Lagos makes N23 billion monthly in internally generated revenue and is striving for more. By comparison, Kano collects N24 billion yearly, just about what Lagos gets in one month.
Some argue that Lagos is rich, with high population and multinational businesses, and so is able to pay workers.
But Edo also does not owe workers’ salary, even though not wealthy; likewise other states such as Nasarawa, Katsina, Borno, Yobe, and Bayelsa.
States owe salaries ranging from two to 11 months. Among them are Abia, Bauchi, Benue, Ekiti, Enugu, Gombe, Kogi, Imo, Ogun, Ondo, Osun, Oyo, Plateau, Rivers, and Kwara.
Acting News Editor, Ishaya Ibrahim, picks a handful to explain how all the debtor states found themselves in this quagmire. He also proffers the way out.
Across the land, public service workers have been in low spirits for the past 12 months because of irregular payment of salary. That is not even the troubling news.
A sharp decline in the oil price looms following the nuclear diplomacy that lifted sanctions against Iran. That means a plunge in oil revenues for Nigeria, since Iran can saturate the international market with cheaper crude.
In terms of naira and kobo, what affects Abuja percolates down to all states. Nearly half of them are broke, largely because their wage bill is almost the size of their gross income.
With the drop in oil revenue, therefore, the salary overheads of many states are no longer sustainable.
For many states, all of the meagre federal allocation does not even get to them as banks make deductions to service their loans.
Ekiti
In Ekiti, monthly salary bill is about N2.6 billion while federal allocation hovers around N2 billion. It makes N600 million monthly as internally generated revenue (IGR).
The cumulative N2.6 billion income only caters for a handful of workers, and leaves nothing for other critical sectors – education, health, water, and other social services.
A report said in 2012, Ekiti received over N50 billion from the federation account – an average N4 billion monthly, a trend that lasted throughout the four years Kayode Fayemi was Governor.
Yet, the government failed to plough the huge sums into ventures that could make the state financially independent.
The story in Ekiti is replicated in many other states, which had large revenues in the past but failed to invest in infrastructure for IGR.
The N413 billion the Nigerian Liquefied Natural Gas (NLNG) paid to the federal government last month, which was disbursed to states as a bail out, only helped pay a month’s salary.
“For the N2.1 billion that is to be given to Ekiti” Ayodele Fayose, Ekiti State Governor, moaned, “I want to make sure that I do not leave any gap. Our wage bill is about N2.6 billion. I will find means to add to it to pay June salary within the next one week.”
Osun
The situation in Osun is more depressing, as Governor Rauf Aregbesola has over six months of workers’ salary dangling around his neck.
This has forced him to truncate some populist projects – Opon Imon (giving pupils of secondary schools mobile Tablets), free meals for primary school, and stipend for older citizens.
Osun has a monthly wage bill of N3.6 billion, federal allocation of about N2.6 billion, and IGR of roughly N1 billion. Total income, N3.6 billion.
When the going was good, its monthly federal allocation was about N4.6 billion for many years. Yet, the government found it difficult to put up investment and infrastructure that could have made the state financially viable.
With a population of 3.4 million, according to the 2006 census, Aregbesola felt the best way to reduce unemployment was to enlist 20,000 young men in the Osun Youth Empowerment Scheme (OYES) to control traffic.
There are few vehicles on the roads in the state. Analysts say the strategy was self-defeating.
Other than placating civil servants that things will get better with President Muhammadu Buhari’s administration, Aregbesola has literally run out of ideas of what to do.
“Before the last time I paid salaries in November 2014, I have had to either spend the state’s reserves on salaries or borrow money. Today, I have a loan of N12 billion that we spent on salaries and I could not go to the banks anymore,” he lamented.
A report by NOI polls says Osun has a monthly food market worth about N20 billion – and if it could simply produce the food consumed by residents, which would also create massive employment, billions of naira would flow in the economy and raise IGR.
Osun, though rich in tourist sites, fails to profit from its natural treasures, especially from the Osun Osogbo Grove, a mysterious monument which got world fame through Susan Wenger, a white priestess nicknamed the Adunni Olorisa until her death in 2009.
Inadequate marketing affects the tourism potential of the state.
