Why States Owe Salaries – Gov. El-Rufai

Kaduna State governor, Nasiru El-Rufai, has stated that Nigeria would end up like Sri Lanka if fuel subsidy and multiple exchange rates continue.

According to El-Rufai, Nigerian states are affected by the failure to remove fuel subsidy and operate a single exchange rate regime, as the Nigerian National Petroleum Company (NNPC) Limited has not been remitting proceeds of oil revenues into the federation account.

He made this known during the World Bank’s Nigeria Development Update and Country Economic Memorandum in Abuja on Thursday.

El-Rufai said the states had supported removal of fuel subsidy in 2022, but it was kept, “If we continue on this track, we would end up like Sri Lanka,” the governor stated. 

“We agreed that by November 2022 fuel subsidies should go because we saw it would affect the solvency of many states, and affecting many states, but somehow the consensus was not implemented” 

Speaking at the World Bank programme, El-Rufai opined that the danger with maintaining fuel subsidy is why the 2023 Presidential candidates have been campaigning on the assurance that subsidy will be removed. 

States can’t pay salaries to workers

The governor disclosed that several states are under financial pressure and can’t afford to increase wages, as they don’t have access to the liquidity of the Central Bank of Nigeria (CBN) as the Federal Government. 

El-Rufai revealed that the states are now dependent on the Federal Government to pay salaries, similar to the financial support received from President Muhammadu Buhari’s administration in 2014-15. 

“Most states, other than oil producing states still receiving derivation, are under pressure, except Lagos state which has a large tax base. 

“We all know and can see the impacts of the fiscal threats on Nigerians, ranging from minimum wage to earnings of Nigerians, ideally we should be multiplying wages of Nigerians but we simply can’t afford it, many states are struggling, and we are back to 2014-15 levels when the Buhari administration inherited 27 sub nationals with salary arrears.” 

He added, “How can we deliver that when we are struggling to pay salaries of civil servants, most state governments are not as large as the FG, I can assure you at least half the states are struggling already and these reforms must be implemented.”