24 states can’t pay salaries without FG allocation – Budgets

At least 24 states of the federation will not be able to pay workers salaries this year without having to wait for federal allocations from the central government, findings by The PUNCH have revealed.

Only 11 out of the 36 state governments of the federation can independently pay their workers’ salaries without depending on federal allocations, according to an analysis of the state governments’ approved budgets for the 2024 fiscal year.

The states with robust internal revenue are Lagos, Kano, Anambra, Edo, Enugu, Imo, Kaduna, Kwara, Osun, Ogun and Zamfara.

The approved budgets are also contained in Open States, a BudgIT-backed website that serves as a repository of government budget data.

While the budgets of 35 states have been made public, Rivers State's budget could not be accessed nor has it also been uploaded to the platform.

According to the analysis budget data, 24 states cannot fund salaries payments from their Internally-Generated Revenue and, as such, may have to rely on the Federal Government allocations or borrowing from banks and related institutions.

The development also means that the respective wage bills of the affected states surpassed their various IGRs, raising concerns about workers productivity and state governments’ efficiency in internal revenue generation.

The 24 states are Bayelsa, Ondo, Yobe, Sokoto, Taraba, Plateau, Oyo, Niger, Nasarawa, Kogi, Kebbi, Katsina, Jigawa, Gombe, Ekiti, Ebonyi, Borno, Benue, Bauchi, Adamawa, Akwa-Ibom, Cross River, Abia, and Delta.

The development is coming amidst clamor for wage increases by labour unions at both the federal and state levels, following the rising cost of living in the aftermath of fuel subsidy removal and unification of the foreign exchange markets by the current administration.

The Nigerian Labour Congress has consistently maintained that if inflation continues to rise, organized labour may have no choice but to insist on a new minimum wage of N1m for Nigerian workers. The government however has rejected the demand.

In the first half of 2023, state governments borrowed about N46.17bn from three banks to pay salaries between January and June 2023. The findings were based on an analysis of the half-year 2023 financial statements of Access Bank Plc, Fidelity Bank, and Zenith Bank Plc

The PUNCH observed that the states borrowed the most from Access Bank in six months, with a record of N42.97bn loan.

This was followed by Zenith Bank (N1.78bn borrowed) and Fidelity Bank (N1.42bn borrowed) within six months.

In 2023, state governors got the most FAAC allocations in at least seven years. The rise in FAAC allocations to the three tiers of government especially states followed the petrol subsidy removal and currency reforms of the current administration. The reforms have reportedly led to a 40 percent boost in income.