Thirty-one state governments owe the Central Bank of Nigeria, CBN, a total of N339.9bn obtained to pay workers’ salaries between 2015 and 2023, a document obtained from the apex bank has revealed.
The document also stated that the sub-nationals had yet to pay an outstanding of N339.97bn and a loan default of N1.31bn as of September 2023.
The fund, which was facilitated through the Salary Bailout Facility, a strategic intervention by the CBN aimed at alleviating the fiscal pressures faced by the states, was part of the over N10.3tn intervention fund made available by the apex bank under the immediate former CBN governor, Godwin Emefiele.
In contrast, the current governor, Olayemi Cardoso, stopped the programme, stressing that the apex bank could not continue to fund more intervention programmes amidst the current economic crisis.
The CBN said the SBF was designed to help the state governments to clear the backlog of salaries owed their employees. The initiative underscores the critical role of the CBN in stabilising the country’s financial landscape, especially in times of fiscal distress faced by state administrations.
The programme, which has been closed according to its status report, involved key stakeholders, such as the benefiting state governments, Deposit Money Banks, the Federal Ministry of Finance, and the Accountant-General of the Federation, all of whom played pivotal roles in implementing and managing the bailout package.
A breakdown of the report showed that 31 state governments benefited from the initiative, with N457.17bn disbursed. Despite the substantial disbursement, the principal repayment made so far totalled N117.21bn, with interest repayments at N45.21bn.
It also showed that the states collectively borrowed N457.17bn to pay salaries to their respective civil servants and an overdue amount of N1.31bn.
The report further said the top beneficiaries of the bailout facility included Imo, which received N20.46bn; Kogi, N20.26bn; Kano, N20.21bn; Oyo, N16.81bn; and Osun, N15.93bn.
The inability of the states to perform their primary obligation to their workforce has been a front-burner issue in recent times amidst clamour by labour unions to increase the minimum wage from the current N30,000.
Last year, state governments borrowed about N46.17bn from three banks to pay salaries between January and June, according to an analysis of the half-year 2023 financial statements of Access Bank, Fidelity Bank, and the Zenith Bank Group.
It was observed that the states borrowed the most from Access Bank in the six months, with a record of N42.97bn loan.
This was followed by Zenith Bank with N1.78bn, and Fidelity Bank with N1.42bn in the six months.
It was reported that the inability of 24 states to pay workers’ salaries this year without having to wait for federal allocations from the central government despite improved federal allocations.
The development also means that the respective wage bills of the affected states surpassed their various internally generated revenues, raising concerns about workers productivity and state governments’ efficiency in internal revenue generation.
The 24 states include Bayelsa, Ondo, Yobe, Sokoto, Taraba, Plateau, Oyo, Niger, Nasarawa, Kogi, Kebbi, Katsina, Jigawa, Gombe, Ekiti, Ebonyi, and Borno.
Others are Benue, Bauchi, Adamawa, Akwa Ibom, Cross River, Abia, and Delta.
In 2023, state governors got the most Federal Account Allocation Committee disbursements in at least seven years. The rise in FAAC allocations to the three tiers of government, especially the states, followed the removal of petrol subsidy and currency reforms of the current administration. The reforms have reportedly led to a 40 per cent boost in income.
Financial experts have raised concerns about states’ spending on recurrent expenditure, highlighting the need to embrace financial innovations.
