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How Nigeria Made N41.6tr Revenue In 4 Years, Yet Can’t Pay Workers

Central Bank Of Nigeria building

Central Bank Of Nigeria building

NIGERIA generated a whopping N41.6 trillion as revenue from crude oil proceeds and taxes, as well as duties between fiscal years 2011 and 2014, findings from the Central Bank of Nigeria (CBN); the Federal Ministry of Finance; and Offices of the Accountant General, and Auditor-General of the Federation have revealed.

Yet, the country is broke to the extent that paying the salaries of public sector workers, who do not constitute 10 per cent of the population at both federal and state levels, has become impossible.

The figure in question excludes the federal and state governments’ independent revenue generated, which if added may bring the accruals to over N60 trillion within the four-year period under review.

At the last tally, last week, the organised labour, under the aegis of Nigeria Labour Congress, counted over 20 states in the country that owe salaries, some for upwards of nine months.

Even the federal government is not spared blame, as workers in its fold now receive their salaries far in arrears, ostensibly only after the Debt Management Office (DMO) succeeds in raising funds from the debt market.

Surprisingly, the federal government and the other tiers of government on a monthly basis get allocation from the federally collected revenue. During the four-year period under review, the three tiers shared a whopping N29.26tr distributed as follows: federal government – 52.68 per cent; states -26.72 per cent; and local councils – 20.60 per cent.

Also states of oil minerals producing localities share additional 13 per cent of the oil proceed every month as derivation funds, while revenue generating agencies like the Nigerian Customs Service (NCS) and the Federal Inland Revenue Service (FIRS) draw from the Federation Account, seven per cent and four per cent, respectively, of non-oil proceeds of their reported revenue for the month, as cost of collection.

The balance of the N4.610 generated revenue, which amounted to about N11.7tr was spent on joint venture cash calls for oil minerals production, royalties and other sundry statutory commitments.

The breakdown of the generated revenue within the period is as follows: year 2011, the sum of N11.116tr was generated and the sum of N6.158tr was shared by the three tiers at the Federation Accounts Allocation Committee (FAAC); year 2012, the sum of N10.654tr was generated and the sum of N6.564 was shared at FAAC; year 2013, the sum of N9.759tr revenue was collected and N7.488tr distributed by the three tiers, while last year, the sum of N10.091tr was generated and the sum of N6.058tr shared at FAAC.

In spite of this somewhat rosy situation, the period also witnessed what could be described as a boom in the activities of debt accumulation by both the states and the federal government, particularly at the domestic debt market, with the Debt Management Office (DMO), the country’s debt management agency, throwing all caution to the wind and approving every application by the states to raise money from the debt market, even after it had undertaken a very thorough Debt Sustainability Analysis (DSA) on the 36 states and the Federal Capital Territory, which revealed very risky position of states’ finances in a ratio of debt to their internally generated revenues (IGRs), which should be the basis of their credit rating, as opposed to oil revenue allocation, because oil is a finite product.

With the support of the DMO and the Securities and Exchange Commission (SEC), the states even in the face of adequate finances at their disposal, developed the appetite for loans from the capital market and money market until the then Central Bank Governor, Mallam Sanusi Lamido Sanusi, had to stop banks from further lending money to them when it became clear that the loans were not for investment but needed to fund their excesses. Sanusi, accordingly, raised lending.

By year 2013, when the Debt Management Office (DMO) concluded the domestic debt data reconstruction of the public debt liabilities in the country’s 36 states and the Federal Capital Territory (FCT), which The Guardian exclusively obtained and reported, the total liabilities of states was put at N1.86tr as at the end of June, 2012, up from the N1.42tr level in December 2011.

A breakdown of the figure indicates that local or domestic debt obligations account for N1.186tr with the balance being the foreign debt liabilities. Contractors’ liabilities top the chart on the debt table, followed closely by commercial banks’ loans, bonds, pension and gratuity and government-to-government debt in that order.

According to the report: “The total public debt of the 36 states rose from N1.42tr as at December 31, 2011 to N1.86tr by June 2012. The marginal increase of about 3.32 per cent was as a result of slight increases in both the external and domestic debt stocks.”
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2 Comments
  • Benjamin

    The sad truth is that Nigeria is not an anomaly: most countries are in some form of debt, even ones which brag about reducing their budget deficits. Of course, while that means many people are feeling Nigerians’ pain, it does not excuse how a country this rich in oil has let this go on so long. Our only excuse is that we have had many growing pains, and with the example set by Jona that a government can function and transition in peace, we only now have the opportunity to catch up to our peers on the world stage.

    If I have any advice for Buhari, it will be to learn from Nigeria’s past mistakes whilst simultaneously building on what has allowed us to progress as one of Africa’s leading nations.

  • Matthew keyh

    SOLUDO WAS RIGHT

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