31 State Governments Owe Central Bank of Nigeria ₦339.9 Billion in Unpaid Salaries
According to documents obtained from the Central Bank of Nigeria (CBN), as of September 2023, thirty-one state governments collectively owe the CBN a total of ₦339.9 billion, which was borrowed between 2015 and 2023 to pay workers’ salaries. This debt includes an outstanding amount of ₦339.97 billion, along with a loan default of ₦1.31 billion.Thank you for reading this post, don’t forget to subscribe!
The funds were accessed through the Salary Bailout Facility (SBF), initiated by the CBN under the tenure of former Governor Godwin Emefiele. The SBF aimed to alleviate fiscal pressures faced by state governments, specifically to clear salary arrears owed to employees.
While the SBF program has since been halted by the current CBN governor, Olayemi Cardoso, due to economic constraints, it remains a significant intervention in addressing financial challenges experienced by state administrations.
Despite the substantial disbursement of ₦457.17 billion to 31 state governments, only ₦117.21 billion has been repaid as principal, with ₦45.21 billion repaid in interest.
Top beneficiaries of the SBF included states like Imo, Kogi, Kano, Oyo, and Osun, which received significant amounts to address salary arrears.
The inability of states to fulfill their primary obligation of paying salaries has raised concerns, especially amidst calls for an increase in the minimum wage. Last year, many states resorted to borrowing from banks to meet salary obligations, indicating financial strain.
Moreover, twenty-four states were reported to be unable to pay salaries without waiting for federal allocations, highlighting the precarious financial position of several states.
Financial experts have expressed concerns about the sustainability of states’ fiscal management, emphasizing the need for increased revenue generation and financial innovations. They suggest exploring Public-Private Partnerships to enhance Internally Generated Revenue and reduce dependence on bailout facilities.
The growing domestic debt of the Federal Government, amounting to ₦4.94 trillion in the first six months of President Bola Tinubu’s administration, indicates a significant reliance on borrowing. Despite promises to reduce borrowing and focus on revenue generation, domestic debt has continued to rise.
Experts warn that Nigeria’s increasing debt profile hampers economic growth and sustainability. They stress the importance of prudent fiscal management and strategies to offset previous debts and enhance revenue generation to achieve positive economic outcomes
