The Kaduna State Government on Thursday, says it has adopted stringent measures to manage the unexpected economic consequences unleashed by the coronavirus pandemic.
A statement signed by Muyiwa Adekeye, Special Adviser to the Governor (Media & Communication) said, following the submission of an interim report by its economic crisis response committee, the state government will be implementing belt-tightening measures immediately to depress its recurrent costs and cope with the anticipated steep decline in revenues.
The new measures are contained in a statement from Sir Kashim Ibrahim House released after the consideration of the interim report of the economic crisis response committee of the State Executive Council.
The statement said, “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 debated at a meeting chaired by the Governor and attended by the Deputy Governor, Dr. Hadiza Balarabe, and senior appointees of the state government.
“The government considered the revenue implications attached to the various scenarios the committee examined. 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. The meeting also noted the persisting global uncertainty as to how and when the coronavirus pandemic will be effectively contained. 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 report noted that should these unfavourable conditions persist, Nigeria may witness the worst economic crisis in its entire history. Therefore, it is a matter of urgency for a sub-national like Kaduna State to seriously consider and adopt measures to manage an extremely dangerous socio-economic situation. The state will also broadly engage with the federal monetary and fiscal authorities to suggest measures that will be required to reduce the impact of the economic shocks as they affect our state.
“The meeting noted the risks to the state since revenues to a sub-national like Kaduna State consist basically of transfers from the Federation Account Allocation Committee (FAAC) and its own internally-generated revenue (IGR). With crude oil prices falling, FAAC will certainly shrink considerably in the near-term, business slowdowns and the severity of the resulting economic contraction may significantly limit IGR as well.
“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. Our annual revenues could fall by as much as N24bn in 2020 if crude prices fall to $20 per barrel. Either of the 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 without adopting fiscal and monetary policy realism by the federal government.
“Therefore, it was decided that Kaduna State will prioritize its capital projects, especially in the health, education and infrastructure sectors, and uphold social safeguards like preserving the minimum monthly pension of N30,000. The state will also strive to remain afloat by aggressively cutting costs of governance and expanding revenue sources such as presumptive taxes on informal businesses, land use charges in major urban areas and imposition of development levy payable by every adult in the State, as contained in the State Tax Code.
“In specific terms, Kaduna State has adopted the following coping measures, while it continues to closely monitor the unfolding situation:
1. Prioritize Funding of Capital Projects: amidst the looming downturn, investments in the fundamentals for growth and development will be robustly pursued;
2. Cut Personnel Costs and Depress Overheads: the government will cut overhead expenses by 50% and centralise expenses like purchase of equipment, vehicles, fuel and stationery. It will impose an immediate embargo on foreign travel;
3. 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 centralised. This will promote transparency and limit expenses;
4. 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 do not present evidence of their Retirement Savings Accounts (RSAs) will also be temporarily removed from the payroll;
5. 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;
6. Expand Revenue Base: by getting more citizens to pay ground rent, presumptive tax and development levy;
7. Local government councils will be encouraged to adopt similar cost-cutting and revenue enhancement measures to preserve their ability to discharge critical obligations.
“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 measures, if necessary,” the statement said
