Have you wondered what health workers at the frontline are thinking about right now? Patient management and/or the next paycheque?
But the real question is, what bailout package is made for health workers? What is in it for the “working poor”. What are we putting together for the have-nots?
The Central bank gave ₦1trillion bailout package for big businesses. First, this would have given ₦50,000 to 20 million families in Nigeria. But, when is the Federal government or the Central bank planning the direct package for health workers.
At the moment, crude oil is cheaper than water. The government will soon roll out a series of bailouts. What is not certain from its antecedence is if it would cut a check for the frontline health workers.
The global economic crisis, the Nigerian dilemma
In recent days, some prominent economists and institutions have pondered the idea that the current economic shock brought on by COVID-19 could trigger the worst recession — an outcome deemed all but inevitable.
By all metrics, we are already in a fiscal crisis of unimaginable consequences. The income of local, state and the federal government will take a massive plug. In 2016, 33 states could not meet recurrent expenditure obligation without resorting to borrowings. 26 states could not pay salaries. 2016 is, however, a child’s play compared with what lies ahead.
With about 90 percent of Nigeria’s Labour force (82.59mil) depending on daily income, the lockdown and the resulting “hunger in the land” seem to be a deeper and more damaging event. Of course, health is more important than money.
More important is the welfare of frontline health workers putting everything – life, family & friends – on the line to keep everyone alive. We should spare some prayers for our health workers.
Most of the health workers are employed by the state governments. Apart from Lagos and perhaps Ogun State, the ability of state governments to pay the salaries of health workers (and other workers) is strongly linked to Federal Accounts and Allocation Committee (FAAC).
FAAC revenue or the bib of Nigeria’s feeding bottle federalism was ₦531 billion in February 2020, down from ₦716 billion in January 2020. This was at the wake of COVID-19 striking the heart of the global economy.
Revenue from FAAC drawing from initial situation analysis that set a benchmark price of crude at $35 per barrel, a 1.8million barrel per day crude production and debases the effect of total lockdown estimates average monthly FAAC allocation to be shared among the federating units for Q1 and Q2 2020 at ₦595 billion and ₦655 billion, respectively. But the recent event and programs put in place by the government to curtail the spread of coronavirus and its effect on consumer spending suggest the fiscal crisis may be more severe going forward.
For instance, if you look closely at the numbers for petrodollars, the average price of crude oil during the 2016 economic recession was $45.96/b. EIA forecasts Brent crude oil prices will average $33/b in 2020. Things can go south very fast if the second wave hits the world, especially in countries quickly reopening their economies.
In terms of volume, Nigeria recorded a volume of 1.419mil Barrel/Day in Aug 2016. Average crude oil lifted in 2016 was 1.62m barrel/Day and 1.83mil barrel/Day in Q3 and Q4, respectively. We are producing 1.8million but about 70 percent of the April loading cargoes have yet to find buyers. Some March cargoes remain unsold. Effectively, we are selling below 1.2mil Barrel/Day even at $12 per barrel.
The implication is simple; we are poised to earn very little from Crude. In 2016 (during the recession that destroyed millions of Jobs), Nigeria total oil revenue was ₦3.5 trillion (out of the projected revenue of ₦9.72 trillion). The Federal government share of Oil Revenue was only ₦697 billion, an amount insufficient to meet FG’s personnel cost of ₦1.6trillion. Despite devaluing, the Naira – allowing FG to squeeze in some exchange rate gains.
International trade has since come to a complete halt. So tariffs on imports that necessitated Nigeria closing land borders will never come in. The incentive to bring goods to Lagos port like reduction in fees for demurrage was not part of FG’s policy response.
Tax Revenue including Value Added Tax and company income tax, are all directly and indirectly dependent on consumer spending. Personal income tax ( PAYE, Direct assessment) is dependent on salaries and income of the working population. The determinant of how much tax income the government earns is strongly linked to the ability of the rich and “working poor” to earn income.
By all metrics, we are already in a fiscal crisis of unimaginable consequences. The income of local, state and the federal government will take a massive plug. In 2016, 33 states could not meet recurrent expenditure obligation without resorting to borrowings. 26 states could not pay salaries. 2016 is, however, a child’s play compared with what lies ahead.
It is thus critical that the monetary and fiscal authority quickly put together a financial support program for the “working poor” especially frontline health workers before everything falls apart.