Hard times loom in states, revenues shrink, wage bills rise

By AdvocateNews on 11/11/2019

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There are strong indications that in the months ahead, state governments will face hard times with rising wage bills and dwindling revenues.

Investigations by The PUNCH’s correspondents showed in the last four months, states’ allocations from the Federation Account had been on the decline.

It was further learnt that efforts by state governments to shore up their internally generated revenues had not recorded the expected success as only two states were able to raise their IGRs above what they received from the federation account.

The Chartered Institute of Taxation of Nigeria, the Chartered Insurance Institute of Nigeria and the Chief Executive Officer, Economic Associates, Dr Ayo Teriba,   in separate interviews with The PUNCH, said with the wage bill increase and the failure to raise   internally generated revenues, there would be difficulties in the months ahead for states.

They called on the state governments to stop their wasteful spending and reduce their appointees, in order to get enough funds for key sectors such as education and health.

Since June, states’ allocations from the federation account have been on the decline. For the allocation in June, the 36 states got N201.15bn. In July, it declined to N190.38bn.

In August, states’ allocation went down to N188.925bn. In September, they got N186.816bn.

Investigations showed that allocations fell following deductions being made from their allocations to service loans and the repayment of the bailouts.

It was learnt that besides N162m, which is being deducted monthly from 35 states’ allocations for the N614bn bailout given to them last year, further deductions were being made from their funds.

Such deductions currently being done by the Office of the Accountant-General of the Federation,  include external debts, contractual obligations, national water rehabilitation projects, the National Agricultural Technology Support Programme, payment for fertilizer, state water supply project, state agricultural project and the national FADAMA project.

Despite these deductions, most of the poor states are battling with foreign and local debts.

For example, Edo State has $277.74m foreign debts; Cross River, $192.73m; while Oyo is indebted to the tune of $136. 53m.


Delta State has N233.56bn local debts; Akwa Ibom, N206.41bn and Cross River is battling with N168.82bn debt.

One of our correspondents’ analysis of figures obtained from the National Bureau of Statistics showed that in the last 18 months, states had not diversified their sources of revenues.

An analysis of the states’ IGR and their monthly allocations  indicated  that while total IGR generated by the 36 states and the Federal Capital Territory  was estimated at N1.85tn in 18 months, the net amount distributed to them from the federation account was put at N3.76tn.

This implies that the amount which the states and the FCT got from the federation account during the period exceeded what was generated internally by them with about N1.91tn.

A further analysis showed that only Lagos and Ogun states   were able to raise their IGRs above the amount given to them by the FAAC.

Based on the analysis of the revenue profile of states as obtained from the NBS, Lagos received a total of N177.1bn from the federation account for the 18 months period.

However, the state was able to realise about N587.34bn as IGR during the period. This brought the total revenue available to the state during the 18 months period to about N764.45bn.

For Ogun State, out of the total available revenue of N172.26bn, about N114.13bn was earned through the IGR, while the balance of N59.13bn was received from the federation account.

Further analysis showed that Rivers State generated N188.75bn in the IGR.

But Delta and Kano states earned N95.82bn and N62.66bn respectively as the IGR as against their respective FAAC allocations of N322.32bn and N124.97bn.

The document stated that Kaduna generated N51.8bn as IGR and received an allocation of N101.21bn in the 18 months’ period, while Edo had N43.89bn as IGR as against FAAC allocation of N101.05bn.

Oyo State generated N38.73bn IGR but got N87.4bn from the federal allocation.

Also, Enugu State generated N32.84bn as the  IGR during the 18 months period and received N78.11bn from FAAC; Akwa Ibom raised N44.66bn as IGR as against FAAC allocation of N288.65bn;  Kwara had N39.13bn IGR as against FAAC allocation of N65.12bn; while Ondo generated N43.78bn  as against N92.95bn allocated to it by FAAC.

