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N614bn Bailout Fund: As FG Moves To Begin Deduction



Barely a week after the Federal Government announced that it would begin to deduct the N614bn bailout given to the states, MARY AMODU writes on the development the issue is generating

Survival of the states in the country outside monthly allocation has remained an issue that needs unearthing   in order to proffer solutions to insolvency if dividends of democracy must be delivered to the grassroots.

The 36 in the country have been relying solely on one major source of income which is the monthly allocation from Federation Account.

This federation account, has usually also been generating its revenue, solely from oil, a situation the present administration claimed to have found alternative to through Agriculture and Science and Technology.

In 2014, no fewer than 28 states were incapable of paying workers’ salaries, sequel to fall in oil prices and this caused hardship workers across the states.

This unpleasant situation prompted the President Muhammadu Buhari-led government to provide a bailout package to the states with a view to settling the backlog of salaries running into several months.

When the first tranche of the fund was disbursed in 2015, the Central Bank of Nigeria (CBN) disclosed that 19 of the 36 states of the federation first benefitted from the workers’ salary bailout package.

The then CBN spokesperson, Ibrahim Mu’azu, put the states that applied for and received various sums from the aid as Kwara, Zamfara, Osun, Niger, Bauchi, Gombe, Abia, Adamawa, Ondo, and Kebbi.

Others included Ekiti, Imo, Ebonyi, Ogun, Plateau, Nassarawa, Sokoto, Edo and Oyo.

He noted that the bailout, which was in line with the resolution by the National Economic Council (NEC), was to enable the affected states to pay the backlog of workers’ salary arrears.

The package has a 20-year repayment tenure for all states, except Ogun State, which opted for a 10 year tenure.

Mu’azu explained that contrary to reports that Ogun state accessed N20 billion from the bailout, the state actually received a total of N18.9 billion.

The Nigeria Labour Congress (NLC), however, then pledged to work with the Independent Corruption Practices and related offence Commission (ICPC) to monitor the use of the N338 billion total bailout meant for use in paying workers.

The states that benefited from the funds, which the NLC said it would monitor included: Abia (N14.152bn),

Adamawa (N2.378bn); Bauchi (N8.60bn); Bayelsa (N12.85bn); Benue (N28.013bn); Borno (N7.680bn); Cross River (N7.856bn); Delta ( N10.036bn); Ebonyi (N4.063bn); Edo(N3.167bn); Ekiti (N9.604bn); Enugu (N4.207bn) and Gombe (N16.459bn).

Others were: Imo (N26.806bn); Kastina (N3.304bn); Kebbi (N0.690bn); Kogi (N50.842bn); Kwara (N4.320bn); Nasarawa (N8.317bn); Niger (N4.306bn); Ogun (N20.00bn); Ondo (N14.686bn); Osun(N34.988bn); Oyo( N26.606bn); Plateau (N5.357bn); Sokoto (N10.093bn) and Zamfara (N10.02bn).

Did states use this fund as planned? This question would be best answered by the handlers of the fund.

However, when the Federal Government backtracked last week that it was ready to start deducting the loan from the monthly allocation of states, there was mixed feelings across board as various states may not function well if the federal government commenced the deduction because the states do not have stable alternative sources of income.

“The federal government will in the next two weeks begin the deduction of the N614 billion Budget Support Facility it gave to 35 states,” the Minister of Finance, Budget and National Planning, Zainab Ahmed said.

She stated this at the NEC meeting, presided over by Vice President Yemi Osinbajo, at the Council Chambers of the Presidential Villa in August disclosed the plans of the Federal government.

Also while speaking at the Public Consultation Forum on the draft 2020-2022 Medium Term Expenditure Framework in Abuja on September 10, she stressed that the deductions will begin on September 27.

According to her, the refund was not going to be treated as revenue to be used to fund the 2020 budget, adding.

“It was a loan that was advanced by the Central Bank of Nigeria to the states,” she stated.

Ahmed, who further explained that because the payment was made by the CBN, the recovery process is for the loans to be deducted from the FAAC allocations of the states and remitted back to the CBN, added that the process will not require a consideration of the fiscal strategy paper (FSP) implementation, but to ensure the states stayed on the path of fiscal sustainability.

The minister stressed that, “This will not be a condition for the deduction. We will deduct direct at source and remit to the CBN “

Some Nigerians, in their argument, backed the move while some differ in their argument. Those who differed, argued that instead of Federal Government to be deducting from monthly allocation, it should be using monthly Security votes given to the governors for bailout repayment.

A lecturer in University of Abuja, who spoke to LEADERSHIP on condition of anonymity stated that since security situation in Nigeria is awful, their security votes should be used to repay the loan.

While the governors and their commissioners refused to make individual pronouncements on the development it was clear that they were not comfortable with the arrangement especially coming at a time when many states have yet to comfortably pay the new National Minimum Wage of N30, 000.

The governors however, noted that they would tackle it collectively under the canopy of the Nigeria Governors’ Forum.

Hence, the 36 State Governors under the aegis of Nigeria Governors Forum (NGF) during the week agreed to pay the N614 billion that was advanced to 35 states as budget support facility.

Chairman of NGF and Ekiti State governor, Dr. Kayode Fayemi said that as governors they are willing to pay the refund of the bail out fund, but that this will be done after a proper reconciliation with the federal government.

Fayemi said: “If you borrow, you pay. We are never averse to payment of loans that we took under legal environment and we don’t want a situation that will put our financial and banking system into jeopardy.

“However, governors believe that we are ready to pay, we also have a duty to ensure reconciliation of account as far as moneys owed to states may be concerned and that is the process that is ongoing.

“It is a storm in a teacup when we read about governors refusing to pay. We don’t have such an issue, we are ready to pay.”

However, considering the fact the federal Government’s resolve to commence the deduction and the stand of the governors to comply, the propandrance of the opinion is that the governors should look inward and be creative, in order to meet the needs of their people.

There is no doubt that every state has enough potential to be solvent through ingenuity. It is also a fact that the federal government has enough financial burden that it cannot continue to be a Father Christmas, doling money to support the states.



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