The 17 newly elected governors will have a difficult time boosting the economies of their various states since they will be left with debts from their predecessors totalling at least N2.1 trillion in domestic debt and $1.9 billion in foreign debt.
Investigations by Saturday PUNCH revealed that some of the first term governors-elect would also have to deal with many months’ worth of unpaid workers’ salaries and growing pension liabilities amid protests for the implementation of the national minimum wage, rising inflation, skyrocketing prices of goods and services, and declining purchasing power.
On March 18, 2023, governorship elections were held in 28 of the 36 states of the federation, and a total of 16 governors-elect were elected to succeed their predecessors, who will serve out the remainder of their constitutionally mandated second terms. A first-term governor, however, lost his bid for reelection to the candidate of the opposition party.
The country’s entire domestic debt as of September 30, 2022, according to the Debt Management Office, was N21,551,924,507,448 while $39.66 billion was owing to foreign creditors.
On May 29, Dr. Alex Otti, the governor-elect of the Labour Party, will succeed Dr. Okezie Ikpeazu of the People’s Democratic Party in Abia State. Otti will inherit a total of N104,573,334,025.73 in domestic debt and $95,632,239.04 in external debt. Between 10 and 27 months’ worth of wages are currently owing to teachers and health care professionals in the state.
If no new debt is accrued between September 2022 and May 28, 2023, Akwa Ibom State Governor Udom Emmanuel will leave behind for his chosen successor, Umo Eno (both of them are members of the PDP), N219,617,660,991.63 in domestic debt and $46,569,647.22 in external debt.
Aside from eight to fifteen months’ worth of overdue pay, Rev. Fr. Hyacinth Alia of the All Progressives Congress will succeed Governor Samuel Ortom of the PDP in Benue State. He will also inherit N143,368,150,982.89 in domestic debt and $30,472,977.14 in debt to foreign creditors.
Bassey Otu, who would succeed Prof. Ben Ayade as governor of Cross River State, will be responsible for paying off N175,198,799,155.96 and $215,754,975.33 that Prof. Ayade left behind. Both are members of the APC.
Delta State Governor Ifeanyi Okowa will leave a total domestic debt of N272,612,510,528.95 and a foreign debt of $60,046,972.41 to his successor, Sheriff Oborevwori. While Oborevwori is the Speaker of the state House of Assembly, Okowa was the PDP’s vice presidential candidate in the presidential election held on February 25.
The APC’s Francis Nwifuru will succeed David Umahi as governor of Ebonyi State and inherit debts of N67,060,019,562.44 and $59,841,539.37, respectively, from his party member.
The situation would be the same in Enugu State, where outgoing governor Ifeanyi Ugwuanyi will transfer his total domestic debt of N89,887,652,914.75 and external debt of $123,024,888.67 to Peter Mbah, his selected successor from the PDP.
Malam Umar Namadi of the APC, who would succeed Governor Muhammad Badaru Abubakar of the same party in Jigawa State, will have his job cut out for him with N44,406,862,432.83 in debt to domestic creditors and $27,611,046.36 in foreign debt.
The APC’s Uba Sani will inherit from the outgoing governor, Nasir El-Rufai, domestic debt of N86,863,069,011.79, while the external debt profile of the state stood at $586,776,219.18 as of September 30, 2022. Sani is still smarting after his narrow victory in the Kaduna State governorship election.
The state’s debt level is as high as the fervor and joy that greeted the election of Abba Kabir of the New Nigeria People’s Party as governor of Kano State. Kabir will receive the N125,186,662,228.72 and $109,422,176.85 owing to domestic and foreign creditors, respectively, that Governor Abdullahi Ganduje inherited from the APC.
While both individuals are members of the ruling APC in Katsina State, the transition between Governor Aminu Masari and Dr. Dikko Radda should go well. But the new governor will also take over obligations to local creditors totaling N62,374,809,154.32 and obligations to foreign creditors totaling $55,824,330.35.
While the Independent National Election Commission pronounced the Kebbi State governorship election to be inconclusive, the debt profile that Governor Atiku Bagudu of the APC has left behind is without dispute. The state owes local businesses and others N60,131,306,074.57, and it has $42,403,327.93 in international debt.
Abubakar Bello, the governor of Niger State, will leave his fellow APC member and successor, Umar Bago, debts totaling N98,262,195,557.88 and $69,266,186.30, respectively.
In addition to transferring power to Mr. Caleb Mutfwang of the opposition PDP, Plateau State Governor and Director-General of the APC Presidential Campaign Council, Simon Lalong, would leave behind N151,903,415,543.09 in domestic debts and $33,735,927.81 in liabilities to foreign creditors.
