In anticipation of the second tranche of the Paris and London Club loan refund, governors of the 36 states of the federation met early last month in Abuja and resolved to offset accumulated salary arrears and pensions in their respective states once the funds are made available by the federal government.
At the Abuja meeting, the governors, many of whom had been accused of diverting the first tranche of the said refund totalling N516.38 billion appeared to have come to terms with the reality of the suffering of their respective civil servants living in want on account of non payment of salaries, pensions and other allowances and firmly promised to do things differently of salaries, pensions and other allowances and firmly promised to do things differently.
A statement released by their spokesman, Mr. Abdulrazque Bello-Barkindo had said in part that “The governors who are aware of agitation over the non-payment of the backlog of salaries and pension arrears and the precarious predicament of the Nigerian worker, deliberated on the matter and concluded that in order to set the country on the path of growth, something immediate must be done to ameliorate workers’ plight by offsetting the backlog of their pay and emoluments. We all agreed that a substantial amount from the next tranche of the Paris-London refunds be used in the settlement of workers’ salary and pension arrears.”
The governors had subsequently gone back to their respective states to give their eagerly waiting workers and pensioners assurances that their plight would be over soon, but as it turned out, it was a case of counting the chicken before they hatch. The federal government did, as it promised, release another sum of N243.7billion for the 36 states and Abuja, but the amount proved grossly inadequate for such purpose, thus putting the governors in limbo and further highlighting the precarious financial situation of the states and indeed the country.
Before releasing the first tranche of the refund late last year, the federal government had made it clear that the intention was for states owing a backlog of salaries to use at least 50 percent to clear such backlog, but upon the receipt of the money, a number of them were said to have looted or diverted the monies to other ventures leaving the workers in continued penury. This had prompted the decision of the federal government to carry out an investigation to uncover states that failed to use the funds for the intended purpose and subsequently omit them from the list of those to benefit from the second tranche.
The threat had allegedly compelled some of the governors to release funds to the local councils as well as led to lobbying of the federal government by same governors. It was, for instance, alleged that the Bayelsa State government which had withheld funds due to the state’s eight local governments from the N24.5billion it got in the first refund and consequently falsely claimed to have collected only N14.5billion was compelled to release N1.3billion following the threat by Abuja.
Another governor Abdulaziz Yari of Zamfara State was accused of building a 100-room hotel in Lekki, Lagos, with the $3 million he got from the Paris Club loan refund to states in addition to diverting the sum of N500 million from the same fund to pay off a loan. These allegations notwithstanding, a careful examination of the wage bills and financial obligations of the indebted states reveal a bigger challenge: the funds were simply not
sufficient to clear such arrears of salaries in a number of states.
“Some have been owing salaries for periods getting to one year. That’s a clear case. In spite of the bailout funds, they are still not able to pay these salaries,” noted Mr Boniface Chizea, an economic analyst and former banker.
“One expected that this Paris Club refund would be substantial enough for them to clear all the backlog of salaries, but it is not. Then if you listen to the EFCC, some of the state governors who do not have conscience diverted the first refund, not even diverted to things that can help the ordinary citizens or help the economy of the state; they diverted it to their own personal use, so they just laundered the money.”
A careful examination of the states shows that Oyo State, for instance, with a monthly bill of about N5.3billion is owing up to eleven months of salary arrears, especially to local government staff. It got N13.3billion in the first tranche and N7.9billion in the second, but with monthly allocation of about N3.2billion and internally generated revenue of N1.3billion, it is obvious that it is in precarious situation.
Abia State got a sum of N11.4billion in the first tranche and N5.7billion in the second, bringing the total amount to N17.1billion. However, the state needs as much as N25billion to be able to offset arrears of salaries and pensions, meaning that if all the money collected in the refund were used to pay such arrears, and not just 50 percent as directed by the federal government, it still wouldn’t be adequate. Yet, for a state whose monthly internally generated revenue is N1.1billion on the average and federal allocation in the region of N3billion, it is obvious that the workers, whose monthly wage bill is about N3.5billion, are in for rough days ahead.
“The Paris Club refund cannot go anywhere, it is N5.7billion which is nothing compared to what we need,” Mr. Uchenna Obigwe, the Abia State Chairman of the Nigerian Labour Congress (NLC) told Business Hallmark.
“We need up to N25billion to clear arrears of pensions and salaries. Today, gratuity is in the neighborhood of N15billion and N16billion. Federal government should give more money so that these issues of arrears and gratuity will be taken care of,” he pleaded.
Benue, another state that has been having issues with payment of salaries is still not out of the woods, and may not be soon despite the Paris funds. The state got N13.7billion in the first tranche and N6.9billion in the second, but needs much more than that for salaries and pension arrears alone. Interestingly, the state has a wage bill of about N4billion, but it’s monthly allocation is in the region of N3billion, and internally generated revenue around N800million.
