Eighteen out of the thirty-six
states of the federation are technically bankrupt. This is because they have
mortgaged their federation account allocations to contractors by signing
irrevocable payment orders with various banks.
As a result, payment to
contractors and other debt instruments are deducted at source and have become
first line charge on their lean resources. The internally generated revenues of
these states are also not enough to meet their obligations so they owe workers
several months of unpaid salaries.
The states which owing workers,
according to the Nigeria Labour Congress are Abia, Akwa Ibom, Bauchi, Benue,
Cross River, Ekiti, Imo, Jigawa, Kano, Katsina, Kogi, Ogun, Ondo, Osun, Oyo,
Plateau, Rivers and Zamfara
This is not the first time
states owe workers. In 2003, then Economic Adviser to President Olusegun
Obasanjo, Professor Charles Soludo, said that most state governments have
signed away their future statutory allocations to contractors whom they owe.
Explaining many states are
bankrupt and cannot fund developmental projects, Soludo said that most states
were technically bankrupt as huge deductions are made from their allocations to
pay such creditors.
This, he said, was “the reason
why a good number of states in the Federation owe their workers several months
of unpaid salaries.” He said after such deductions from allocation to the
states, they are left with little or nothing to operate with. As a result, most
of the states are not able to perform their statutory obligations. Instead of
telling the people the simple truth, they keep complaining of lack of funds.
Most of these states go into
further indebtedness through heavy borrowing and undertaking projects they have
no financial capacity to carry. “The problem of states in the Federation is
their total dependence on the Federal Government. Their internal revenue drive
and generation are so weak that no state can operate without federal allocation
or grant in some cases.”
Reacting to the high
indebtedness of states, Director-General, Securities & Exchange Commission
(SEC) Mr. Mounir Gwarzo condemned the indebtedness of some state governments,
which debts did not measure up with infrastructural development in their states
as the agony of unpaid salaries haunt most of them. He described the
indebtedness as a bad omen, more so, where there are no infrastructure in place
to underpin their debts.
Gwarzo therefore urged the
affected state governments to take advantage of equities, bonds or mortgage
bond securities in the capital market to develop their states’ infrastructure.
He urged governors to explore the opportunities available in the market to
deliver infrastructural development to their people, saying it is better to
borrow to meet infrastructural needs than to be content with just paying
salaries.
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