Governors and second Paris Club refund
Last week the Federal Government released N243.795 billion to the 36 states and the Federal Capital Territory [FCT] as the second Paris Club debt deductions’ refund to the states. A Federal Ministry of Finance statement indicated that some states namely Akwa Ibom, Bayelsa, Rivers, Delta and Kano received as much as N10 billion each while […]
Last week the Federal Government released N243.795 billion to the 36 states and the Federal Capital Territory [FCT] as the second Paris Club debt deductions’ refund to the states. A Federal Ministry of Finance statement indicated that some states namely Akwa Ibom, Bayelsa, Rivers, Delta and Kano received as much as N10 billion each while Lagos and Katsina got N8 billion apiece. FCT got the lowest amount of N684.867 million.
This second tranche of manna from heaven is coming seven months after the first trance was paid to the states late last year. These refunds emanate from over-deductions from statutory financial allocations of the 36 states for debt servicing between 1995 and 2015. It will be recalled in 2005, President Olusegun Obasanjo’s administration used the revenue windfall garnered from high international oil prices and cleared this country’s debt obligations to the Paris and London Clubs. State and local governments subsequently protested that the deductions exceeded their debt liabilities.
Though the Obasanjo regime agreed to the refunds, neither his regime nor the Yar’adua and Jonathan regimes that followed ever made the refunds until President Muhammadu Buhari came along. Last year he agreed to make the refunds to the states under certain conditions, including using part of the money to offset the huge backlog of salaries, gratuities and pensions that had accumulated in most of the states. Due to the steep decline in Federation Account receipts and the economic recession, majority of states had fallen behind in meeting their salary obligations and an emergency federal bailout that Buhari approved in 2015 ameliorated but did not entirely solve the problem.
Unfortunately, the first tranche of Paris Club refund to the states worth N516.38 billion also failed to solve most of the problems of salary and pension arrears. This was partly because the backlog had grown very large in some states but also because many governors had other priorities, including paying contractors. Paying contractors is not bad in itself except that many had embarked on white elephant and unviable projects.
Early in July the governors promised that the second tranche of the funds would be used to offset salary and pension arrears. Nigeria Governors’ Forum [NGF] said in a statement that at a meeting hosted by their chairman, Zamfara State Governor Abdul-Aziz Yari Abubakar, the governors said they resolved to offset all backlog of salaries and allowances owed their workers as soon as the second tranche of the fund is released. It said, “The 36 governors last night resolved to offset the backlog of salaries and pension arrears owed civil servants in the country as soon as the next tranche of payment from the Paris-London Club loan refunds are made…The governors who are not oblivious of the hue and cry over the non-payment of the backlog of salaries and pension arrears and the precarious predicament of the Nigerian worker.”
As soon as the funds were released last week however, some state governors began to say that the money cannot clear the backlog in their states, or that they will commit only a part of it to workers, etc. This is in addition to allegations that some governors appointed “consultants” to whom some of the funds from the first tranche were diverted and which are now the subject of probes by EFCC and ICPC. Some observers even noted that the naira fell to its lowest value against the US dollar precisely when the first tranche was paid, due to a rush on the dollar from those funds.
This time around, we urge the governors to use these funds judiciously to ameliorate the suffering of their workers and their people by clearing the backlogs of salaries and pensions. They should commit the rest to useful projects that will ameliorate people’s suffering. We urge the Nigeria Labour Congress [NLC] and other civil society groups to rise to the occasion and ensure the judicious use of these resources.