Abia
For many years, Abia had a rosy income stream of more than N12 billion every month in federal allocation until the fall in oil price in the last quarter of 2014, which shrank it to N8 billion.
With a monthly wage bill of N2.5 billion and less than N600 million as IGR, the state’s cumulative income is about N8.6 billion.
IGR is grossly small compared with the huge potential of the state, especially its boisterous Ariaria market, one of the biggest trading hubs in Africa.
But the drive for IGR in Abia is a hard nut to crack because the residents are not used to paying tax, believing it is the responsibility of the government to do everything for them for free.
Former Diamond Bank Chief Executive Officer (CEO), Alex Otti, believes that rice farming alone can add N73 billion to the state’s treasury yearly, but “little or no attention is given to agriculture by the state government.”
Otti laments that “Nigeria spends a whooping N365 billion a year on importation of rice alone. That is N1 billion per day.
“If a state like Abia puts its house in order, and decides to support agriculture, and decides to support rice milling, and empowers our people with the correct seedlings, and supports the mill plants, we can easily reduce that import bill by 20 per cent.
“What that means is that over N73 billion can be saved from rice import bill.”
He said if N73 billion is added to the N104 billion which is Abia’s 2015 budget, the state’s Gross Domestic Product would soar, yielding jobs.
Abia can also make so much money from cocoa, he argued.
“You probably would not know that Bende produces cocoa. And when they produce cocoa, they sell the cocoa beans. By doing that, you are exporting jobs. We don’t add any value. We just sell them in their natural state.
“We can convert cocoa beans to cocoa butter. We can add value. We can even add more value from cocoa butter to chocolate, to Ovaltine and all that.
“If we do that, we will save scarce foreign exchange, we will create jobs for our people and people will be happy.”
Otti disclosed that from his research, there are about 50,000 shoemakers in Aba whose businesses have been crippled because of poor infrastructure.
“These were the same shoemakers that created the Aba-made fame. Most of them are now idle. Why are they idle? They produced their shoes under very harsh economic conditions.
“You buy your generator, you buy your diesel, you buy your water.”
As a result of these burdens, which he said include a poor road network, “the price of these shoes, which are not as sophisticated as the ones imported from China, is so high.
“Why will people buy Aba shoes that are more expensive than Chinese shoes that are better and less expensive?”
Otti argued that the state government could reverse the trend and make Abia financially independent.
But Governor Okezie Ikpeazu feels he needs an urgent loan of N30 billion to solve some of the financial problems he met on the ground.
Ikpeazu wrote a letter dated July 15 to the speaker of the state House of Assembly that he needs the money to construct and to rehabilitate roads, dredge Aba River, construct one hospital in each of three zones of the state, among other projects.
The All Progressives Grand Alliance (APGA) counters that by granting the loan, the banks involved may be putting depositors’ money in jeopardy.
APGA Publicity Secretary, Madu Chikwendu, said important legal provisions were neglected in the loan application.
“Even the banks providing this loan are toying with depositor’s funds since there is no guarantee that the state has the capacity to repay. By granting this loan, the banks are violating federal law and endangering depositors funds,” he warned.
Kano
Kano is also bogged down by its inability to pay workers’ salary and by heavy debt, despite the fact that it is the commercial hub of the North.
Kano, the second most populous state after Lagos, has N24 billion as yearly IGR, short of its wage bill of N36 billion, a report in Daily Trust said.
Analysts believe that the state’s contentment with previous rosy federal allocation is responsible for its dismal N2 billion monthly IGR from a population of more than nine million, according to the 2006 census.
The state fails to leverage on food crops cultivated in its vast fertile land – millet, cowpeas, sorghum, maize, rice.
It is a major producer of hides and skin, sesame, soya bean, cotton, garlic, gum arabic and pepper; apart from groundnuts and cotton produced for export and industrial use.
During the colonial period and several years after Nigeria’s independence, Wikipedia recalls, groundnuts produced in the state constituted one of the major sources of revenue for the country.
Ayo Makinde, a financial analysts with Ace Investment, believes every state in Nigeria could be viable if governors invest wisely.
In his view, all states, including Lagos, have agriculture potential, which, if properly harnessed, could add fortunes to foreign exchange, apart from other mineral resources neglected.
