corresponding result.
According to the government, the discovery of ghost workers in the state civil service who have been flushed out has saved the state a substantial amount of money, to be channelled into other sectors.
In Akwa Ibom State, the administration of Governor Udom Emmanuel has been able to put certain measures in place to bring the impact to the barest minimum and keep the state afloat.
Some of the measures put in place to minimize government spending have attracted criticism from several quarters as many who were used to, and were beneficiaries of the spending of the previous administration have accused the governor of being too stringent.
Udom ordered for the audit of the state civil service through the biometric verification method. About 9,000 ghost workers and ghost pensioners were discovered and huge sums of money were paid to them as salaries and other entitlements. The discovery has saved the state a lot of money.
The government also strengthened its tax collection to boost revenue. In this respect, the government said it would treat all tax evaders as saboteurs.
Lagos State Governor, Mr. Akinwunmi Ambode, had on many occasions disclosed that despite the current economic situation, the overall 2016 budget performance of the state as at half year, recorded 70 percent, while total revenue recorded 73 percent. Prior to the recession, Lagos State had deliberately embarked on a cautious drive to improve its IGR.
Between June 2015 and June 2016, the state received N178 billion from federal allocation. However, the IGR for the same period was N268billion, higher than that of 32 states combined. The 32 other states merely generated a total of N257bn in 2015.
Ambode said the state would reduce dependence on federation allocation by increasing its IGR to a monthly target of N30 billion in 2017 and subsequently N50billion monthly in 2018 as it targets a yearly budget of N1 trillion by 2018.
The first thing Governor Nasir El-Rufai did last year was to cut his salary and that of his deputy by 50 percent. He later extended the measure to all political appointees. That not enough, in September the government suspended the free feeding programme in primary schools it introduced late last year, saying it could not bear the cost.
Also, to save cost, the state government had to award contract for jobs through a system it calls retainership which spreads the payment in bits of instalments that do not take a full chunk from the government.
The Kaduna State government also had to put measures to increase its IGR, made possible through the introduction of a new tax code enacted by the state House of Assembly which centralised all revenue collections in the Kaduna Internal Revenue Service. There is no cash collection, which increased the state government’s revenue by nearly 50 per cent.
Benue State, like several others in the country is in financial mess following the continued dwindling allocation from the Federation Account Allocation Committee (FAAC). It would be recalled that at the wake of the present administration of Governor Samuel Ortom, there was the initial problem of paying workers owed between four and six months salaries by the previous government.
The development, it was gathered forced the new governor to access a N10 billion loan out of which he expended N7.5 billion on payment of two months salaries to workers in the state. Ortom had claimed that he inherited a total debt of salaries, pensions and gratuity which stood at N69 billion before the federal government came to its rescue with a bailout of N28 billion out of which many workers were also settled.
Ortom, who had formally dedicated the state to God for His divine intervention in May this year, appealed to the people to return to agriculture in order to revamp the ailing economy, stressing that even the meagre amount gotten from the federation account could not cater for the people’s needs.
At the moment, the government appears to be encouraging investment in Small and Medium Enterprises (SMEs) as well as promoting agriculture-driven industrialisation.
The Kwara State government has continued to close the gap created by the ongoing recession through improved IGR. Many aspects of the state are affected to the extent that some companies have relocated. It is more affected by the recession since it is mostly a civil service state where majority of activities depend largely on salaries.
The Kwara government saw this coming, and came up with an improved IGR technique, by setting up an agency to aggressively drive it. The agency came on board in October last year, and is said to have helped greatly by blocking most of the loopholes that have affected the state revenue.
Another system adopted by the state government is the establishment of the Kwara Infrastructure Development Fund, which will fund all developmental projects in the state.
Critical analysts have challenged the Cross River State Governor, Ben Ayade, to transact government business transparently by disclosing sources of funds with which he uses to run government business, prosecute projects and pay salaries regularly, so that they would know if he was drawing funds from questionable sources that could plunge the state into irredeemable indebtedness.
Last week, despite the economic recession in the country, the governor staged a much criticised African Beauty Pageant where he sponsored 21 girls from different African countries to Calabar, capital of the state, and reportedly spent about $80,000 for prizes and logistics. Ayade had said he was staging it to draw better international attention to climate change and what the state was doing in that direction.
Cross River citizens like other Nigerians are experiencing hard times since the state was never a business-oriented one.
Jigawa State Governor, Mohammed Badaru Abubakar, recently told journalists that due to the drop in the state’s revenue, a major problem confronting the state was the issue of salaries. To solve it, he had to call for a meeting with ministries, departments and agencies. They discussed how to cut the cost of running government without compromising efficiency and quality service-delivery, and the exercise helped stabilize the government.
The payment of salaries and standing orders which amounted to N1.5 billion has been significantly reduced, and helped in saving about 50 percent. Spending of N100 million monthly on diesel for powering street lights across the state was reduced to N72 million from N100 million.
While he denied plans to sack workers en masse, Badaru declared in February this year shortly after the swearing in of local government councils caretaker committee that his government could not conduct council elections because of lack of funds.
Rivers State Governor, Nyesom Wike, has stated in many fora that the present economic recession in the country would not in way affect the deliverance of infrastructure and payment of salaries of civil servants.
The State government has also improved on its IGR drive as over N7bn is generated monthly. The state has also borrowed money from banks, part of which was used to pay outstanding salaries of civil servants as well as financing of infrastructure.
Enugu State Governor, Ifeanyi Ugwuanyi, seems to have learnt to cut his coat according to his cloth, to avoid needless spending. At the moment, the administration appears not to be bothered about embarking on many capital-intensive projects, aside the on-going road project at the university town of Nsukka.
Presently, the administration is maintaining urban roads, servicing the state civil service, paying workers salaries and other essentials. Aside the monthly federal allocation which has generally reduced, the state government collects revenue through taxes, levies, etc to be able to run the government at the state level.
In Yobe , Governor Ibrahim Gaidam has taken radical steps to reduce the cost of governance in order to rescue the state from its precarious financial difficulties. Early in 2016, the government cut down its overhead cost by 50 percent to channel it to other areas of importance.
The situation also forced the government to carry out staff audit at state and local government levels. This has helped the government to remove ghost workers from the salary payrolls and reduce leakages. Recently, the state government sacked some civil servants that were defrauding the state over N20 billion using lists of ghost workers in the state salary payroll.
Since the federal allocation nosedived about 15 months ago, the Sen. Ibikunle Amosun administration has been struggling to survive. More evidence of the administration living above the recession and the lean federal allocation has been in support given to investors. Checks revealed that no fewer than 423 companies with a minimum of over N2 billion investment capital are currently operating from Ogun State.
At a town hall meeting held ahead of the presentation of the 2017 budget last month, Amosun hit at public servants who had then embarked on an indefinite strike. He accused the workers of being insensitive with their demands and at a time of economic recession. “Some are not using their brains. I cannot give what I don’t have,” he said.
Since the assumption of the present administration in Abia State, the executive arm of government decided to cut down their salaries and allowances by 50 percent. However, successes so far recorded by the administration in healthcare, security, agriculture, housing and road construction and rehabilitation are as a result of prudent management of scarce resources.
The dream of the Governor Okezie Ikpeazu-led administration in Abia State is to leave a lasting legacy of sustainable development and transformation in the State.