Unpaid Salaries: What states are owing

July 2016 coverAs the prevalent economic crunch takes its toll on living standards across the country, Nigerians have resorted to belt-tightening measures not seen since the days of the Structural Adjustment Programme (SAP). Many Nigerians now rue the loss of purchasing power as inflation has surged into double-digit; reaching 15.6 percent in May, the highest level since February 2010.

For civil servants and pensioners in many states of the federation who face the double jeopardy of high inflation and backlog of salaries, life could not be tougher. President Muhammadu Buhari painted a grim and agonised picture that “27 out of the 36 states cannot pay salaries; a disgrace to Nigeria.” He regretted the country’s inability to save in the years of abundance and the culture of consumption it spawned.

Sources in the Presidency revealed that due to the non-payment of workers’ salaries in most states of the federation, many state governors have been besieging Aso Rock in recent times, requesting for assistance. States are unable to settle over N200 billion in salary backlogs while pensioners’ arrears could not be ascertained at press time.

State of the states
All measures to alleviate pain of cashlessness among the public service workers have failed. Civil servants in the states that have had salaries slashed are still unable to receive the fraction their governments are offering.  A few are contending with the threat of mass sack as governors seek the easiest way out of the jam. With the exception of Lagos, Edo, Ebonyi, Cross River, Akwa Ibom, Kano, Enugu, Jigawa, Anambra, Kaduna, Yobe, Borno, Sokoto and Rivers states which have been able to pay workers’ monthly salaries up to date by press time, the rest owe workers between two  and 13 months.
TheEconomy gathered that even with two tranches of relief money from the Federal Government, the situation has not improved as many states are still insolvent notwithstanding deals to pay a fraction of the salary arrears. With the inability of the states to meet their monthly wage bills, many wonder how it will be possible to meet the latest labour (Nigeria Labour Congress) demand for minimum wage increase from N18, 000 to N56,000.
Ekiti State workers have been at daggers drawn with the Governor Ayodele Fayose-led state government. Six workers have been reported to have died in the last five months since the salary crisis started. The state NLC Chairman, Raymond Ade Adesanmi told reporters that one of the dead workers was a teacher who committed suicide in Aramoko-Ekiti, headquarters of Ekiti West Local Government Area because of rising interest on the bank loans she obtained and has been unable to offset. He added that many workers and pensioners are suffering from stress-induced ailments such as hypertension, diabetes and kidney failure.

The rumour mill is still abuzz with the strange story of a civil servant who seriously in want stole some cocoyams; a crime for which she was lynched.
Ekiti State is said to owe workers at least five months’ salaries. In April, the government paid Grade Level 01 to 07 staff their January salaries while those on Level 08 and above received half pay. The Ekiti State government like other insolvent states claims that it has not been able to meet salary obligations because the allocation from the Federal Government and the internally generated revenue cannot support the salary bill.

Information Commissioner Lanre Ogunsuyi says the state is indeed “behind in salary payment because the allocation from the Federal Government and the internally generated revenue cannot support the salary structure”.

At press time, workers were on strike over the non-payment of salaries just as they were joined by students.

In Bauchi State, workers in the Ministries of Education, Health, Agriculture, and the Primary Health Care Development Agency are owed salaries of four to six months. The State Board of Internal Revenue and the Ministries of Finance, Budget and Economy Planning workers are owed at least two months’ salaries. The state chapter of the NLC accuse Mohammed Abubakar, the State governor of diverting the Federal Government bailout fund and leaving the backlog of salaries arrears unpaid.

Benue State workers have endured six months of unpaid service, even as the government of Samuel Ortom is battling to offset the huge debt of N90 billion he inherited from his predecessor, with N12 billion representing five months’ salary arrears. Governor Ortom has initiated moves to take advantage of the recent N90 billion loan made available by the Federal Government.

Since the transition from the People’s Democratic Party (PDP)-led administration of Captain Idris Wada to the incumbent, Yahaya Bello of the All Progressives Congress (APC) in Kogi State, about six months’ salaries are owed state government workers even as the situation is worse for local government employees. The government said recently that the state’s N20 billion bailout fund from the Federal Government has been released. However, staff verification by the screening committee set up to ascertain the true number of workers has caused punishing delay.

Onuh Edoka, the Kogi State chairman of NLC, is appalled that the governor has refused to pay the salaries of the local council workers despite receiving allocation meant for the local governments from the Federal Government for defraying the wages. Kogi State has 17, 750 core civil servants excluding local government workers, primary school teachers, and staff of the state judiciary, legislature, and tertiary institutions. The total wage bill for core civil servants is about N3.1 billion.

The Plateau State government currently requires about N11.9 billion to clear the over five months’ salary arrears going by the state’s monthly wage bill of N1.7 billion. The wage bill is not the only burden left by the previous administration; the former Governor, Jonah Jang was said to have left a debt profile of N104 billion while pension arrears came to a little at over N11 billion.

