CBN interventions: 31 state govs borrow N457.17 billion to pay salaries.

At least 31 state governments in Nigeria have collectively borrowed N457.17 billion to pay salaries to their respective state civil services. This significant financial move was facilitated through the Salary Bailout Facility (SBF), a strategic intervention by the Central Bank of Nigeria (CBN) aimed at alleviating the fiscal pressures faced by these states.

This is according to a report seen by Nairametrics, which meticulously presents the disbursement of the over N10.3 trillion intervention fund by the apex bank.

About the Intervention

• Established in August 2015, the SBF was designed to help state governments clear the backlog of outstanding salaries owed to their employees. This initiative underscores the critical role of the CBN in stabilising the country’s financial landscape, especially in times of fiscal distress faced by state administrations.
• The facility involved key stakeholders, such as the benefiting state governments, Deposit Money Banks (DMBs), the Federal Ministry of Finance (FMF), and the Accountant General of the Federation (AGF), all of whom played pivotal roles in implementing and managing this bailout package.

The report highlights the SBF’s post-implementation impact, noting the crucial relief it provided in settling the backlog of salaries across the states. This intervention not only alleviated the immediate financial burdens on the state governments but also likely affected the livelihoods of numerous civil servants awaiting their remunerations.

74% of amount borrowed still outstanding

• According to the detailed breakdown presented in the report, 31 state governments have benefited from this initiative, with a disbursement amounting to N457.17 billion. Despite the substantial disbursement, the principal repayments made so far total N117.21 billion, with interest repayments at N45.21 billion.
• Consequently, a considerable sum of N339.97 billion remains outstanding, which is about 74% of the total amount disbursed. There is also an overdue amount of N1.31 billion as of September 2023.

Imo State leads list of top beneficiaries

Among the top beneficiaries of this bailout facility were states like the following

• Imo, which received N20.46 billion;
• Kogi with N20.26 billion;
• Kano at N20.21 billion;
• Oyo, which got N16.81 billion; and
• Osun with N15.93 billion.

The report further identifies a vital issue of concern, which is the delay in principal and interest repayments by the Participating Financial Institutions (PFIs). This delay underscores the broader challenges of fiscal management and sustainability within the states, highlighting the need for more robust financial strategies and practices.

To address these ongoing challenges, the report recommends that an increased focus be placed on enlightening state investment companies about the benefits of Public-Private Partnerships (PPPs). Such partnerships could significantly enhance the state’s Internally Generated Revenue (IGR), improving fiscal health and reducing dependence on bailout facilities for salary payments.