Editor's note: Prince Emmanuel Sam, special assistant to the Akwa Ibom state governor on local media, writes on how the state government is mitigating the global meltdown caused by the coronavirus pandemic.
The coronavirus disease has affected countries in two major ways namely, loss of human lives and economic meltdown. In response, world leaders are battling the deadly virus with very difficult decisions that have a far-reaching impact on global commerce and trade. Among the commodities worst hit by scaling down of trade is crude oil, which has crashed to an all-time low of less than $20 per barrel.
A country like Nigeria, which depends mainly on crude oil for foreign exchange, this is a major setback. For instance, the country’s budget for 2020 fiscal year - based on an oil benchmark of $53 per barrel - is no longer feasible, leaving it grappling with recession once again. However, in Akwa Ibom state, Governor Udom Emmanuel has hatched a proactive plan to mitigate the effects of an inevitable economic downturn on the state.
Just as he did during the 2016 national recession, the governor is drawing from his expertise in corporate finance and macroeconomics to put up measures that will push the state through what will obviously be very difficult times. Aspects of this plan were disclosed by the commissioner for economic development and Ibom deep seaport, Mr Akan Okon, during an interview recently.
Some of the measures are reworking the 2020 budget to reflect current realities with a focus on survival, stimulating the growth of small and medium scale enterprises, promoting local trade and providing conducive environment for industries and businesses to thrive, embarking on more aggressive taxable and non-taxable revenue generation as well as producing a long term economic plan for the state.
Economic projections around the world for 2020 are no longer attainable, accordingly, Governor Emmanuel’s first line of action is to review the state budget to concentrate on survival. He may suspend some capital projects, make adjustments that will ensure overhead is reduced in order to operate within the resources available and prioritize government activities on how to ensure the state economy survives the meltdown. There are also measures in place to seal leakages and save scarce funds.
According to Okon, “we have commenced work on it [budget]. We will engage the various ministries and will come up with a position that everyone would see. In fact, the projection (from the last Federation Account and Allocation Committee, FAAC) is that we will lose not less than 30 per cent of projected revenue; therefore, there is need for us to adjust our budget.
“Note that the federal government crude oil benchmark was $53 per barrel. But as I speak, the price of crude oil has gone below $20 per barrel. We are in very difficult times because of the impact of the outbreak of Coronavirus on the world economy.”
To sustain the local economy during this period, the administration is looking at encouraging activities of small and medium scale entrepreneurs. The target is to ensure that policies are put in place to stimulate production at the micro and medium scale. This way, basic essentials like food and beverages will be produced locally. As it becomes more difficult to patronize imported goods, entrepreneurs will be given needed support to operate and do their businesses in a way that will boost the economy.
Governor Emmanuel places a premium on agriculture because it has proven to be a major sector which provides food for the teeming populace, raw materials for industries and employment. In the meantime, the government will continue to provide enabling environment for industries to come in to exploit available raw materials for industrialization in the state.
The governor is also looking at improving tax and non-tax sources of revenue thereby raising the state’s IGR and reducing its dependence on federal allocation. A mechanism is being put in place to ensure that those that are in the tax net pay relevant taxes to the state while ensuring that those who are not there yet are brought into the tax net. This will ensure a high percentage of tax compliance. Similarly, other sources of revenue especially agro-allied ventures will be primed to add significantly to the IGR.
Lastly, to sustain rapid and uniform development of the state, the governor has proposed a long-term economic plan. Speaking on this plan, Mr Okon said “the governor has given my ministry the approval to start the plan.
“The plan addresses the entire gamut of the economy. We are brainstorming so that no element would be left out because at the end of the day we want a development plan that is acceptable, implementable and that which will lead to the development of the state.”
Lest we forget, in 2015 at the point of taking over the reins of leadership in the state, Nigeria was technically in recession. At the state level, the governor was greeted by a bleak economic future. There was a huge debt overhang, major projects left uncompleted and a backlog of unpaid gratuities and pensions and sundry financial commitments left behind by the previous administration.
It took the ingenuity of Governor Emmanuel to undertake the ‘financial engineering’ of the state economy and put it on the road towards recovery. His experience from years of operating global corporate finance was brought to bear as he churned out innovative vehicles some of which included ‘Loan Conversion to Bonds’ - LCB, ‘Alternative Project Funding Approach - APSA and ‘Guarantee Contractor’s Finance Scheme – GCFS with which he was able to navigate through the debt overhang and deliver on his five-point agenda for the state.
Referring to the harrowing period, years later, Governor Emmanuel while presenting the 2019 budget proposal to state legislators said “Together, we weathered the storms of recession and kept sailing when some states were struggling and needed to be provided lifelines. When men had said there is casting down, our testimony had always been that there is a lifting up.”
Once again, this man of faith is putting his belief to work and hopes to change the narrative for his people.
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