Cash crunch hits states as salaries swallow revenues

Posted by News Express | 15 April 2021 | 670 times

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•President Buhari
  • We need more money for debt servicing, day-to-day running of govt, admits FG
  • Ekiti spends 93% of allocation on workers, receives N3.1bn on the average, says state
  • We can’t continue spending 90% of our revenue on civil servants, pensioners – Gombe

Two top officials of the Muhammadu Buhari regime on Wednesday indicated that the country urgently needed more funds to run government and provide basic amenities for Nigerians.

Although the Minister of Finance, Budget and National Planning, Zainab Ahmed, in an interview with the State House correspondents faulted a claim by the Edo State Governor, Godwin Obaseki, that the Federal Government printed between N50bn and N60bn in March, she said there was a need to improve revenue to run government.

On his part, the Accountant-General of the Federation, Ahmed Idris, at the 2021 retreat for members of the technical sub-committee on cash management, stated that there was increasing pressure on government funds.

The minister and the accountant-general of the federation said these as investigations by The PUNCH revealed that most state governments were fast turning into salary-paying centres as a larger percentage of their revenues was spent on personnel costs compared to capital projects.

For example, while the Ekiti State Government said it spent 93.6 per cent of its federal allocation on personnel costs, its  Ondo counterpart admitted that it was challenging paying  high personnel costs.

Recall that two state governors a few days ago painted gloomy pictures of  finances of state and federal governments.

On Monday, Governor El-Rufai of Kaduna State, through his Special Adviser on Media and Communication, Mr Muyiwa Adekeye, while justifying the decision of the state government to lay off workers said, “In the last six months, personnel costs have accounted for between 84.97 per cent and 96.63 per cent of FAAC ( Federation Account Allocations Committee) transfers received by the Kaduna State Government. In March 2021, Kaduna State had only N321m left after settling personnel costs.”

On Thursday last week, Obaseki was quoted as raising the alarm over Nigeria’s financial position which he said made the Central Bank of Nigeria to print about N60bn to augment allocation shared by states in March.

He said, “When we got FAAC for March, the Federal Government printed additional N50-N60bn to top-up for us to share. This April, we will go to Abuja and share. By the end of this year, our total borrowings are going to be within N15-N16tn.”

The finance minister in the interview with State House correspondents on Wednesday said there was no truth in the claim made by  Obaseki.

She, however, said there was an urgent need for the country to improve its revenue to service debts and ensure day-day running  of government.

Shedding more light on the country’s finances, the finance minister stated,  “Nigeria’s debt is still within sustainable limit. What we need to do as I have said several times is to improve our revenue to enhance our capacity to service, not only our debt, but to service the needs of running government on a day-to-day basis.”

Describing the governor’s claim as very sad, the minister explained that the money shared monthly at FAAC was revenue generated.

Ahmed, who said Obaseki’s claim was not factual, described revenue distribution as public information that was available to all.

The minister also faulted the governor on the alarm raised on the country’s borrowings. She insisted that the nation’s debt profile was still within sustainable limit.

Ahmed said, “The issue that was raised by the Edo State Governor, for me, is very sad because it is not a fact. What we distribute at FAAC is a revenue that is generated and in fact, distribution revenue is public information.

“We publish revenue generated by the FIRS (Federal Inland Revenue Service), the Customs and the NNPC (Nigerian National Petroleum Corporation) and we distribute at FAAC. So, it is not true to say we printed money to distribute at FAAC. It is not true.”

Efforts to reach the governor on Wednesday proved abortive as none of his former aides picked their calls, while one, who promised to call back,  did not do so as of the time of sending of  this report.

A visit by The PUNCH to the government house on Wednesday evening also did not yield a result as the governor was said to be out of the office after attending to the day’s job, apparently to attend the closing ceremony of the National Sports Festival, which ended in Benin on Wednesday.

There is increasing pressure on govt funds – AGF

Also on Wednesday, the Accountant-General of the Federation, Idris, advocated efficient management of government funds.

He stated that at present, there was increasing pressure on government funds, a situation that had made it imperative for managers of government funds to evolve strategies that would guarantee efficient cash management.

Idris disclosed this at the 2021 retreat for members of the technical sub-committee on cash management. The technical sub-committee on cash management, inaugurated in April 2016, is the professional arm of the Federal Cash Management Committee.

According to a  statement issued in Abuja by the Director, Information, Press and Public Relations, Office of the Accountant-General of the Federation, Henshaw Ogubike, Idris stated, “Managing funds should not just be about expending the available funds. We must constantly keep ourselves abreast with strategies for knowing how to ensure inflows, when to expend and when not to.

“We must be able to forecast into the unforeseeable future, the cash needs of the government and possible challenges.”

Ekiti spends 93.6% of federal allocation on personnel, receives N3.1bn on the average – Commissioner

In Ekiti State, the Information Commissioner, Akin Omole, said the state spent over 93.6 per cent of the monthly allocation from the federation account on personnel.

Omole, in an interview with one of our correspondents, said, “The state has cut non-core expenditure, minimised the appointment of political appointees and introduced strict procurement standards to ensure value for money on all expenses.

