States under the salary debt burden will now have succour as the Central Bank of Nigeria (CBN) has approved the request by deposit money banks to provide financial accommodation to such state governments to enable them pay the backlog of salaries of their workers.
This follows the decision by the National Executive Council (NEC) at its meeting in June requesting the CBN, in collaboration with other stakeholders, to appraise and consider ways of liquidating the outstanding staff salaries owed by state and local governments.
Out of the 27 states involved, funds have been disbursed to two states, namely, Zamfara and Kwara, which met the requirements of their respective banks. The apex bank said efforts will be made in the coming days to conclude disbursements to other states so that all outstanding salaries to civil servants can be cleared.
The conditions for accessing the loan facility, according to the CBN, include resolutions of the State Executive Council authorizing the borrowing and State House of Assembly consenting to the loan package, as well as issuance of Irrevocable Standing Payment Order (ISPO) to ensure timely repayment.
With slumping oil prices, lower revenue at the federal level and less fund to be distributed by the Federal Account Allocation Committee (FAAC), many states went bankrupt and were unable to pay salaries since last year.
By June 30, 2015, well over 20 states were owing over N100 billion in one or more of salary arrears, pension payments, necessary remittances, and other entitlements of workers.
The debtor states, whose wage debt varies from two to 11 months, include Abia, Akwa Ibom, Bauchi, Benue, Cross River, Ekiti, Enugu, Imo, Jigawa, Kano, Katsina, Kogi, Ogun, Ondo, Osun, Oyo, Plateau, Rivers, Yobe, and Zamfara. At least six of these states owe a backlog of salaries for six months and above.
The range and size of indebtedness vary from state to state. Some states owe workers’ salaries across the board, while others owe salaries for workers in particular institutions or parastatals within their states.
Some states pay their workers’ net salaries but fail to remit tax or loan deductions to the appropriate quarters. Yet, other states owe a backlog of pension payments under the old scheme, leaving their senior citizens to suffer untold hardships, while as many as 26 states have yet to implement the new contributory pension scheme, designed to guarantee availability and prompt payments of pension entitlements.
The West African Examination Council (WAEC) had recently withheld the results of hundreds of thousands of government-sponsored candidates from 13 debtor states who sat for the May/June 2015 West African Senior Secondary School Examinations (WASSCE) over their inability to pay the examination fees.