States repayment of $2.1b threatens Nigerian workers’ wages

Governors are afraid that payment of salaries may be threatened when deductions of the $2.1b budget support facility they accessed begins.

At the end of the National Economic Council (NEC) meeting on Thursday, Finance Minister Mrs Zainab Ahmed said the repayment by states will commence when the federation account allocations for July is distributed. This will be at the end of next month.

Thirty five states – except Lagos – benefited from the bailout made available by the Buhari Administration in July 2015 at a time many of them could not pay salaries.

“The fear of disruption to payment of workers’ salaries is why states lobbied hard for the extension of repayment so that it will fall into when there will be more money accruing to the states, a source at the Nigeria Governors Forum (NGF) said at the weekend.

It was learnt that it took the consent of the Central bank of Nigeria (CBN) to the request for “bridge facility” for the governors to back down and allow the deduction of the facility to begin from July allocation.

The source said: “The governors demanded a six-month bridging facility to be able to cope.

“That’s part of the deal. We agreed to a six-month bridging facility.”

But, the source was not forthcoming on the structure of the bridging facility and how much is allowed per state.

“A bridging facility is described as an interim financing. The gap when financing is needed but not yet available.

The source clarified that the “NEC and the CBN will determine how much to give to each state within the six-month bridging facility timeline.”

Many states are struggling with fragile cash flow.

They have weak Internally Generated Revenue (IGR).

They rely on the monthly Federation Account allocation which has been dwindling until in recent months.

The Federation Account Allocation distribution for June, which was last week, stood at N733.095 billion

It is from this allocation that the repayment of the facility will be deducted.

In a recent research, Civil Society Organisation BudgIT report indicated that only four states – Lagos, Rivers, Akwa Ibom and Kano – are viable.

It said the 32 States could not stand on their own without the federation account Allocation.