States May Sack Workers As Wage Bill Exceeds IGR

…More States Battle For Survival

If Internally generated Revenue figures for states captured in National Bureau of Statistics data are anything to go by, there is a possibility that state governments may consider reducing their work force.

The Kaduna state government may have belled the cat when it publicly admitted that it may have to disengage 4,000 civil servants due to dwindling financial resources and higher wage bill which the it could not sustain.

More states have continued their battle for survival as a result of the mounting wage bill and low receipts from IGR.

THE WHISTLER analysis showed that the 36 states’ IGR has remained a far cry from their annual expenditure as the wage bill exceeds IGR by over N330bn.

This has led to state governments relying more on disbursement of funds from the Federation Accounts Allocation Committee.

The Federation Account is currently being managed on a  legal framework that allows funds to be shared under three major components.

They are statutory allocation, Value Added Tax distribution; and allocation made under the 13 per cent derivation principle.

Under statutory allocation, the Federal Government gets 52.68 per cent of the revenue shared; states, 26.72 per cent; and local governments 20.60 per cent.

The framework also provides that Value Added Tax revenue be shared thus: FG, 15 per cent; states, 50 per cent; and LGs, 35 per cent.

Similarly, extra allocation is given to the nine oil producing states based on the 13 percent derivation  principle.

Recall, the struggle to pay salaries began in 2020, when some states, including Nasarawa and Kaduna hinted on implementing a 25 per cent cut in salaries payable due to dwindling revenue.

The NBS data showed that total IGR for 2020 (excluding FCT) stood at N1.214trn, while the total proposed wage bill (Salaries /personnel cost) was N1.54trn.

This shows that the proposed wage bill of the 36 states in 2020, outweighs the actual revenue generated for the period by 21.3 percent.

For example, while Jigawa State total revenue for the period stood at N8,667,720,607.78, the personnel cost budgeted for the period was N44,647,500,000.

Yobe state budget showed a personnel cost of N28,179,452,687, while its actual revenue for the period was N7,779,631,176.

Similarly, Adamawa State generated a total of N8,329,870,706.65 revenue, while its 2020 budget showed a total personnel cost of N36,547,202,964. Among others.

In a chat with THE WHISTLER, Ibrahim Aliu, Kaduna based economist stressed on the need for state governments to focus on improving revenue, while reviewing their expenses and and bureaucratic system.

He frowned at situations where the cost of governnace in most states outweighs revenues.

He said, “Revenue issues for state has lingered over the years, and its really taking too much time to be resolved. I think the state governments need to start looking inward to build up a stronger productive aspects of the state’s economy for fiscal viability.

“State governments typically struggle to collect various taxes the constitution empowers them to collect.

“They appear not willing to go the extra mile to collect taxes and generate income, but prefer to rely on the monthly allocations from the federation account.”

Speaking further, Aliu said that states government should implement early retirement for civil servants, which will help address the burden of paying salaries.

“This speaks to the need for state governments to diversify and strengthen their revenue source, identify a peculiar commodity and develop a market for it,” he added.