The leader of the disgruntled PDP governors, also known as G5, Nyesom Wike, will hand over the reins of Rivers State to his appointed successor, Siminialayi Fubara, who will inherit a domestic debt of N225,505,011,356.00, according to the DMO, while the external debt of the oil-rich state is estimated at $140,177,828.95.
Aminu Tambuwal, the chairman of the Nigeria Governors’ Forum, will take over Sokoto State to Ahmed Aliyu of the APC on May 28 along with a total of N85,584,818,029.23 in domestic debt and $37,127,361.58 in international debt. Tambuwal will end his eight-year, two-term PDP tenure.
Governor of Taraba State Darius Ishaku would transfer N90,807,647,838.11 in domestic debt and $22,280,666.87 in foreign debt to fellow PDP member Kefas Agbu.
The combined debt of the 17 states, whose new chief executive officers will assume control on May 29, 2023, is N2,103,343,925,388.89 for domestic contractors and other creditors and $1,755,968,311.36 for foreign creditors.
Salary Backlog
Several of the newly elected governors will also have to deal with displeased employees and pensioners as a result of their predecessors’ failure to make payments on time.
In Abia State, the Chairman of the Nigeria Labour Congress, Uchenna Obigwe, said, “The state ministry workers are not being owed. Those owed include workers of the Abia State University Teaching Hospital, Aba; Health Management Board, Umuahia; Abia State Polytechnic, Aba; College of Education (Technical), Arochukwu; secondary school teachers and the Abia State Universal Basic Education Board, as well as pensioners.
“None of them is owed less than 10 months, particularly Abia Poly, Arochukwu Technical, ABSUTH and HMB workers. Some are owed more than 20 months.”
Obigwe expressed doubt that the Ikpeazu administration would be able to pay the outstanding liabilities before leaving office, stating, “If the administration has the intention to do something, it would have done it before the election to appeal to the workers to vote for the ruling party’s candidates.
“That would have been the time they would have done that. But they didn’t do it. Even the leave allowance, they didn’t pay it.
“So, what we are hoping for is the promise by the governor-elect that within one year, he will clear the arrears.”
Dave Otuiheneme, the chairman of the Nigeria Union of Allied Health Professionals’ HMB branch, claimed that workers were due 14 months’ worth of wages.
Chidinma Wokoma, the HMB Chairman of the Medical and Health Workers Union, claims that as of March 31 the workers will have been owed money for 15 months.
A backlog of unpaid salaries is being left behind in Benue by the departing PDP administration.
Some employees who talked with Saturday PUNCH claimed that the arrears ranged from nine to thirteen months.
Apart from the five months’ worth of unpaid wages from 2017, it was learned that, as of March 2023, the Ortom administration owed the state employees four months’ worth of wages.
A civil servant in one of the ministries, who identified himself simply as Daniel, said, “State civil servants were owed five months salary arrears in 2017 and apart from that, what we were paid early this month (March) was November’s salary.
“So now, the government owes the state workers another four months’ salaries, making a total of nine months.”
It was a similar situation for local government workers, as they were said to be owed 11 months’ salaries.
“The local government workers were owed seven months’ salaries in 2017 and if we add another four months from December 2022 to March 2023, it is now 11 months,” Joshua Terna, a local government employee said.
The worst affected are reportedly primary school teachers, who are owing between 14 and 15 months’ wages, while secondary school instructors are purportedly owed between 8 and 10 months’ wages.
A primary school teacher, who simply identified herself as Doshima, said, “In 2017, we were paid just two months and owed for 10 months. Then for 2021, they owed me September salary, while for others, it is different. For 2022, we are owed December salary; then this year, they have not paid us since January and we don’t know when we will be paid.”
Pensioners are not excluded either; it is claimed that local government retirees are entitled 72 months of pension allowances, compared to 36 months for state pensioners.
When reached, Godwin Anya, the recently-retired NLC state chairman, stated that nothing had changed.
Anya stated, “Though I left office just two weeks ago as the NLC chairman, the situation has not changed at all.
“The salary paid in early March was for November 2022 and those arrears of 2017 are still there, except that the government before the election released N150m to defray the 2017 arrears, which is meaningless, and N100m to settle the arrears of local government workers’ salaries for 2017.”
As he takes office, the incoming governor, Alia, has pledged to pay off the backlog of salary arrears.
He said, “Our state, Benue, needs a total reset! Governance in our state has hit a historic low. This election is a mandate to reform and recalibrate governance in Benue.
