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Economic crisis: States borrow N46bn from banks to pay salaries
Between January and June 2023, state governments borrowed nearly N46.17 billion from three banks to pay salaries.
The findings were based on an analysis of the half-year 2023 financial statements of Access Bank, Fidelity Bank, and Zenith Bank Group.
it was observed that the states borrowed the most from Access Bank in six months, with a record of N42.97bn loan.
It was followed by Zenith Bank (N1.78bn borrowed) and Fidelity Bank (N1.42bn borrowed) within the six-month period.
According to the H1 2023 financial statement of Access Bank, the outstanding balance on the salary bailout fund was N58.84bn by June 30, 2023, from N101.81bn in December 2022.
“The amount of N58,842,651,795 represents the outstanding balance on the state salary bailout facilities granted to the bank by the Central Bank of Nigeria for onward disbursements to state governments for payments of salary of workers of the states. The facility has a tenor of 20 years with a 2 per cent interest payable to the CBN. The bank is under obligation to on-lend to the states at an all-in interest rate of nine per cent per annum. From this creditor, the bank has nil undrawn balance as at 30 June 2023,” Access Bank noted.
For Fidelity Bank, the H1 2023 financial statement showed that the outstanding balance on the salary bailout fund was N80.65bn by June 30, 2023, from N82.07bn in December 2022.
The bank noted “FGN Intervention fund is CBN Bailout Fund of N80.65billion (31 Dec 2022: N82.07bn). This represents funds for states in the Federation that are having challenges in meeting up with their domestic obligation including payment of salaries. The loan was routed through the bank for on-lending to the states. The bailout fund is for a tenor of 20 years at 9 per cent per annum.”
It added, “The bailout fund is for a tenor of 20 years at 7 per cent per annum and availed for the same tenor at 9 per cent per annum until March 2020, the rate was reduced to 5 per cent for one year period due to Covid-19 pandemic to March 2021 after which it was extended to February 2023. CBN on August 17 2022 further reviewed the rates in response to economic outlook and approved the following order; All intervention facilities granted effective July 20, 2022 shall be at 9 per cent per annum while all existing intervention facilities granted prior to July 20, 2022 shall be at 9 per cent per annum effective September 1, 2022.”
According to the H1 2023 financial statement of Zenith Bank, the outstanding balance on the salary bailout fund was N125.14bn by June 30, 2023, from N126.92bn in December 2022.
The bank noted, “The Salary Bailout Scheme was approved by the Federal Government to assist state governments in the settlement of outstanding salaries owed their workers. Funds are disbursed to banks nominated by beneficiary states at two per cent for on-lending to the beneficiary states at 9 per cent. The loans have a tenor of 20 years. Repayments are deducted at source, by the Accountant General of the Federation, as a first line charge against each beneficiary state’s monthly statutory allocation. This facility is not secured.”
Findings show that the loans occurred despite the slight increase in the revenue allocation to states.
it was earlier reported that there was a N540bn increase in the amount shared between the Federal Government, states, and Local Government Areas.
This was according to an analysis of the communiqués issued by the Federation Account Allocation Committee between January to July for 2022 and 2023.
In 2022, a total of N4.96tn was shared for the first seven months of the year.
By 2023, a total of N5.5tn was shared for the first seven months of the year.
However, The PUNCH has also reported that about 25 states in Nigeria suffered a drop in their internally generated revenue and battled cash crunch in the first quarter of 2023.
Data obtained from the budget implementation report of each state showed that 25 states earned N182.26bn in Q1 2023.
This was a shortfall of 3.07 per cent or N5.77bn from the N188.03bn made in Q4 2022, based on a quarter-by-quarter analysis.
Although there are 36 states in Nigeria, Rivers and Sokoto have no data for Q1 2023 yet; Akwa Ibom has no data for Q1 2022, while Kwara, Edo, Kaduna, Lagos, Bauchi, Zamfara, Yobe, and Ogun have no data for Q4 2022.
Therefore, the figure for IGR was limited to 25 out of the 36 states in the country.
Findings showed that the 25 states projected an IGR of N219.56bn for Q1 2023 but only made about N182.26bn, which means that they had a revenue performance of 83.01 per cent.
This also means that the revenue underperformed by 16.99 per cent as it failed to hit the states’ revenue target.
States debt
Also, state governments’ indebtedness to commercial banks rose to N2.2tn amid worsening revenue challenges.
This was according to data from the quarterly statistical bulletin of the Central Bank of Nigeria, which showed that states and LGAs owed banks about N2.21tn as of March 2023.
CBN data also revealed the states’ indebtedness rose from N1.97tn to the current figure, indicating an increase of about N240bn within the period under review.
Data from the Debt Management Office showed that the 36 states and the Federal Capital Territory have N5.82tn domestic debt and $4.35bn external debt.
