Tayo Busayo, Abuja
Nigeria’s 36 states and the Federal Capital Territory (FCT) accumulated a total debt of N5.28 trillion in seven years of President Muhammadu Buhari administration: from 2015 to 2022. This amount, which comprises domestic and external debts, represents a 220 percent increase from N1.65 trillion collectively owed by the sub-nationals in 2015.
The Debt Management Office (DMO) which published these figures in its latest report on “Nigeria’s Total Public Debt as at June 30, 2022” also showed in another report that the sub-nationals achieved a total internally generated revenue (IGR) of N1.90 trillion as of H1 2022. Although the IGR performance was a remarkable improvement compared with N612.67 billion recorded in 2015, representing a 210.5 percent increase, analysts express concern about the huge debt profile of the sub-nationals against their lean revenues.
“There are genuine reasons to worry. The states keep piling debts while their revenues are not showing commensurate improvement.
Furthermore, the consistent decline in the Federation Accounts Allocation Committee (FAAC) remittance, which is a major source of revenue for the three tiers of government, underlines an unhealthy fiscal condition and signals danger ahead,” said Daramola Olaleye, a financial management expert.
Olaleye’s views are not out of place: The Nigerian National Petroleum Corporation (NNPC) Limited has made zero remittance to FAAC since January 2022. This was due to dwindling oil revenue triggered by a slump in Nigeria’s production level. The country has witnessed unprecedented levels of crude oil theft and pipeline destruction in recent times which culminated in severe fiscal challenges for the nation.
Additionally, money earned from residual oil export is spent on humongous petrol subsidy that sucks up the revenue.
This sad development has worsened the financial condition of the sub-nationals battling to remain afloat amid high inflation, steep devaluation of the naira and rising unemployment rate. Consequently, the states battle to pay salaries, backlog of pensions and meet other governance commitments.
A recent 2022 Nigerian Sub-National Salary Survey by BudgIT, a Nigerian civil tech organisation, identified 12 out of the 36 states in the country that owe their civil servants at least one month’s salary as at July 31, 2022.
The states are Abia, Imo, Cross Rivers, Taraba, Adamawa, Plateau, Benue, Nasarawa, Ebonyi, Delta, Edo, Ondo and Kogi. The report also showed that of the above-mentioned states, Imo, Cross Rivers, Adamawa, Abia and Edo have the most miserable Nigerians as their cost of living has surged amid record-high unemployment, making them poorer.
“We conducted this empirical survey to spotlight and identify state governments that have consistently failed to meet the essential requirement of governance and employee compensation, thereby subjecting their workers to unpaid labour and harsh living conditions,” BudgIT said. Economic analysts posit that people being owed salaries might see themselves plunged into higher incidence of poverty because they will struggle to pay for the basic needs of life. It is devastating at a time the states undergo sustained increase in the prices of commodities and services.
The survey also highlighted that Abia State currently owes its state tertiary institution workers six months’ salary, while Ebonyi has not paid its pensioners in the last six months. Secretariat workers in Taraba, reportedly, complained of irregular salary payments for up to six months. Similarly, lecturers at state tertiary institutions and midwives in the state-owned hospital in Ondo State have not been paid a dime in the last four months.
The report further showed that health institution workers in Abia have not been paid salaries in the last 10 months. “These are signs of hard times ahead as the states battle to repay and service their debts amid low revenue inflow”, Olaleye said.
The federal government has serviced domestic debt with N1.33 trillion in the first half of 2022, a 43 per cent Year-on-Year (YoY) increase from N935.46 billion reported in the first half of 2021. Data from DMO further showed that domestic debt service was at N2.05 trillion in 2021, a 10.8 percent increase from N1.85 trillion in 2020. This suggests that the states will be spending a huge chunk of their resources on debt servicing.
The Federal Government’s move to commence the deduction of a N614 billion bailout fund, which it gave to 35 states of the federation, was greeted with protest by the governors who said it would create severe financial hardship for them. The government had extended the conditional budget support facility to the 35 states through the Central Bank of Nigeria (CBN) to help them pay their workers’ salary and settle their pension obligations.
The then Chairman of the Nigerian Governors’ Forum, Kayode Fayemi of Ekiti State, said the governors demanded a reconciliation of accounts between the federal and state governments before repaying the bailout fund granted them. The reconciliation, the governors argued, would allow the states to deduct the debts the federal government owed states as a result of the repair of federal roads undertaken by the state governments in their domains.
Given the prevailing realities, the measure could only provide a temporary relief as the federal government battles with dwindling oil revenue which has lingered over time.
The Minister of State for Petroleum Resources, Dr Timipre Sylva, disclosed in August 2022 that the country lost 400,000 barrels of crude daily via oil theft. Nigeria’s oil production slumped by 28 million barrels between January and July 2022, threatening the Federal Government’s N9.37 trillion oil and gas revenue target by the end of the year.
The Minister of Finance, Budget and National Planning, Dr Zainab Ahmed, blamed oil production shut-ins due to pipeline vandalism, crude oil theft and high petrol subsidy cost. These have compounded the financial woes of the sub-nationals which depend largely on the monthly FAAC receipts to fund their budgets and other commitments.
No fewer than 133 million Nigerians, representing 63 per cent of the population, are currently living in multi-dimensional poverty, the NBS has disclosed.
According to the Nigeria Multidimensional Poverty Index (MPI) 2022 Survey, which was released last week by the statistical agency, there are high deprivations in sanitation, access to healthcare, food insecurity, and housing.
The report shows that poverty is higher in the rural areas where 72 per cent of the people are poor, compared to 42 per cent in the urban areas. It stated that about 70 per cent of Nigerians live in rural areas, yet these areas are home to 80 percent of poor people.