Governor Simon Lalong applied to the Central Bank for N10 billion, but only got N5 billion. He hinged his inability to clear the backlog on the delay in release of the remaining N5 billion by the CBN. The state government is said to have secured about N20 billion in loans when it assumed office last year,  excluding the bailout funds. At press time, no other feasible attempt was made to settle the workers, aside the monthly federal allocations.
In Taraba State, teachers are at the receiving end as the government, like other salary-owing ones, finds it difficult to pay them the N18, 000 minimum wage. Other civil servants are, however, paid as at when due. Aliyu Jauro Mafindi, the state chairman of NLC, describes Governor Darius Ishaku’s failure to pay teachers as unfortunate.  Recently, the angry teachers embarked on an indefinite strike until government shows “sincere commitment” to clear the backlog of their salaries.

In Kwara State, some civil servants and pensioners have not received their salaries and pensions of between two and six months. The Committee of Unions of Tertiary Institutions (CUTI) comprising COLAASU, SSUCOEN and NASU of the Kwara State College of Arabic and Islamic Legal Studies (CAILS) chapter is pained by what it terms neglect of the institutions’ workers.

In Edo State, although  Governor Adams Oshiomhole’s administration does not owe civil servants, pensioners are having it tough as they have been without pension for 10 months. The governor caused a stir among his colleagues recently when he unilaterally increased the minimum wage by 25 percent, which the state workers are said to be enjoying, but the fate of pensioners hangs in the balance. Besides, workers of Egor Local Government Council are owed salaries in what the state government claimed was due to error in processing the allocation of the local government.

Civil servants in Abia State are owed between two and four months, but workers of the state Health Management Board have not been paid since December 2015. Interestingly, just as the state workers groan over unpaid salaries, Governor Okezie Ikpeazu caused nervous glances to be cast in his direction when he reportedly donated N20 million to the camp of Internally Displaced Persons (IDPs) in Adamawa State, giving the impression that all was well with Abia State.

Imo State workers and pensioners too are agonising over unpaid wages and pension arrears. While civil servants were last paid 70 percent of their salaries in March, pensioners have lost count of when last they were paid. In recent times, there has been a running battle between the Imo State government and workers over non-payment of salaries. As a way out of the salary burden, the government moved to downsize its workforce with labour, expectedly, resisting the move. Many workers were eventually sacked and a number of others retired prematurely. Following mounting unpaid salaries, the national and state leaders of the Nigeria Labour Congress stormed Owerri, the Imo State capital for a showdown with government. However, by and by, Governor Rochas Okorocha and labour reached an agreement on a 70:30 formula for the payment of salaries. Since then, no worker has been paid full salaries.  Sadly too, workers have only been paid up till March at press time.

Bayelsa State workers have not been paid for four months, just as retirees are owed seven months’ arrears. The agony of local government employees is worse. Workers in some of the councils have lost count of the arrears owed them. The state wage bill is about N4billion while the allocation from the Federation Account, after all deductions, has dropped sharply to about N1.6bn. Deputy Governor Rear Admiral Gboribiogha John Jonah (retd) summed up the Bayelsa situation thus: “It is sad that the state found itself in this situation. Bayelsa is not known to owe salaries, but with N1.6billion, it is physically not possible to pay.”

Despite a deal reached between the Oyo State government and labour 10 months ago to utilise 90 percent of the state’s allocation to pay salaries, the state is reportedly owing workers four months’ salaries.  Just as the workers have threatened strike, they are pushing for a review of the earlier agreement to include Internally Generated Revenue in the payment of salaries “because 90 per cent of the federal allocation is not enough again to pay workers,” says Mr Waheed Olojede, Oyo NLC Chairman.

However, the state government is not inclined to the idea. “Even if we add everything, it cannot still pay workers’ salaries. We cannot use all the resources to pay workers who make up just over 60,000 of about seven million citizens of the State. It is completely irresponsible,” says Mr Yomi Layinka, Special Adviser to Governor Abiola Ajimobi on Communications and Strategy.

In Osun State, government even reneged on paying March salaries, saying it could not afford to pay its state secretariat electricity bills let alone the N2.6billion wage bill. Only N6.23 million accrued to the state from the Federation Account in March after deductions. Between July 2015 and March 2016, workers have been taking home half pay while they are yet to receive anything since then.

Delta State government workers have received their salaries up to date, but the same cannot be said of local government employees who are owed N8.4billion in arrears as at March.  Of the backlog which dates back to the last quarter of 2014, only three months were offset from the state’s bailout fund. The plight of the workers was exacerbated by the decision of the state government to stop augmenting revenues accruing to local councils which amounted to N700million.

Tales of woe
Just as the fortunes of government workers and pensioners have nosedived, Investigations by TheEconomy show that most workers have resorted to borrowing to meet their basic needs. What is more, unable to bear the agony, some state workers have reportedly taken to suicide. According to the Ondo State chapter of the NLC, the Trade Union Congress (TUC) and the Joint Negotiating Council (JNC), 35 of their members and pensioners have died due to unpaid salaries and pension.