In its December 2022 edition of the Nigeria Development Update, the World Bank noted that states’ debts would rise above 200 per cent of the revenue generated in 2022 and 2023.
The report read, “Debt levels for an average state are estimated to increase from 154.6 per cent of revenues in 2021 to above 200 per cent of revenues in both 2022 and 2023.”
Borrowing for salaries
Economic experts, who spoke with The PUNCH on Wednesday, described borrowing for the payment of salaries as dangerous, cautioning states against this.
An economist and former Vice-Chancellor of the University of Uyo, Prof Akpan Ekpo, acknowledged the bad economic situation of the country, which has compelled states to do more borrowing.
He, however, advised against borrowing for recurrent expenditures, such as salaries.
“The situation is bad but most states do not have enough in terms of internally generated revenue. A lot of the states, even their federal government allocation, cannot pay salary, which is very dangerous. You should not borrow to pay salaries.
“You should borrow to finance capital projects. States have to think of new ways of increasing their IGRs. If they continue borrowing to pay salaries, it is not good for the economy,” Ekpo said.
He urged the states to look at what they have in their states in order to find a way to increase their revenue.
Ekpo also urged the states to increase service delivery, which will attract more revenue.
A development economist, Dr Aliyu Ilias, also acknowledged the economic difficulties that states are faced with but noted that borrowing to pay salaries is a problem.
“With the current hardship we have in the country, they may not have alternative than to resort to borrowing. But borrowing to pay salaries is becoming a problem. We must stop borrowing for recurrent expenditure. We can borrow for capital expenditure; that is okay. The consequence is that we are digging ourselves into more trouble,” he said.
He admitted that state governments might be unable to join in the Federal Government’s effort to increase allowance to workers.
He then advised, “Each state should look inward, find what they are good at and maximise it.”
Also speaking with The PUNCH, a Professor of Economics at the Olabisi Onabanjo University, Prof Sheriffdeen Tella, said borrowing for consumption is worsening the country’s inflation.
“It is part of what was creating inflation. Most of the money borrowed were for consumption not production. It is unfortunate,” he said.
He urged the states to stop depending on the Federal Government and boost local production for more revenue generation.
A former President, Association of National Accountants of Nigeria, Dr Sam Nzekwe, described the borrowing by states as bad.
“This is the bad borrowing we are talking about – borrowing for recurrent expenditure. That is a very bad one,” he stressed.
He further called on states to stop depending on the Federal Government, cut governance costs, and block revenue leakages.
“Most of them depend on the Federal Government. I will advise them to work hard to increase their internally generated revenue. When they do that, they have to look into the costs of governance – having a fleet of cars for themselves and aides.
“They should reduce the cost of governance and block leakages. Most of the money you see are being embezzled,” he told The PUNCH.
FRC engages banks
The Fiscal Responsibility Commission has said it is set for a stakeholder dialogue on how to implement sections of the Fiscal Responsibility Act, 2007 relating to lending by banks to governments and public institutions in the federation.
The agency, which is saddled with the task of promoting a transparent and accountable government financial management framework for Nigeria, disclosed this in a statement by its spokesman, Bede Anyanwu, on Wednesday.
The statement read, “The Fiscal Responsibility Commission has concluded preparations to hold a stakeholder dialogue on implementing sections of the Fiscal Responsibility Act that relate to lending by banks to governments and public institutions in the Federation.
The Fiscal Responsibility Act 2007 (FRA), which is Nigeria’s foremost legal framework for the promotion, monitoring, and enforcement of fiscal discipline and accountability in the management of public finances, stipulates that lending by banks to governments or their agencies in contravention of certain provisions of the Act shall be unlawful.
The statement added, “The Commission aims at using the stakeholder dialogue to refresh the attention of stakeholders to this provision of the Act and to engender stakeholder agreement on ways to enhance compliance and thereby improve the nation’s debt management practices.”
The Asset Management Corporation of Nigeria (AMCON) has listed the Silverbird Entertainment Centre in Abuja for sale to recover a longstanding multi-billion naira debt linked to a former Nigerian Senator, Ben Murray-Bruce, and his companies.
The listing, published in a recent public notice by AMCON, shows that the Abuja Mall, a prime commercial complex located in the Central Area, Cadastral Zone, is now open for bids from interested buyers. The property is among several assets AMCON disposes of across different states, including Lagos, Rivers, Oyo and Plateau.
The Abuja mall, operated under Silverbird Entertainment, was previously seized following a 2016 Federal High Court order over a debt of more than N10 billion owed to AMCON by several companies owned by the Murray-Bruce family. Those affected include Silverbird Productions Limited, Silverbird Showtime Limited and Silverbird Galleria Limited.
