Paris Club refunds insufficient to offset backlog of salaries in 13 states

Thirteen state governments out of the 20 states which are owing civil servants and pensioners will need an extra N175 billion to offset the backlog of salaries and gratuities, BusinessDay findings show. This extra fund is required, after deducting the amounts disbursed to them in the second tranche of the Paris Club refunds from the outstanding salary arrears and gratuities.
The states in question are Rivers, Kogi, Delta, Niger, Taraba, Bayelsa, Abia and Benue. Others are Nasarawa, Osun, Ondo , Ekiti and Adamawa states.
The remaining seven states that will be off the hook, following the receipt of the second Paris refunds, are Kwara, Enugu, Zamfara, Gombe, Edo, Bauchi and Imo. The Federal Government recently released N243 billion to the 36 states of the federation in the second Paris Club refunds, meaning that the FG has so far disbursed N760.17 billion to states, under the refund scheme.
“The state governments entered into an agreement with the Federal Government before the funds were released, with regard to the utilisation of the funds which are specifically meant to pay outstanding salaries and gratuities, as that is the only way they can alleviate the suffering of their workers, said Misbau Lateef, a lecturer in the department of jurisprudence and private law, faculty of law, Obafemi Awolowo University, Ile Ife.
“Based on the reality on ground, some states will not be able to pay everything. They should source for additional funds to pay workers their inalienable rights”, he added.
The realisation that some states will still not be able to completely offset their outstanding obligations to workers and pensioners became evident following the analysis carried out BusinessDay Research and Intelligence Unit (BRIU) after the 36 states had confirmed receipt of the second tranche of the Paris Club refunds. The funds are meant to stimulate the economy and to support the state in meeting salary and other obligations, so as to alleviate the challenges workers face.
The analysis was inspired by a publication by Budgit, a research advocacy group, in June this year, which shows that some state governments owe civil servants and pensioners for as many as 28 months.
Topmost on the list of states that will need additional funds, is the Rivers state government, which owes pensioners 28 months gratuities, based on the said publication.
Meanwhile, on the average, the state government remits N1.48 billion into the pension’s scheme monthly, which brings the 28-month deductions not remitted to N42.86 billion. Our analysis indicates that even if the Rivers State Government decides to offset the gratuities with the N10 billion given to it in the second refunds scheme, it will still need additional N32 billion to meet pensioners’ obligations.
Kogi State owes its workers 12 months’ salary arrears and likewise owes pensioners 17 months’ unpaid gratuities. At an average of N2.78 billion monthly personnel cost, this brings its outstanding obligations to its workers to N33.9 billion, excluding gratuities. The state received N6.03 billion in the refund scheme, meaning that it needs over N27.88 billion to offset salaries and gratuities.
Delta State needs N5.65 billion monthly to meet its personnel cost and an additional N400 million to pay pensioners. With six months salaries owed to workers and another eight months unpaid gratuities to pensioners, the state needs N37.24 billion to pay all its obligations to civil servants and pensioners and this is N27.24 billion more than the N10 given to it from the Paris Club refunds.
Similarly, Niger state will need extra N16.8 billion in addition to the recent refunds, to meet its outstanding salaries and gratuities. Other states and the extra funds needed to stay afloat are Taraba, N16.28 billion; Bayelsa, N11.50 billion; Abia, N10.78 billion; Benue, N8.69 billion; Nasarawa, N6.54 billion; Osun, N5.72 billion; Ondo, N5.66 billion; Ekiti, N5.25 billion and Adamawa , N100 million.
The inability of states to meet their monthly obligations became aggravated, following a sharp fall in crude oil prices in the international market, paltry monthly IGR revenue and high cost of governance. As at the end of 2015, the total cost of governance of the 36 states of the federation amounted to N2.27 trillion, divided into personnel cost N890.9 billion; overhead cost N507.7 billion; CRF charges N209.5 billion; pensions N215.6 billion; debt charges N64.7 billion; other transfers N206.4 billion and other expenses which amounted to N172.6 billion.