Mr Sunday Adeleye, Ondo State Chairman of the JNC justified the strike embarked on by workers in the state, saying 23 public servants and 12 pensioners died due to lack of money to buy food and medication. “We are tired of the situation and we know where the money is. Government should mop up all money sources — Ecological Fund and others to pay our salaries. Our people are dying,” he said.

Indeed, for many state government workers and pensioners, these are not the best of times. A retired teacher in Benin City, Mrs Carol Imasuen, who is being owed 10 months’ pension, laments her plight in catering for her two children in the university.  “I had to borrow money recently to send for their upkeep. After spending my life serving, I don’t have to be treated like this,” she said.

Profligacy in the states
No doubt, the drop in the prices of commodities in the international market is expected to hit hardest a country like Nigeria which depends on crude oil for 90 percent of its revenue and about 80 percent of export earnings. Prior to the oil prices falling by 70 percent to about $30 per barrel (rebounding somewhat to about $50 now), the commodity sold for about $110 per barrel in a boom that was expected not to last. However, most state governors, giddy with hubris, engaged in huge but ‘unsustainable’ projects.

In Osun State, the government, through its Opon Imo programme, doled out electronic tablets and laptops to secondary school students and resorted to the construction of an international airport, with many analysts questioning its economic sense. Ekiti State, which prides itself as the Fountain of Knowledge, is no different. The previous administration built a N2.5billion Government House making many to question the knowledge in such a project compared to pro-poor projects.

The Imo State government embarked on paying pupils monthly stipends even as many believed it was not sustainable. For the Nassarawa State government, its priority was the construction of a N20billion cargo airport in conjunction with a Chinese firm which provided 75 percent of the financing. Only time will tell when the economic dividends of such a project will begin to accrue to the state.
Many other states fell in love with the construction of universities even as they struggled to fill their quotas in federal universities near by. For the governors, it was a matter of pride to have a university. Others such as Rivers and Akwa Ibom states bought and chartered private jets for frivolous foreign and local trips. In 2014, Akwa Ibom State also spent $96million building the Akwa Ibom International Stadium which was heavily criticized as wasteful.

Most worrying was that the state governments arm-twisted the federal government to share the proceeds of the excess crude account (and tried to block the establishment of a Sovereign Wealth Fund), which was meant to act as savings for the rainy day. Indeed, the rainy day has come and most governments are now burdened with huge debts. “Despite crude oil staying above $100 per barrel for 42 consecutive months, the federal, state and local governments failed to build adequate fiscal buffers,” according to a recent report by budgIT.

Indeed, analysts had cautioned against sharing the proceeds of the Excess Crude Account (ECA). Professor Chukwuma Soludo, former CBN governor through a widely publicised essay prior to the 2011 general elections noted that “the issue is not if the oil price will crash, but when. If oil falls below $40 tomorrow, the economy will come down on its knees with catastrophic consequences. Surely, the oil price will crash sooner or later, but Nigeria has no contingency plan”.

The bailout and its diversion
At the assumption of President Buhari-led federal government on May 29, 2015, many states owed salaries of between two and 13 months.  The parlous state of the economy occasioned by dwindling oil receipts made the bailout inevitable.  Little wonder the federal government had in July 2015 approved N689.5 billion as lifeline for states to enable them pay their workers several months of salary arrears. To meet this obligation, the federal government shared $1.7billion out of $2billion from proceeds of the ECA in addition to funds sourced from the LNG and loan from the CBN. In all, 27 states received N689.5 billion in bailout.

However, investigations by the ICPC in conjunction with the NLC reveal that some of the states which got the bailout did not actually owe salaries while others which owed salaries and got the bailout diverted same for other purposes. For example, Zamfara State, which applied for about N32billion but got about N10billion allegedly used the funds to settle 14 local governments, contractors as well as buy fertilizers. Imo State, according to the ICPC report, used its bailout funds of about N26.8 bilion which was reportedly domiciled in Fidelity Bank and Zenith Bank for purposes other than settling salary arrears. About N6 billion was allegedly transferred to bank accounts not related to salary payment and attracted a management fee of N21 billion. Benue State received N12 billion for the payment of salaries but of this amount, N70 million allegedly found its way into the account of the Office of the Deputy Governor.

Disappointed with the way the states misallocated the bailout funds and following more calls for assistance from the states, the federal government has made available another N90 billion to be accessed by the states in two tranches under strict conditions. Finance Minister Kemi Adeosun, who unveiled the loan package, said N50 billion would be released within three months and the balance in the next nine months at nine percent interest rate. The money, according to the minister, is not a bailout but will help the states to rebalance their portfolio. The conditions which have been described as stringent include the publication of audited financial statements within nine months of financial year-end, introduction and compliance with the International Public Sector Accounting Standard (IPSAS), publishing of the state budget online annually, implementation of a Treasury Single Account (TSA) and the review of all revenue-related laws and update obsolete rates/tariffs among others.

Although, some state governments have indicated interest in the new package, most Nigerians are sceptical that the beneficiaries would use the funds to offset the mounting wage bills. The implication is that many state civil servants will continue to live in anguish over non-payment of salaries.

By Osaze Omoragbon and Pita Ochai

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