“Ekiti spends 93.6 per cent of its average FAAC receipts on personnel. Ekiti State has received N18.5bn, an average of N3.1bn  over the last six months”.

On whether the state was considering sacking workers, he said, “No, we are not exploring this option. Ekiti State will continue to prioritise the welfare of its workers, but the state will also rely on its workforce to increase productivity, and drive internally generated revenue growth to ensure the state can better withstand any shocks from the federally distributed revenues.”

He said that the Dr Kayode Fayemi administration had, since assumption of office, grown the IGR “by 55 per cent from N450m to N700m per month”.

On the wage bill, he said, “Political appointees account for 9 per cent of monthly payroll costs (N158m) while civil servants account for 91 per cent (N1.54bn), using March 2021 payroll.

“Since we assumed office, political appointees have not accounted for more than 9 per cent of the payroll and this figure even dropped during the height of the COVID-19 pandemic when political appointees forfeited half of their salary as a sacrifice to the state during a very difficult period.

“We get the cooperation of international bodies and donor agencies that exist for development. That is obviously the difference between a government that knows its onions and others.”

“We are not actually in the best of times financially, but we are a government and not an organisation or corporate body that exists for purely economic reasons. We are mindful of the socio-economic lives of our people and as such our decisions and actions should reflect this. We shall together weather the storm and come out better.”

Personnel cost is a challenge – Ondo

On its part, the Ondo State Government said the personnel cost in the recurrent expenditure of the budget was a challenge to any government.

A sum of N42.228bn, which is 53.4 per cent of total recurrent expenditure of N79.084bn was earmarked for personnel cost for the  2021 budget.

The state Commissioner for Information and Orientation, Mr Donald Ojogo, however said in spite of the challenge, the government was still coping.

He said, “The governor, Arakunrin Oluwarotimi Akeredolu, SAN, has said it repeatedly that the bane of good governance is the bogus percentage spent on recurrent expenditures. Every governor’s desire, especially for ours in the state is to have more than 50 per cent voted for capital expenditure. But the implications are such that you have to wane down personnel to achieve such, and this is impossible because that means throwing more people into the labour market that is already overwhelmingly bloated.

“It is a huge challenge for all governments, it is not is peculiar to Ondo State, neither is any tier of government insulated.”

We are facing paucity of funds – Osun

The Osun State Commissioner for Political Affairs and Intergovernmental Relations, Taiwo Akeju, when contacted, admitted that the state was struggling with paucity of funds.

Akeju,  however, said Governor Adegboyega Oyetola, had been managing the available resources to meet all obligations.

Asked how much the states was spending on personnel cost monthly, Akeju said the figure was not available to him, but explained that despite paucity of funds, the state had not borrowed from banks.

“We have a seasoned administrator in Governor Oyetola. He is managing the state with the available resources. Till now, we have not borrowed from any bank. There is paucity of fund, but the little we have the governor is managing it well,” Akeju concluded.

In the state  2021 budget, recurrent expenditure under which personnel cost was captured was N50,620,238, while capital expenditure was N59,234,768,500,00.

We can’t continue to spend 90% of our revenue on civil servants, pensioners who are 1.7% of our population – Gombe

In Gombe State, the Commissioner for Finance, Muhammad Magaji, said the state spent between 80 per cent and 90 per cent of its IGR and federal allocation on the payment of salaries and pensions.

Magaji, who disclosed this on Wednesday, while briefing newsmen after council meeting presided by Governor Muhammadu Yahaya, said the state introduced the Integrated Payroll Payment Gateway and Human Resource Management Information System to reduce leakages.

He said while between 80 per cent and 90 per cent of the state’s revenue was spent on civil servants and pensioners, they constituted only 1.7 per cent of the state’s population.

The commissioner stated, “We spent about 80-90 per cent of our earnings from the internally generated revenue and allocation on the payment of salaries and pensions.

“If we continue to pay that, it means only 10 to 15 per cent will  be used to provide services for other people in Gombe State whereas the civil service and the pensioners are just about 1.7 per cent of the total population of people in Gombe State and others need services to be provided for them.”

Magaji said the  Integrated Payroll Payment Gateway and Human Resource Information Management System would help us reduce payroll fraud and increase transparency in the payment of salaries and pension to deserving pensioners.

A check reveals that the Sokoto State personnel cost is N36,199,656,390.09 as against overhead cost of N30,032,230,567.20, out of the state budget of N176,685,535,663.47.

Part of the state government saving measure was civil servants screening, where over N1.647,657,430.86  was saved as a result of its fishing out of multiple ghost workers and child workers.

It was undertaken by the state government under the auspices of the state Ministry of Finance.

The Bauchi State Government on its part earmarked  N31,763,906,163 of its  N213,914,559,427.00 budget for 2021 for personnel costs, according to a copy of the budget obtained by The PUNCH.

In Benue State, a check in the 2021 budget shows that the state expects a total revenue of  N58,758,672,152   from the federal allocation and the Value Added Tax.

While Independent revenue stands at N19,761,611,452, loan which is part of receipt for 2021, stands at N30,261,757,702.

The personnel cost for the year stands at N49,338,215,266 and overhead cost N41,472,736,484 as against capital expenditure of N41,781,089,561.  (The PUNCH)

 


Source: News Express

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