An investigation by The Press has revealed that 24 states in Nigeria are unable to pay workers’ salaries independently and rely on federal allocations for sustenance. The findings are based on an analysis of the states’ approved budgets for the 2024 fiscal year.
Only 11 out of the 36 states have robust internal revenue to cover their wage bills without federal support. These states include Lagos, Kano, Anambra, Edo, Enugu, Imo, Kaduna, Kwara, Osun, Ogun, and Zamfara.
The analysis, conducted using data from Open States, a BudgIT-backed platform, indicates that 24 states lack the internal revenue to fund salary payments. Consequently, they may resort to federal allocations or borrowing to meet their financial obligations.
States such as Bayelsa, Ondo, Yobe, Sokoto, Taraba, Plateau, Oyo, Niger, Nasarawa, Kogi, Kebbi, Katsina, Jigawa, Gombe, Ekiti, Ebonyi, Borno, Benue, Bauchi, Adamawa, Akwa-Ibom, Cross River, Abia, and Delta are among those facing challenges in funding salary payments.
This revelation comes amid calls for wage increases by labor unions, fueled by rising living costs following the removal of fuel subsidies and the unification of foreign exchange markets.
In the first half of 2023, state governments borrowed approximately N46.17 billion from three banks to settle salary arrears. Access Bank recorded the highest loan disbursement of N42.97 billion, followed by Zenith Bank (N1.78 billion) and Fidelity Bank (N1.42 billion).
Despite increased revenue projections, 32 states plan to borrow N2.78 trillion from domestic and external sources to finance their 2024 budgets.
Financial experts have expressed concerns about states’ heavy reliance on federal allocations and borrowing to cover recurrent expenditure. They emphasize the need for states to explore innovative revenue-generating strategies and attract investments to reduce dependence on federal allocations.
Experts also call for fiscal reforms and restructuring to empower states with more control over resources within their domains. Rationalizing staff and political appointees to reduce overhead costs is also recommended as part of efforts to achieve fiscal sustainability.
As Nigeria grapples with economic challenges, addressing the fiscal imbalance between states and enhancing revenue generation capacity are critical steps towards achieving long-term financial stability and development.
