Nigeria’s north central states may suffer more from FG dwindling revenue, says report

While the coronavirus pandemic continues to have a negative impact on the Nigerian economy, nothern states may suffer more from its implications, a report said.

Lagos based geopolitical risk firm SBM Intelligence in a report said this is because “many of the states in the North Central rely heavily on federal allocations to survive.”

Nigeria’s economy is projected to contract by 3.4 percent this year, government officials said last week, as dwindling oil revenues and the new coronavirus forced it to cut budget plans for a second time. Nigeria was assuming a lower petroleum price of $20 per barrel.

Finance Minister Zainab Ahmed said in March that this year’s record 10.59 trillion naira ($29.42bn) budget would be cut by about 15 percent.

At the time, she said the initial assumed oil price of $57 a barrel would be reduced to a worst-case scenario of $30 a barrel.

But last Tuesday, she said that benchmark would again have to be revised down.

“The fact that crude prices have dropped precipitously makes it likely that states in the North Central will struggle to deal with dwindling finances and a COVID-19 outbreak in the region,” it added.

This region consists of Benue, Kogi, Kwara, Nasarawa, Niger, and Plateau States, and the Federal Capital Territory, Abuja and they are heavily plagued pastoral conflict.

The conflict has effectively affected food production and added more people into the unemployment pool, the report says.

“We are in the process of an amendment that is bringing down the revenue indicator to $20 per barrel,” Ahmed said in a web conference about the impact of low oil prices on the country.

“With the economic threat from COVID-19 and the consistent warnings to those who sell in the market space, and civil servants, it is likely that bringing things to a halt within the region will largely affect revenue generation for the first quarter of 2020.”

The report also highlighted that the potential impact of COVID-19 in the north east states “will be very devastating.”

“The economic implication is further unemployment, serious difficulty with off-setting both local and foreign debts, as well as a setback in the region’s fight against Islamic extremism,”

But for the remaining four regions, SBM reports indicated that the dwindling federal government revenue and the pandemic might have a mild effect on the economies of the states in the region.

SBM said the effect on the north west states “will be very limited and not cripple life within the region” while for the south east states the pandemic might “damage the reputation of state governments, highlighting their inability to handle a health crisis in the region, rather than an economic crisis.”

For south south region the report indicated that states in the region will “most likely going to need federal government support to prevent it from plunging into a devastating financial crisis.”

South west region might see more foreign aid come to the zone than any other, the report added.