Friday, 18 September 2015

AT LAST... Ebonyi, Ekiti, Imo, Ogun, Oyo Get FG’s Bail-Out Funds

The Central Bank of Nigeria, CBN, said yesterday that five more states got their shares of its bail-out funds designed to ease the financial challenges faced by the second tier of government, to clear outstanding salary arrears of their workers.
The Director of Corporate Communications of the apex bank, Alhaji Ibrahim Muazu, said in Abuja that the five states were Ebonyi, Ekiti, Imo, Ogun and Oyo.

He disclosed that with the latest group of beneficiaries, 15 states had accessed the N338 billion, which had been clarified as a loan and not a grant.BAIL-OUT

The apex bank said for a state to receive the fund, it must submit a resolution of the State Executive Council, SEC, authorizing the borrowing. It must also obtain an approval of the states House of Assembly consenting to it and issue an Irrevocable Standing Payment Order, ISPO, to enable CBN deduct at source when its allocations become available.

At the end of the last administration, only a few states were up-to-date in meeting their financial obligations due to alleged massive corruption and refusal to prioritize payment of workers’ salaries by governors.

Benefiting states
The 10 states that received the bailout funds earlier are Kwara, Osun, Zamfara, Niger, Bauchi, Gombe, Abia, Adamawa, Ondo and Kebbi. The delay in accessing the funds by some states, it was learned, was due to the conditions placed on it by CBN.

However, the Nigeria Labour Congress, NLC, has said that it was monitoring 27 states to which the bailout funds have been disbursed.

According to NLC in a statement yesterday, Kogi State got the highest with N50.842 billion, while Kebbi State got the lowest with N690 million.

Others are Abia State, N14.152 billion; Adamawa, N2.378 billion; Bauchi, N8.60 billion; Bayelsa, N1.285 billion; Benue, N28.013 billion; Borno, N7.680 billion; Cross River, N7.856 billion; Delta, N10.036 billion; Ebonyi, N4.063 billion; Edo, N3.167 billion; Ekiti, N9.604 billion; Enugu, N4.207 billion; Gombe, N16.459 billion and Imo, N26.806 billion.

Similarly, Kastina State received N3.304 billion; Kwara, N4.320 billion; Nasarawa, N8.317 billion; Niger, N4.306 billion; Ogun, N20 billion; Ondo, N14.686 billion; Osun, N34.988 billion; Oyo, N26.606 billion; Plateau, N5.357 billion; Sokoto, N10.093 billion and Zamfara, N10.020 billion.


Reacting to the development, NLC said it would partner with the Independent Corrupt Practices and Related Offences Commission, ICPC, to monitor the disbursement and use of the N338 billion bailout funds for 27 states, owing their workers’ salaries.

NLC, in a statement by its factional President, Ayuba Wabba, recalled that it had directed its states councils to serve as whistle-blowers on any criminal diversion of bailout funds.

It said: “We agree with ICPC that the painful days of the public running after funds after appropriation are over for the good of all Nigerians, including our working members. The states NLC is monitoring are those who have benefited from the disbursed N338 billion bailout funds.”

External debt

The external debt profile of states has shown that Lagos State has the highest with $1.087 billion, followed by Kaduna State with a total of $234 million. Cross River followed with $131.469 million.

Other states with relatively large external debt are Edo, $123 million; Ogun, $109 million; Bauchi, $87 million; Enugu, $62 million; Katsina, $78 million; Osun, $67 million, and Oyo, $72 million.

Based on the rising debt profiles of state governments, the Federal Government, last year, directed banks not to grant fresh loans to them until they got the relevant approval and clearance from the Federal Ministry of Finance.

The Federal Government had said the directive was to protect the states from excessive accumulation of debts.

Minister of State for Finance, Bashir Yuguda, had said that the decision was not aimed at stalling the development efforts of the state governments.

He said that most of the states had been experiencing difficulties in servicing their existing debts and it would not be advisable to allow them take fresh loans.

IGR analysis

Internally Generated Revenue, IGR, of states had been poor, though rising in total amount. Lagos, Rivers, Delta, Edo, and Akwa Ibom are states that recorded the highest IGR from 2010 to 2013.

Available data from the National Bureau of Statistics, NBS, and Joint Tax Board, JTB, for the period showed that Lagos dominated in 2010. Rivers followed with N173.1 billion, while Delta realized N106.4 billion. Edo raked in N53.53 billion, just as Akwa Ibom made N35.6 billion.

On the other hand, Jigawa, Zamfara, Nasarawa, Borno and Taraba states dominated the bottom of the table. Jigawa recorded only N2.725 billion; Zamfara, N6.374 billion. Nasarawa, Borno, Taraba generated N5.982 billion, N6.83 billion and N7.571 billion, respectively.

The IGR was realized from Pay-As-You- Earn, PAYE, direct assessment, road taxes and other revenue with PAYE accounting for the highest amount.

Depletion of excess crude account

The Federal Government, under former President Olusegun Obasanjo, had set up the excess crude account, where the oil revenue above the budget benchmark was being saved every year for the rainy day.

However, state governors fought the decision and insisted that the money be shared instead of being saved.

The Federal Account Allocation Committee was drawing from the fund to augment short falls in oil revenue accruing to the federation monthly.

Nigeria’s Excess Crude Account, which at a time had about $20 billion, has plunged to $2.45 billion as oil prices continue to fall. The balance in the dollar component of the excess crude oil revenue account depleted to about $2.45 billion in December 2014.

The account, which stood at about $4.11 billion in October, dropped to about $3.11 billion in November 2014.

Details of the balance of the account released at the end of the FAAC meeting showed that the transfer to the account, as a result of foreign exchange gain, dropped from N1.767 billion to about N665 million.

The Accountant General of the Federation, Jonah Otunla, said in a statement at the end of the meeting that the balance in the account dropped from about $3.11 billion to $2.45 billion in December.

The new balance in the account followed the withdrawal of the equivalent of N15.631 billion to augment the shortfall in allocation available for distribution to the three tiers of government for the month.

Former CBN Governor, Sanusi Lamido, and the former Finance Minister, Dr. Okonjo-Iweala, had argued that the account be kept for a rainy period. But state governors had their way and the money sharing began.

If there were enough funds in the account, it will not have been this bad for state governments.

Analysts at Cardinal Stone, in their outlook for 2015, disclosed that the low price of crude oil in the international market will expose the structural deficiencies in the Nigerian economy and will plunge some states into a quagmire.