Similarly, Anambra State was able to generate N25.37bn in 18 months but received N81.4bn from the federation account; Imo had IGR of N25.43bn as against N81.01bn it got from FAAC; Abia raised N22.74bn  as against federal allocation of N81.93bn; Bayelsa generated N19.5bn IGR as against N218.85bn it got from FAAC; while Plateau generated N22.23bn IGR compared to FAAC allocation of N65.24bn it received under the period under review.

Benue had IGR of N24.44bn as against FAAC allocation of N81.28bn;  Sokoto generated IGR of N30.84bn but got N81.26bn from FAAC; Kogi raised N18.01bn as IGR and received N78.34bn from federal allocation, Niger got N19.55bn as IGR and received N84.55bn from FAAC;  Jigawa raised N14.61bn IGR and got  FAAC’s N88.86bn; while Osun ‘s N20.59bn IGR was a far cry from the N32.92bn it got from the federation account.

But in spite of the dwindling revenues organised labour has said they will not listen to any excuse that can deny them the payment of the new minimum wage.

States must have other sources to absorb shock – Teriba

But experts, who spoke to The PUNCH, warned that to avoid difficulties, states must depend less on federal allocation.

The Chief Executive Officer, Economic Associates, Dr Ayo Teriba, said with the impact of increase in wage bill, states must have other revenue sources to absorb the shock.

Teriba, in an interview The PUNCH, said, “Unless there is an increase in the sources of revenue, there will be less money for other capital projects. The challenge before the states is to try and find new revenue sources to absorb the shock.”

Govs must cut expenses  to get money for education, others – CITN

On her part, the President of the CITN, Mrs Olajumoke Simplice, in an interview with The PUNCH, said the state governments needed to cut their expenses and think out of the box to increase their IGR so that capital projects in critical sectors such as education, health and transport would not suffer.

She said, “It is either the state governments shed their weight or look inwards and improve their Internally Generated Revenue, build capacity for their staff, think out of the box, and cut their expenses. If they only pay salaries and not improve their revenues, other capital projects may have to suffer.”

Govs must reduce waste – CIIN

Also, the Director-General of the CIIN, Mr Richard Borokini, said there were a lot of ghost and redundant workers in the civil service that had to be removed, so that the state governments would be able to pay productive workers well.

“The governments need to reduce a lot of waste so that they can have money to pay workers well and implement their capital projects,” he said.

Reduce aides, stop wastage, ex-ANAN president tells govs

Similarly, a former President, Association of National Accountants of Nigeria, Dr Samuel Nzekwe, said state governments should not give excuses not to pay the new minimum wage because they were living in affluence.

He said, “They should see how much they are going to bring out from their security vote because it is a big chunk of money. Secondly, they have so many aides. What are they doing? These aides are paid huge sums of money. They should prioritise their expenses.”

Low revenues, not an excuse for non-implementation of minimum wage – Labour

But labour leaders, in separate interviews with The PUNCH, said low revenues would not be an excuse for governors not to pay the new minimum wage.

This week, governors are expected to set up joint negotiating councils for consequential adjustments on the new minimum wage.

But ahead of the negotiations in various states, labour leaders said they would not accept sacking of workers nor accede to any plea not to receive the new minimum wage from any governor.

Osun has 45,000 workers, N2.5bn wage bill – Labour leader

For instance, in Osun State, the NLC Chairman, Jacob Adekomi, said labour leaders in the state would not accept retrenchment of workers as a condition for the payment of the new minimum wage.

Adekomi told one of our correspondents that the Osun State Government had 45,000 workers on its payroll excluding the 35 commissioners and special advisers recently sworn in by Governor Adegboyega Oyetola.

The NLC chairman said as of July, 2019, Osun’s monthly wage bill stood at about N2.5bn. He said since then, many workers had left service on retirement and for other reasons.

Asked if the state government could afford to pay the new minimum wage without sacking workers, Adekomi said, “Before now, the belief was that Osun could not pay full salaries.

