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    Home - Akwa Ibom, Kano, Oyo, 29 Other States Owe Contractors, Retirees 933bn – Report

    Akwa Ibom, Kano, Oyo, 29 Other States Owe Contractors, Retirees 933bn – Report

    By Farouk AbbasNovember 8, 2024
    NGF

    THIRTY-TWO states in Nigeria owed a total of N933.32bn to contractors and retirees in 2023, according to findings.

    BORNO PATRIOTS

    The findings are based on an analysis of data from the 2024 State of States report by BudgIT, a Nigerian civic organisation that focuses on promoting transparency, accountability, and effective governance,

    The 32 states with liabilities to contractors and retirees are Abia, Adamawa, Akwa Ibom, Anambra, Bauchi, Bayelsa, Benue, Borno, Cross River, Delta, Ebonyi, Edo, Ekiti, Enugu, Gombe, Imo, Jigawa, Kaduna, Kano, Katsina, Kebbi, Kogi, Kwara, Lagos, Niger, Osun, Oyo, Plateau, Sokoto, Taraba, Yobe, and Zamfara.

    Silk

    The report revealed that these liabilities consist of N408.69bn in contractor arrears and N524.63bn in unpaid pensions and gratuities.

    Notably, certain states like Bayelsa, Edo, and Kebbi had no reported contractor liabilities, while others such as Ogun and Ondo did not report any pension arrears.

    This newspaper observed that Delta State topped the list of contractor obligations, with liabilities amounting to N76.26bn.

    This was far above Imo’s N43.47bn and Cross River’s N39.12bn, which ranked second and third, respectively.

    Kano and Akwa Ibom followed closely with N37.04bn and N31.07bn, respectively, in contractor arrears.

    In contrast, Jigawa and Yobe had the least obligations to contractors, with N98.19m and N2.79m owed, respectively.

    Nigerian TAX Reform - Federal Goverment

    Regarding pensions and gratuities, Benue State emerged as the state with the highest arrears, owing a staggering N74.3bn to retirees.

    Oyo followed with N40.05bn, while Enugu, Bauchi, and Cross River States owed N34.46bn, N31.21bn, and N29.86bn, respectively.

    At the lower end of the spectrum, Lagos State recorded just N2.69m in pension arrears, the smallest figure nationwide.

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    Other states with relatively modest pension liabilities include Kaduna with N1.69bn and Borno with N2.95bn.

    The report further noted that the aggregate operating expenses of the states in Nigeria accounted for 47.36 per cent of their total expenditure in 2023.

    These expenses surged by 21.17 per cent, rising from N3.8tn in 2022 to N4.64tn in 2023

    Debt servicing also posed a significant burden, with N1.25tn, representing 12.8 per cent of the affected states’ cumulative expenditure, dedicated to servicing loans.

    BudgIT also noted that states spent N287.56bn in 2023 on liabilities such as contractor arrears, pension and gratuity arrears, and other outstanding debts.

    However, this spending was not officially captured in the states’ fiscal records, suggesting that the financial strain may be even worse than reported.

    BudgIT noted, “The aggregate operating expenses of the states, which formed 47.36 per cent of the aggregate expenditure, increased by 21.17 per cent from N3.8tn in 2022 to N4.64tn in 2023.

    “Additionally, N1.25tn, representing 12.8 per cent of the cumulative spending of the states, was used to service debts. Interestingly, N287.56bn, not captured by states as part of their expenditure for the 2023 fiscal year, was utilised to offset contractor arrears, pension and gratuity arrears, and other outstanding liabilities.”

    The report also revealed that the states are grappling with additional liabilities totaling N1.19tn.

    This includes N408.69bn owed to contractors, N521.36bn in pension and gratuity arrears, N79.64bn in salary and staff claims, N4.36bn in judgment debts, and N182.79bn in other payables.

    The BudgIT report read, “In addition to the existing debt stock, the states have exiting liabilities totalling N1.19tn: N408.69bn is owed in contractor arrears, N521.36bn is owed in pension and gratuity arrears, N79.64bn is owed in salary and other staff claims, N4.36bn is owed in judgement debt and other pending litigation, and other payables and liabilities amount to N182.79bn.”

    Last week, this newspaper reported that the backlogs of pensions owed by the federal and state governments increased to over N193bn.

    Although several states such as Zamfara, Benue, Kaduna, Kano, Nasarawa, and others have been clearing the backlogs, it was gathered that the Federal Government had yet to clear over N88bn in contributory pensions, while many states were burdened by pension backlogs estimated at over N105bn.

    The Assistant General Secretary of the National Union of Pensioners, Bunmi Ogunkolade, earlier told this newspaper that the Federal Government had yet to clear N88bn accrued rights under the Contributory Pension Scheme from March 2023 to date.

    The CPS was introduced by the Pension Reform Act of 2004, and under this law, employees and employers jointly contribute to a Retirement Savings Account for each worker, making pensions more sustainable.

    The law set the minimum combined contributions at 15 per cent of an employee’s monthly earnings.

    The Pension Reform Act of 2014, which amended the 2004 law, further improved the CPS by increasing contributions to a combined minimum of 18 per cent and tightening regulations to ensure compliance by both private and public sector employers.

    Speaking with this newspaper, Bunmi Ogunkolade said state governments were footdragging on matters related to the payment of retirees’ gratuities and the implementation of the new pension scheme.

    Ogunkolade who noted that state governments were not owing monthly pensions for retirees called on the need to pay retirees their entitlements.

    He said, “No state owns a monthly pension. We are talking about the monthly stipends that they pay. The N17,000, N10,000, and others but what they owe is gratuity. Some states are owing as far back as 2012. They have refused to release the funds. Even with the issue of the pension scheme, most states are still using the old one. Someone who was probably earning N10,000 in 2010 is still getting the same thing in 2024 because the states have failed to do the needful.

    “You can say you are paying my monthly pension but that is nothing if you don’t pay me my gratuity and that is what we are saying. Also, we have some states that have commenced the implementation of the new pension scheme as approved by the National Salaries, Wages, and Income Commission. You have states like Lagos, Ondo, and others. So it is the gratuity that states are owing and not monthly stipends. We have been talking with them. We’ve been communicating with these states on the need to release the gratuities.”

    The Nigeria Association of Pensioners, Anambra State Council, earlier urged Governor Chukwuma Soludo to address outdated pension rates.

    This appeal follows the discovery of a case where a retired senior matron in the state, identified as Mrs. Fanny Ngozi Uchefuna, reportedly receives N330 as a monthly pension.

    This appeal follows the discovery of a case where a retired senior matron in the state, identified as Mrs. Fanny Ngozi Uchefuna, reportedly receives N330 as a monthly pension.

    Contractors Pension States
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