24 Nigerian States Unable to Meet Salary Obligations Without FG Allocations, Budget Analysis Reveals

A recent analysis by The Punch has unveiled a concerning financial situation in at least 24 Nigerian states, revealing their dependence on federal allocations for workers’ salary payments in 2024.

According to the study, only 11 out of the 36 states can autonomously cover salary expenses, relying on robust internal revenue. These states include Lagos, Kano, Anambra, Edo, Enugu, Imo, Kaduna, Kwara, Osun, Ogun, and Zamfara.

The remaining 24 states, including Bayelsa, Ondo, Yobe, Sokoto, Taraba, Plateau, Oyo, Niger, Nasarawa, Kogi, Kebbi, Katsina, Jigawa, Gombe, Ekiti, Ebonyi, Borno, Benue, Bauchi, Adamawa, Akwa-Ibom, Cross River, Abia, and Delta, are compelled to rely on federal allocations or resort to borrowing.

This financial challenge raises concerns about workers’ productivity and the efficiency of state governments in revenue generation. The issue comes amidst the ongoing demand for wage increases by labor unions at both federal and state levels.

In 2023, state governments borrowed approximately N46.17 billion from three banks to meet salary obligations, underscoring a persistent reliance on external funding.

While experts expected the recent boost in Federation Account Allocation Committee (FAAC) allocations to reduce borrowing, the analysis shows that 32 states are planning to borrow N2.78 trillion in 2024.

Financial experts emphasize the need for states to explore financial innovations and attract investors. Development economist Aliyu Ilias suggests identifying unique strengths and creating policies to attract investments. Professor Akpan Ekpo urges states to increase revenue through improved service delivery, while Muda Yusuf emphasizes the importance of fiscal sustainability and the need for states to reduce overheads.

The financial strain on these states underscores the urgency for comprehensive fiscal reforms and innovative strategies to ensure long-term financial stability and reduce dependency on federal allocations.