Thirty-two states in Nigeria owed a total of N933.32bn to contractors and retirees in 2023.
According to findings, which is 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.
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.
It was 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.
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.
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, it was 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 The PUNCH 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 on Thursday, 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.
Uchefuna, with identity card number AN 866, retired on October 21, 1994, from the State Education Commission, with Njikoka Local Government as her pay point.
In response to this situation, the union wrote to Governor Soludo, requesting a review and harmonisation of pension rates in the state.
The letter referenced a circular from the National Salaries, Incomes and Wages Commission, urging the governor to implement the new rates.
Also, the Retired Directors of the Anambra State Public Service have called for a pension review and harmonisation, noting that retirees have not seen an increase since 2003.
In 2023, Anambra State owed N24.26bn to contractors and N4.38bn in pension and gratuity arrears, bringing its total liabilities to N28.64bn.
Based on a statement released on Thursday, the Special Adviser to the Governor of Ekiti State on Media, Yinka Oyebode, stated that the governor approved the payment of two months’ pension arrears to local government pensioners.
He noted that the Ekiti State Governor, Mr Biodun Oyebanji, approved the release of N1bn as a gratuity to state pensioners.
It will be recalled that Oyebanji last month distributed N3.5bn in gratuity cheques to retirees in the state as part of efforts to offset the backlog of outstanding gratuities.
In 2023, Ekiti State owed N2.32bn to contractors and N12.41bn in pension and gratuity arrears, bringing its total liabilities to N14.73bn.
Madukwe B. Nwabuisi is an accomplished journalist renown for his fearless reporting style and extensive expertise in the field. He is an investigative journalist, who has established himself as a kamikaze reporter.