Sodeinde QuadriA document obtained from the Central Bank of Nigeria (CBN) has revealed that thirty-one state governments owe a total of N339.9 billion obtained as salary bailout funds between 2015 and 2023. These funds were acquired to pay workersโ salaries during this period, highlighting the financial strains faced by many states across Nigeria.
The outstanding debts include both the principal amount of N339.97 billion and an additional N1.31 billion in loan defaults as of September 2023. The funds were facilitated through the Salary Bailout Facility (SBF), a strategic intervention by the CBN aimed at alleviating fiscal pressures experienced by various states.
Under the leadership of the immediate former CBN governor, Godwin Emefiele, the bank made over N10.3 trillion available through various intervention funds, including the Salary Bailout Facility. However, the current CBN governor, Olayemi Cardoso, has ceased the programme, citing the economic crisis as a reason for discontinuation.
The SBF was designed to assist state governments in clearing backlogs of salaries owed to their employees, underscoring the critical role played by the CBN in stabilizing the countryโs financial landscape during times of fiscal distress.
According to the report, 31 state governments benefited from the initiative, with a total of N457.17 billion disbursed. However, despite substantial disbursements, only N117.21 billion has been repaid as principal, with an additional N45.21 billion in interest repayments.
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Imo, Kogi, Kano, Oyo, and Osun were among the top beneficiaries of the bailout facility, receiving significant amounts to address their salary payment obligations.
The inability of states to meet their primary obligation to their workforce has become a pressing issue, especially amidst calls by labor unions for an increase in the minimum wage. Last year alone, state governments borrowed approximately N46.17 billion from various banks to meet salary obligations between January and June.
Furthermore, recent reports indicate that 24 states are unable to pay workersโ salaries without relying on federal allocations, despite improved revenue allocations from the central government. This situation raises concerns about workers’ productivity and the efficiency of state governments in generating internal revenue.
Experts have warned that many states are not financially sustainable and are at risk of insolvency without a boost in investment. They emphasize the need for states to attract more investments and generate additional revenue internally to reduce dependence on federal allocations and borrowing.
