Reasons Why State Govs Can’t Pay Salaries – CBN

The Central Bank of Nigeria (CBN) has attributed the inability of states and local  governments to meet its financial obligation due to the drop of about 30.6 per cent from the federation account allocation in April 2015. This is in comparison to the amount that was allocated in same time last year.

Godwin Emefiele, CBN Governor

The Economic Report released by the apex bank stated that the total allocation from the federation account to state governments was N153.45. This figure showed a low in revenue allocation of about 30.6 to 22.9 per cent to the 2014 monthly fund allocated. This fall in revenue to states was as result of continued drop in global oil prices.

“The breakdown showed that at N119.27 billion or 77.7 per cent of the total, state governments’ receipt from the Federation Account was below both the 2014 monthly budget estimate and the level in the preceding month by 29.7 and 30.3 per cent, respectively.

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“This was lower than both the budget estimate and the level in the preceding month by 33.8 and 19.7 per cent, respectively. Of this amount, receipts from the Federation Account were N64.99 billion (73.1 per cent of the total), while the VAT Pool Account accounted for N23.92 billion (26.9 per cent of the total).

The report revealed that N735.07 billion revenue collected by the federal government in April 2015 was lower by 9.8 per cent of the monthly budget estimate. This have made availability of fund needed by state and local governments to be unavailable for both recurrent and capital project.

“At N735.07 billion, estimated federally-collected revenue in April 2015, was lower than the monthly budget estimate by 9.8 per cent. The decline in estimated federally-collected revenue (gross) relative to the monthly budget estimate was attributable, largely, to the shortfall in receipts from oil revenue during the review month.”

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The report further stated the Federal government got N146.49 billion, the state and local government shared N74.30 and N57.28 billion respectively. While N29.38 went to the oil-producing states as 13.0 Derivation Fund. From the Value Added Tax, the Federal Government received N10.25 billion and while the state and local government got N34.17 and N23.92 respectively.

Presently, several states are owing workers months of salaries. In Osun, the Christian Association Nigeria pledged with church leaders to come to the rescued of the state’s civil servants by providing foods and other necessities.

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