“In the first one (refund), more than 50 percent was used to pay salaries, this second one too, even though it is half of the first one, the government has decided to use 80 percent, said Mr. Godwin Anya, the state NLC chairman.
“Our case in Benue here is very bad, even if you use that whole money, it won’t take us anywhere.
“For the local governments, they have areas of ten months, teachers eleven months, including this July that is about to end. But for the states, it should be six months, including July. The backlog of pension arrears is there, gratuity is not even being talked about. That’s how bad the situation is, and we are telling government to do something.”
Kogi, Imo, Ondo and others are in similar situation, even some of the major oil producing states are not doing better despite their huge allocations.
Bayelsa is one of the oil producing states and has comparatively huge federal allocation, but even with the N24.9billion it got in the first refund and the N10billion it got in the second, it is not faring much better with its monthly wage bill of about N4billion.
“Bayelsa is owing six months, that’s the total outstanding salary arrears,” said John Bipre Ndiomu, the state’s NLC chairman.
“But government has agreed to pay two months, in fact they have started paying one and half months. By next month, they will pay another half. Out of the N10billion, N9b is for local government, but it is not enough to settle the bill for the local governments, but the government has agreed to argument it and pay at least one month to local government workers ad well as some gratuity.
“Arrears owed local government workers varies, some are ten, some are eleven, some are even above,” he explained.
Bayelsa gets an average of N8billion monthly as federal allocation, and generates about N6million monthly.
Delta, another oil producing state got N27.6billion in the first refund and N10billion in the second, yet with monthly allocation of about N7.5billion, N7billion monthly internally generated revenue and NN7billion monthly wage bill, it is still struggling with salary arrears of local government workers. Others in the same category include Kogi which owes local government workers between seven to 15 months; Kaduna, 12 months; Oyo between three to eleven months; Nasarawa, seven months; Ondo, six months; Ekiti, six months; Rivers, four months; Akwa Ibom four and Ebonyi and Plateau four each.
For state workers however, Anambra, Borno, Delta, Edo, Ebonyi, Enugu, Cross River, Rivers, Gombe, Jigawa, Kaduna, Kano, Katsina, Kebbi, Lagos, Niger, Plateau, Taraba, Zamfara and Sokoto are not owing.
“So far, we are not owing state workers’ salary, even pension we are not owing,” said Mr Peter Gambo, Taraba State NLC chairman.
“We are only owing gratuity and two days ago, the government announced that it is going to start paying the gratuity. I have been in the government house trying to set up the modalities of payment. It is only local government that is having three months outstanding, but the governor has already given a directive to the head of service that the names should be compiled so he can pay them all.
“The only issue we are having is with gratuity, the primary school teachers and the local government, but for the state staff, we are not owing anything,” he emphasised.
Nonetheless even with some of these states being able to meet salary obligations of state workers so far, Mr. Chizea argues that it is not sustainable and unless the country is restructured in such a way that states would be
encouraged to develop capacities, things won’t get any better and more states will continue to owe.
“That’s one of the reasons why a lot of people are calling for restructuring, the need to do that is now glaring,” he said. I mean, you cannot have states that are not viable all over the place, being dependent, causing problems for everybody and stifling the rate of national growth.
“It is a crying shame, but I think it is also good that it is happening because for those who are trying to resist restructuring, which of course, most of us wonder why it should be so because there is no state in this country that doesn’t have hidden potential to produce something, but when you put a structure in place where you eat without working, then you create disincentive for those who want to work.
“You perpetuate laziness and undermine the growth and development of the country. We need to do something about the structure of this country; we are now waiting for APC. They have set up a committee to at least define it on their own, what they think is restructuring, and that’s laughable. It is laughable because everybody knows what restructuring means, once you earn your resources and give some percentage to the centre, that’s it. Let’s go back to that, and everybody will begin to sit up and you will kill the struggle for the centre.”
Lasted week, a communiqué issued by the sub-committee of the Federation Accounts Allocation Committee (FAAC) of the Office of the Accountant-General of the Federation at the end of the meeting held on Tuesday revealed that a total of N652.229 billion has been distributed as federal allocation for the month of June 2017 to the federal government, state governments and local government councils.
The communique further indicated that the gross statutory revenue received for the month is N570.584 billion and is higher than the N317.562 billion received in the previous month by N253.022 billion.
This improvement was celebrated as an indication of things looking up, but for the analyst, Chizea, such is not the case.
“We have to ask what made up this amount of money. You look at the oil market which we all know is not doing very well, we are not getting the volume, we are not getting the price, and the Russians and the Saudi Arabians are now saying that Nigeria and Libya should also cut production, so it is not sustainable,” he said.