Second Paris Club Loan Refund: Nigerian govt to make tougher demands on states – Adeosun

Kemi Adeosun, Minister for Finance [Photo credit: The BusinessPost]

The Federal Government is yet to release the second tranche of London-Paris Club Loan refunds to the 36 state governments, Minister of Finance, Kemi Adeosun, confirmed on Thursday in Abuja.

The Minister said the Federal Ministry of Finance was still working with the Presidency to determine the terms and conditions that would guide the disbursement of the funds.

“It’s not ready yet,” the minister said. “Before the payment of the first tranche of the funds, the President directed the states to use 50 per cent for the payment of arrears of salaries, gratuity and pensions to their workers.

“A lot of the states complied with the directive. When we are ready, part of the guidelines for disbursement will be that the states use 70 per cent of the payment for the same purpose,” she said.

However, the minister did not say why most of the states were still owing huge backlog of salaries to their workers.

The Nigeria Union of Local Government Employees, NULGE, said about 23 states of the federation currently owed local government workers’ arrears of salary ranging from one to 16 months.

The national president of the union, Ibrahim Khaleel, named Bayelsa State as owing local council workers for between 10 to 16 months, followed by Kogi, seven to 15 months and Delta, eight to 14 months.

Other states include Kaduna (12 months), Oyo (three to 11 months), Edo (10 months), Abia (five to nine months), Kwara (two to nine months), Benue (nine months), and Nasarawa (seven months), while Ondo, Ekiti, and Imo are owing six months.

Zamfara has not implemented minimum wage, while Adamawa, Rivers, Akwa Ibom, Ebonyi, and Plateau states owe four months each, and Taraba and FCT (three months).

Also, Osun State has been paying half salaries for more than 24 months, while few months are being owed salaries in Enugu. Ogun and Ekiti have continued to withhold union dues deducted from workers’ salaries for the past seven and nine months respectively.

Cross River state workers, who are being owed between one to three months salaries, have continued their strike action, following their refusal to heed to the plea by the state government for them call off the action this week.

Following the approval of the payment of the refund in the first tranche of disbursement, a total of N516.38 billion was paid to the 36 States and the FCT.

On November 21, 2016, President Muhammadu Buhari had approved the partial refund of long standing claims by state governments in respect of over-deductions from their Federation Account Allocation Committee, FAAC, allocation for external debt service between 1995 and 2002.

The debt service deductions were in respect of the Paris Club, London Club and Multilateral debts of the Federal and State governments, which Nigeria reached a final agreement for debt relief with the Paris Club in October 2005.

Apart from the refund meant to assist the state governments sort out the huge arrears of salaries to their workers, and alleviate the challenges workers were facing, the President said the funds were part of his government’s efforts to stimulate the economy.

Consequently, the disbursements were premised on the condition that a minimum of 50 per cent would be applied for the payment of workers’ salaries and pensions.

A senior Ministry of Finance official familiar with the issue said the payment of the second tranche of payment was delayed, because the government was to review the report of the impact of the releases on the effort of the states government defray their arrears to the workers.

“The impact analysis report is being compiled by the Federal Ministry of Finance for onward submission to the Acting President, Yemi Osinbajo, as part of the process for approval for the release of the second tranche of payment,” the official said. He requested that name should not be disclosed, as he was not authorised to speak on the issue.

Spokesperson of the Nigerian Governors, Bello Barkindo, said all the 36 governors’ met recently in anticipation of the release of the second tranche of the money already approved by vice-president.

“The governors met in anticipation of the release of the other half of the Paris-London Club refund expected to hit the states’ accounts within the month.

“We all agreed that a substantial amount from the next tranche of the Paris-London refunds be used in the settlement of workers salary and pension arrears.”

The president, Trade Union Congress, TUC, Bobboi Kaigama, and his Nigeria Labour Congress, NLC, counterpart, Ayuba Wabba, have asked the government to enlist the assistance of anti-graft agencies, the Economic and Financial Crimes Commission, EFCC, and the Independent Corrupt Practices and Other Related Offences Commission, ICPC, to probe the use of the first tranche as well as monitor the disbursement of the second.

“We have already called for the probe by ICPC and EFCC those states not only for the first tranche, but subsequent tranches,” Mr. Kaigama said.

“We are working with the Federal Government, which directed that the fund be used for the payment of arrears of workers’ salaries and pensions before anything else.”



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