“But since the coming on board of the present administration, workers have been receiving full salaries. Where there is a will, there is a way; it is about the willingness to do what is right and give the other man what rightly belongs to him.

“We know it has not been easy for the state government, but we believe when there is a will, there is a way. We will meet the government and negotiate.

“However, we will not accept sacking of workers. We won’t negotiate based on that. No labour leader will bargain with the job of their people.”

All efforts to get the reaction of the  Osun State Government proved futile. The Chief Press Secretary to the governor, Ismail Omipidan, though promised to make government’s position on the matter available, he never did.

However, the Ekiti State Chairman of the Joint Public Service Negotiating Council, Kayode Fatomiluyi, said the state could pay the new minimum wage.

Fatomiluyi, in an interview with The PUNCH, stated that sacking of any worker over the minimum wage should not be contemplated.

He said, “We don’t pray for that and we know our governor will not do that. It is not about whether we will accept it or not.”

Also, the JPSNC Secretary in the state, Gbenga Olowoyo, said the state organised labour had written to the state government to constitute a negotiating council on the minimum wage.

When contacted, the Ekiti State Commissioner for Information, Muyiwa Olumilua, did not give the date for constitution of the state JNC. He, however, said the state government did not have the intention to sack any worker.

Govt can pay minimum wage – C’River TUC Chair

In Cross River State, the Chairman of the Trade Union Congress, Mr Clarkson Oti, said there was no excuse for the state government not to pay the new minimum wage.

States burdened themselves with debts – Labour leader

He said the state civil service was not bloated, adding that the state should not contemplate sacking workers.

Oti stated, “We are even telling them to employ more.  The reason is that by 2023, more than half of the civil servants will have retired.”

He also said he did not believe the meagre allocations accruable to the state would militate against the minimum wage implementation.

The labour leader, who put the number of the state’s public sector workers at 18,000, said the state government should get its priorities right.

He stated, “The problem is that they may have burdened their allocations with so much indebtedness such that the deductions are now eating so much into their allocations. The total number of public sector workers in the state is at least 18,000. This includes secondary school teachers who are on the state payroll. The state’s wage bill is about N1.6bn.”

But when contacted, the Chief Press Secretary to the state governor, Christian Ita, said “When we had political appointees plus civil servants, the monthly wage bill was about N5bn,  I don’t know how much it is now.”

He said the state had not discussed whether the workforce would be reduced to enable it to pay the minimum wage.

Ita, however, said it was not the duty of the Federal Government to set parameters for paying the minimum wage for the state.

In Katsina State, the Special Adviser to Governor Aminu Masari on Labour and Productivity, Tanimu Saulawa, expressed   the state government’s readiness to commence negotiations with labour.

But the state NLC chairman, Hussaini Hamisu, in a chat with The PUNCH, said, “The issue of retrenchment or sacking  of  workers when the government implements the new minimum wage will not arise. This is because this was never part of discussions during the agitation for the payment of the new minimum wage.’’

Attempts to get the actual figure of the state total workforce from the governor‘s aide did not succeed, but top civil servants, who confided in one of our correspondents, said they were about 79,000

One of the sources said, “Civil servants alone should be about 25,000, while teachers should be about 27,000 while local governments’ workers should also be about 27,000, but you know, all these figures keep changing.”

In Adamawa State, the Head of Civil Service, Edgar Amos, told The PUNCH that the state would first pay the new minimum wage to those earning less than N30, 000.

He said Governor Ahmadu Fintiri had assured the workers that they would be paid the new minimum wage.

But the Kwara State NLC said it would not rush into signing any agreement with the state government.

The Chairman of the NLC in the state, Issa Ore, said  rather than sign an unacceptable agreement for workers, the congress would rather wait for further directives from the national headquarters.--Punch

Posted 11/11/2019 06:46:38 AM


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