As of September 2023, documents from the Central Bank of Nigeria reveal that 31 state governments collectively owe ₦339.9 billion borrowed between 2015 and 2023 to cover workers’ salaries. This debt comprises an outstanding ₦339.97 billion and a loan default of ₦1.31 billion.
Initiated during former Governor Godwin Emefiele's tenure, the Salary Bailout Facility (SBF) aimed to ease fiscal pressures by clearing salary arrears. Though current CBN governor Olayemi Cardoso halted the program due to economic constraints, it remains a vital intervention for state financial challenges.
Despite disbursing ₦457.17 billion to the states, only ₦117.21 billion has been repaid as principal, with ₦45.21 billion in interest. Notably, top beneficiaries included Imo, Kogi, Kano, Oyo, and Osun.
The inability to pay salaries has raised concerns, especially with calls for a minimum wage increase. Many states resorted to bank loans last year to meet salary obligations, indicating financial strain.
Furthermore, 24 states couldn't pay salaries without federal allocations, highlighting financial vulnerability. Experts advocate for increased revenue generation and financial innovations, like Public-Private Partnerships, to reduce reliance on bailout facilities.
Despite promises to reduce borrowing and focus on revenue, the Federal Government's domestic debt reached ₦4.94 trillion in President Bola Tinubu's first six months, hindering economic growth. Experts stress prudent fiscal management and debt reduction strategies to achieve positive economic outcomes.
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