The fall in the price of crude oil is being used as an excuse to threaten jobs, wage cuts and to support further budget cuts, even on health and education. The trade unions should extend their fight against these attacks and demand a significant increase in government spending on health, education and water by doubling the budget originally proposed for 2020 in these areas. The trade unions also need to demand an emergency living grant for informal workers who are deprived of incomes and livelihoods during lockdowns and a rapid increase in the provision of water and sanitation services to underserved communities.
The global price of oil has fallen by about 50%, but the price is now going back up again and averaged more than $40 a barrel during June . Oil revenue was only planned to fund a quarter of Federal Government expenditure this year . So the fall in the oil price should only result in a budget cut of little more than a tenth. States like Lagos and Ogun get less than half of their income from the FAAC allocations, so again they will be less hit by any possible eventual reductions.
The FAAC allocations for the first quarter of 2020 were the highest for any year since 2014 . The allocations for April were only slightly below this record and were still 94% of the average for the first three months of this year .
Despite this the bosses and some governments have declared war on their workers. Access Bank claimed it wanted to reduce its workforce by 75% and reduce the salaries of its remaining staff by 40% , although this move has been stopped by the Central Bank. Some states have also reduced the salaries of its staff, for example, local government area chairs of Nassarawa State tried to cut their staff March salaries by 25 percent and Kaduna State reduced salaries by 25% from April , resulting in a seven day strike by health workers which is currently in place. Other public sector workers are suffering wage cuts and non-implementation of the new minimum wage, over a year after it was passed into law.
We need to campaign for the ending of health charges in public hospitals and health centres. The Covid pandemic is having a major detrimental effect on general health as the lockdowns reduce incomes available for food, health costs and stop patients attending hospital . This could result in an increase in under-5 child deaths by 45% and an increase in maternal deaths by 40%8. Free testing for malaria, TB, typhoid etc and free medicines will save far more people than Covid will ever kill. Women should not be charged for delivering their babies in hospitals – this is why maternal and neonatal deaths are amongst the highest in the world. We need more doctors and nurses in our health centres and hospitals.
Increased spending on public education would allow decongesting overcrowded classrooms by employing more teachers and urgently building more class rooms before children resume school. It would also reduce the cost to many poor families of school fees which is a major burden. Finally it would reduce the number of out of school children, one of the highest in the world.
To fund this we need to double the Federal and state budgets for health, education and water this year. The 2020 Federal budget proposed only 3% of expenditure for health compared to a target of 15% in the Abuja Declaration of 2001 . It also proposed less than 8% to be spent on education compared with an international target of at least 20%.
These major increases on social spending could be funded by reducing the capital budget (which is mainly looted) and the following reductions:
• Cut capital expenditure by 50% – huge area of leakage. Saving nearly 1200 billion at the Federal Level – they proposed a cut of 20% in capital spending in early April .
• Stop expenditure on cars. ₦11.3 billion is to be spent on the purchase of vehicles in 2020 Federal Budget. Reduce the presidential fleet of aircraft from 11 to no more than two.
• Cut ₦27 billion budget for the renovation of the National Assembly has to go. Similarly capital budgets for government house in each state. Reduce the cost of the National Assembly (2020 budget said N128 billion).
• Cut the security vote for each state saving N250billion in total (around 2.5% of Federal budget). N20billion in the 2020 Federal budget.
• Cut the cost of governance. Every senator (109) is entitled to N200 million constituency fund each year and expenses of N13.5million each month (total N40 billion). Cut the cost of political appointees by 50% as Kaduna State did in April . Stop preferential pension schemes for Governors and political appointees.
• Stopping foreign training and transport would save ₦8 billion from Federal Budget .
• In the Ministry of Defence, not less than ₦2 billion was planned to be spent on kitting out generals15.
• Stop further privatisation and outsourcing, all oil blocks to be managed transparently by the Federal Government. Savings on oil subsidy which many have cost N1,000 billion in 2019 . Reduce use of consultants for work civil servants should undertake.
• States to increase IGR especially by introducing a progressive property tax on properties with a plot of more than the standard plot size.
Above savings may amount to more than N1,300 at the Federal level. So even doubling the original health, education and water budgets for 2020 of N1,284 billion would still leave some savings. This could be supplemented by the N1,000 billion recovered from past looting and the N5,400 billion owed by 350 companies and individuals . These saving could be used as a safety net and to reduce the proposed additional borrowing of $7 billion (N2,750 billion) . It could also be used to provide an emergency living grant for informal workers who are deprived of incomes and livelihoods during lockdowns and a rapid increase in the provision of safe water and sanitation services to underserved communities.