An investigation by The PUNCH has uncovered that at least 24 out of Nigeria’s 36 states may struggle to pay workers’ salaries in 2024 without relying on federal allocations. Only 11 states have sufficiently robust internal revenue to independently cover salary expenses<<<READ FULL ARTICLE>>>
The analysis of the approved budgets for the 2024 fiscal year reveals that the affected states might need federal allocations or resort to borrowing to meet their wage bills.
The states capable of independent salary payments include Lagos, Kano, Anambra, Edo, Enugu, Imo, Kaduna, Kwara, Osun, Ogun, and Zamfara. However, states like 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 expected to face challenges in meeting salary obligations.
This financial predicament comes amid calls from labor unions for wage increases due to the escalating cost of living following fuel subsidy removal and foreign exchange market unification. The Nigerian Labour Congress has insisted on a new minimum wage of N1 million for workers, a demand rejected by the government.
In the first half of 2023, state governments borrowed about N46.17 billion from banks to pay salaries. Despite increased Federal Accounts Allocation Committee (FAAC) allocations to states, 32 states are still planning to borrow N2.78 trillion from domestic and external sources to fund their 2024 budgets.
Financial experts have expressed concerns about states’ reliance on recurrent expenditure and urged the need for financial innovations. They emphasized the importance of states attracting investors, developing areas of strength, and increasing internal revenue to achieve fiscal sustainability.
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Economist Aliyu Ilias urged states to identify strengths to attract foreign investments, while Prof Akpan Ekpo stressed the importance of states increasing revenue through enhanced service delivery. Muda Yusuf, Managing Director of the Centre for the Promotion of Private Enterprise, emphasized the need for states to be more creative in revenue generation and address fiscal federalism issues.
The financial strain on states underscores the urgency for sustainable financial practices and strategies to reduce dependence on federal allocations and ensure long-term economic stability<<<READ FULL ARTICLE>>>
