Most of the 36 states in Nigeria are reviewing their 2020 budgets. The review is in response to current economic challenges caused by the COVID-19 pandemic. Those that have reviewed cited dwindling oil prices and disruption of economic activities caused by coronavirus crisis. Since the price war started, the cost of crude oil has dropped drastically, affecting the revenue of the Nigerian Government.
In Nigeria, the states rely heavily on monthly allocation from the Federal Government. This is due to their inability to generate viable revenue to cater for their huge bills. For this reason, some of them had announced a pay cut in salaries. Several reports had also projected that 33 states out of Nigeria’s 36 states cannot survive without FG input.
Recently, the Ekiti State Governor and Chairman of the Governors Forum, Dr. Kayode Fayemi, said States may get zero allocations from Federation Account Allocation Committee (FAAC) from next month owing to the drastic fall in the prices of crude oil.
To reduce the cost of governance, various states government are trimming the number of workers, their political appointees, and ultimately, their 2020 budgets.
Which Data Aided The Decision?
Is it enough to cut budgets without considering underlining factors or data to aid projections? Which projects are important, which are less, which are more pressing for developmental programmes. The state executives should be using data to ask some of these questions.
Although all the budget cuts will pass through the State assemblies, there is a need to get inputs from the citizens via a public forum or hearing. Civil society groups and development experts have frowned at non-disclosure and lack of transparency in the budgetary processes. This is one of the reasons why Nigeria was ranked low on budget transparency by the International Budget Partnership. In 2019, about 12 states failed to subject their budgets to public scrutiny. Lagos, Sokoto, Akwa Ibom, Bayelsa are some of the prominent ones.
How do citizens and taxpayers rate government when details of the budget are kept in secrecy? It is difficult for citizens to participate in budgetary processes if they do not know budget items that were removed. Mr. Charles Ofomata, Program Officer at Centre for Social Justice, said citizens’ participation is key for transparency and accountability in the budgetary process. He said citizens should be part of the process from planning to the implementation stage.
What is the implication for infrastructural development
Some state governments are pushing for massive internally generated revenue. This is to increase revenue. However, the impact of the budget cuts will largely be on infrastructural developments. For instance, the Niger State Government said capital projects will be in trouble as a result of the proposed cut. The state is proposing to reduce the 2020 budget by 36 percent, from N155 billion to N98 billion. Like Niger State, Ekiti state has cut its 2020 budget by 27 percent.
Other states that have reviewed or in the process of review are Plateau, Kaduna, Gombe, Adamawa, Borno, Kogi, Niger, Nasarawa, Rivers, Kwara, Bayelsa, Yobe, Katsina.
By doing this, it means that most capital projects, which often lead to job creation, rural development, will be halted throughout the year. This may extend to next year when the economy is likely to bounce back.
How can states survive
All the states in Nigeria receive monthly allocations from the Federal Government. Despite calls for a strong internal revenue structure at the state level, most of them still rely on oil proceeds from the Federal Government to survive.
At the last webinar organised by DATAPHYTE in April, experts clamoured for a system at the state level where accountability and transparency are central priorities. They called for judicious use of security votes, and early retirement. These were recommended policy options to help state governments survive. Specifically, a Policy Analyst, Patrick Okigbo, advises state governments to look inward for fiscal viability.
Many have also opined that if state governments conduct their affairs in a prudent and accountable manner, they are will scale through most of the financial mess. Some state governors appoint more aides than embarking on developmental projects while some abandoned regenerative projects for political reasons. To survive these shortcomings, States must ensure proper accountability and open their books to public scrutiny. They should also find avenues to increase IGR and blocked bureaucratic loopholes.
How Data can help absorb future shocks
The Nigerian government, at all levels, is not proud of itself when it comes to DATA. The country lacks adequate data and no official record of its citizenry. For instance, the last population census happened 15 years ago. The country also relies on estimates from development partners like the World Bank and IMF to plan for various social-economical activities. Fast forward to COVID-19 lockdown, the Nigerian government is still struggling to identify those that need palliative.
At the 2019 digital edition of The Platform, Governor Babajide Sanwo-Olu described data as a critical component for economic planning and good governance. He said, “the outbreak of the novel Coronavirus pandemic has shown that Nigerian leaders need to place a premium on the gathering of data if the country truly desires to move forward socially and economically.”
Data gathering is not only important for economic planning, but it also helps state actors to address critical issues before and after emergencies such as COVID-19. It can also serve as indicators for development especially in key sectors such as health; education, agriculture, and security.
To collate data is not only enough but to open the data and let policymakers use it to determine the human development index – trends on poverty, economic directions, income, and education levels. This helps comparative analysis among countries.
Editor’s NOTE: This article has been edited to reflect current realities and erroneous data removed.