In June 2016, the court appointed a receiver, M.A. Banire, to take over the companies’ assets on AMCON’s behalf. Justice C.M.A. Olatoregun, who presided over the matter, also barred Mr Murray-Bruce, his brothers Guy and Roy Murray-Bruce, and other family members from interfering with the receiver’s work. The court’s order covered several mortgaged properties in Abuja, Lagos, and Port Harcourt.
Despite negotiations that followed the initial seizure, the debt remained unresolved. AMCON said the latest sale is part of a broader asset recovery strategy targeting high-profile debtors who have failed to meet their obligations.
Silverbird’s Abuja mall is one of the group’s flagship properties, housing retail shops, a cinema, restaurants and office spaces. According to AMCON’s notice, the property comes with a gross lettable area of 15,050.91 square metres and is being sold as is.
Senator Ben Murray-Bruce, who served in the National Assembly representing Bayelsa East from 2015 to 2019, is also a prominent media entrepreneur and founder of the Silverbird Group, which operates television and radio stations in Nigeria and Ghana, as well as the Most Beautiful Girl in Nigeria (MBGN) beauty pageant.
As of 2017, AMCON said over 400 high-profile obligors were responsible for about N4.5 trillion nearly 80 per cent of the total outstanding debt on its books. The Corporation has since adopted more aggressive recovery efforts, including asset sales and legal enforcement.
Bids for the Abuja mall and other listed properties are due by 11 July.
Prospective buyers are advised to visit AMCON’s official website or contact the designated coordinating agents for details.
Murray-Bruce did not respond to a request for comment on the planned sale as of the time of filing this report.
President Bola Ahmed Tinubu has arrived in Rio de Janeiro, Brazil, to participate in the 17th Summit of Heads of State and Government for the Global South and Emerging Economic Bloc, which includes Brazil, Russia, India, China, and South Africa (BRICS).
The President’s flight touched down at the Galeao Air Force Base tarmac at 8:45 pm on Friday, where the Galeao Air Force Base Commander coordinated the Guard of Honour.
Brazil’s Deputy Minister for Africa and the Middle East, Ambassador Carlos Sergio Sobral Duarte, and the Deputy Minister for Trade Promotion, Science, Technology, Innovation, and Culture, received President Tinubu.
President Tinubu is in Brazil at the invitation of President Luiz Inacio Lula Da Silva. The Nigerian leader will attend a bilateral meeting hosted by President Lula today, July 5, ahead of the summit on June 6 and 7.
At the BRICS Summit, the President will participate in a plenary session and deliver an address on Nigeria’s ongoing reforms to reposition the economy for global competitiveness.
According to the Presidency, he will also attract investors to capitalise on the country’s opportunities in agriculture, solid minerals, healthcare, and alternative energy.
The summit’s theme is “Strengthening Global South Cooperation for More Inclusive and Sustainable Governance.” Deliberations will centre on health, Artificial Intelligence, governance, and Climate Change issues.
Ahead of the Leaders’ Summit, the political negotiators of BRICS brainstormed over aligning more commitments to combat socially determined diseases, artificial intelligence governance, and climate finance.
State Governors participating in the summit with the President are Hyacinth Alia (Benue), Prince Dapo Abiodun (Ogun), Babajide Sanwo-Olu (Lagos), Sheriff Oborevwori (Delta) and Mohammed Umar Bago (Niger).
The All Progressives Congress (APC) has appointed Hon. Ali Bukar Dalori as the acting National Chairman of the party following the resignation of Dr. Abdullahi Umar Ganduje.
Dalori, who currently serves as the Deputy National Chairman (North), was directed by President Bola Ahmed Tinubu to assume the leadership role in an acting capacity pending the meeting of the party’s National Executive Committee (NEC), which is being convened immediately to fill the vacancy.
The announcement was contained in an official statement signed by the party’s National Publicity Secretary, Felix Morka, on Friday in Abuja.
According to the statement, Ganduje tendered his resignation with immediate effect in order to attend to “urgent and important personal matters.”
Dalori’s appointment comes nearly two years after Ganduje was appointed National Chairman in August 2023, succeeding Senator Abdullahi Adamu.
During his tenure, Ganduje was praised for promoting party cohesion, driving electoral strength, and overseeing key defections into the party.
With Dalori now at the helm, the APC said it remains “steadfast and unwavering” in delivering President Tinubu’s Renewed Hope Agenda and sustaining internal unity.
The party expressed gratitude to Ganduje for his “invaluable contributions and distinguished record of service” and extended well wishes for his future endeavours.
President Bola Tinubu has signed the four tax reform bills into law. Tinubu assented to the bills at the Presidential Villa on Thursday.
The four proposed laws are the Nigeria tax bill, the Nigeria tax administration bill, the Nigeria revenue service (establishment) bill, and the joint revenue board (establishment) bill.
The signing ceremony was attended by Senate President Godswill Akpabio, Tajudeen Abbas, speaker of the house of representatives, and Julius Ihonvbere, house majority leader.
Also present were Abdulrazaq Abdulrahman, governor of Kwara, Hope Uzodinma, his Imo counterpart, and Wale Edun, minister of finance, among others.
Tinubu transmitted the proposed legislation to the national assembly on October 3, 2024, urging lawmakers to pass the tax reform bills.
The bills initially faced opposition from the northern governors, who argued that the proposed laws could harm the region’s interests, asking the national assembly to reject the bills and demanding fair and equitable implementation across all regions.
However, in January, the Nigeria Governors’ Forum (NGF) endorsed the bills after agreeing on an “equitable” VAT-sharing formula.
The house of representatives passed the bills in March, while the senate approved them in May.
On June 18, the legislature transmitted the bills to the president for assent.
Speaking earlier on Thursday, Tinubu said the tax bills will unify the country’s fragmented tax system.
“They (tax reform bills) deliver the first major, pro-people tax cuts in a generation, targeted relief for low-income earners, small businesses, and families working hard to make ends meet,” Tinubu said.
“For too long, our tax system has been a patchwork—complex, inequitable, and burdensome. It has weighed down the vulnerable and shielded inefficiency. That era ends today.”
Tinubu added that the bills will eliminate wasteful duplications, reduce red tape, restore investor trust, and promote transparency and coordination at all levels.
A businessman, Peter Otomewu and his company, Pebeto Enerji Limited, were on Monday arraigned by the Economic and Financial Crimes Commission, before the Ikeja Special Offences Court for allegedly defrauding a petroleum services company of $75,000.
The defendants were docked on a two-count charge bordering on obtaining money by false pretence and stealing, preferred against them by the EFCC.
The anti-graft agency’s prosecution counsel, M.S. Owede, told the court that Otomewu and his firm committed the alleged offences sometime in 2018.
Owode told the court that the defendants fraudulently obtained the sum of $75,000 from Virgin Forest Energy Limited under the false pretext that they had a vessel, MT AYSU, capable of transshipping petroleum products from a mother vessel.
The prosecutor alleged that the representation was false and that the money was never used for the stated purpose.
Otomewu and his firm were accused of dishonestly converting the entire $75,000 property of Virgin Forest Energy Limited to their use.
According to the EFCC, the offences committed contravened Sections 278, 278(1), and 411 of the Criminal Law of Lagos State, 2015, and Section 1(1)(a) and 1(3) of the Advance Fee Fraud and Other Related Offences Act, 2006.
However, both defendants who were docked before Justice Mojisola Dada pleaded not guilty to the charges against them when it was read.
Following the not-guilty plea, Owede asked for a trial date and also urged the court to remand the first defendant, Otomewu, in a correctional centre.
But the defence counsel, Mr Peter Ajabor, however, prayed the court to grant bail to the defendants on liberal terms.
Consequently, Justice Dada granted bail to the defendants in the sum of N50m, with two sureties in like sum.
The judge ordered that the sureties must be gainfully employed and reside within the court’s jurisdiction.
She also ordered that the sureties must have N50m in their bank accounts.
Justice Dada further ordered the remand of Otomewu in the correctional centre, pending the perfection of the bail conditions.
The matter was adjourned to September 29, 2025, for commencement of trial.
The Economic and Financial Crimes Commission (EFCC) has interrogated an Abuja-based businesswoman, Halimat Tejuosho, over her alleged involvement in an appointment and contract scam.
Tejuosho, said to be the founder of Haleems Integrated Services Limited, was reportedly quizzed after victims accused her of using false pretenses to obtain funds in exchange for promises of federal appointments and lucrative government contracts.
Counsel to one of the victims, Chief Tolu Babaleye, alleged that Tejuosho ran an elaborate scheme involving forged documents and fake appointment letters to deceive unsuspecting individuals.
He claimed she posed as an aide to the National Security Adviser, Mallam Nuhu Ribadu, to lend credibility to her claims.
“The court had earlier recommended her for prosecution on charges bordering on Advance Fee Fraud, Criminal Diversion of Funds, Criminal Breach of Trust, and Cheating,” Babaleye said.
He also alleged that Tejuosho used her involvement in humanitarian and NGO activities as a smokescreen to attract victims and gain their trust.
EFCC Spokesperson, Mr Dele Oyewale, confirmed that she was invited for questioning and has since been granted administrative bail under stringent conditions.
Investigations are ongoing, and the commission says she may be formally charged to court in the coming weeks.
The anti-graft agency also urged other potential victims to come forward, reiterating its resolve to clamp down on all forms of financial crime.
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