“We need all hands, all good and ready hands, to be on the deck. We need men and women whom the spoils of office cannot buy. We need all who believe that a new Benue is possible.
“I believe that there is an even greater obligation on me, in fact on us all, to tell the Benue people very clearly the difficult choices and challenges that we face and how we will work our way through them.
“We will clear the backlog of arrears of salaries, pensions and gratuities; resettle our IDPs in their ancestral homes; address persistent insecurity challenges and set the stage for a prosperous Benue.”
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Cut costs – Economists
Joseph Babatunde, a former general manager of large scale industries at the Bank of Industry, stated that while the incoming governors will have certain debt burden difficulties, these might be minimized with the establishment of strong economic and financial teams.
He added that the states will be able to raise money to pay off the debts and finance additional projects if the departing governments put the loans into profitable investments and projects.
Babatunde stated, “On the issue of debt in any economy, whether federal or state, usually affects the capacity of the state to generate enough funds. However it depends on the exposure of both the governors and economic team members that they put in place.
“There are so many steps you can take; debts can be renegotiated; you can ask for a little more moratorium or maybe an extension of tenor, depending on the nature of the source of loan. There are also cases, whether the debt is local or foreign, you can talk about the possibility of a debt swap, or maybe some long term bonds to at list be able to generate enough resources.
“And more importantly, it depends on what the loans had been used for; some governors have borrowed and invested in key infrastructure and projects. If the investment is productive, it will assist the state to be able to also generate reasonable funds to be able to repay such facilities
“What I expect is for every state to raise a team of experts knowledgeable in economics and finance so that they can sit with the creditors and negotiate some of the terms where that is feasible.”
He added, “One of the problems we have in our society is that people make promises without getting facts and figures. Ideally, I also expect that before making promises, you want to first know what is the revenue profile that you are expecting both in terms of federal and internally generated revenue, that’s why so many times people have been disappointed because when promises are made and by the time they get fact and figures, they find it very difficult to fulfil their promises.
“Yes, salary payment is important, but it’s not only about payment of salary, because if you don’t deliver in the area of infrastructure, people will be more apprehensive because they believe so much in what they can see.
“For example, you take Kwara State, one thing stood out for the government; they succeeded in ensuring they kept on paying salaries as and when due, however, the arrears they met, they couldn’t just clear immediately, but they had to enter into negotiation and I think they have been paying over a period. I think by the time the Abia State governor-elect is sworn in, he has a very clear picture of the revenue profile of the state, and that to a large extent can determine how far governors can go because you still have to service whatever debt is on the ground.”
An economist and Chief Executive Officer, Cowry Asset Management Limited, Johnson Chukwu, said, “If someone goes into government with the mindset that he will meet huge resources and he gets there and there are no resources, clearly there will be challenges, but I believe that anybody who is serious and was ready for office in this last election that does not know that the finances have dwindled is seriously not a realistic person.
“That’s why some of them were making promises without sound knowledge of economic issues, but the reality is that Nigeria’s economy has dwindled and has been on life support for a long time. We know that several states owe salaries and even some of those that you may think are financially viable have been borrowing heavily.
“There is no basis for anybody when he gets to office to say he is disappointed with the finances, it simply means you are not prepared for the office.”
He counseled the new governors to reduce operating expenses and aid actors in the private sector in growing the GDP and the economy.
Paul Alaje, another economist, predicted that given the enormous debts that their predecessors racked up, life would be difficult for all new governors.
He stated that adequate investigation should be conducted into the loans obtained by state governments and the initiatives the governors used the funds for.
He said, “Debts are like a burden, especially when the money collected is not spent on capital expenditure or projects that can create revenue for the government in the future. Most of the governors-elect have a lot of challenges because more than two-third of the states take allocations from Abuja and can barely pay salaries. As the value of the naira falls, it becomes worse for state governments, especially those whose predecessors have borrowed money on their behalf.
“It is one thing for them to promise during campaigns to help their people, the important thing is how they are going to make the money. In Osun State, for instance, Gboyega Oyetola’s administration met a huge debt from his principal, Rauf Aregbesola; and when Aregbesola left, Oyetola started struggling all through not to borrow more money and these were from the same party. Very few of the new governors will not have the capacity to borrow more, because lenders will also consider their ability to pay.
“Unfortunately, the situation we are in now, the ability to pay remains a major concern. When the new governors resume, it is really going to be difficult for them and borrowing will be very difficult for them too. I think we should start investigating why the state governments borrow and we need to know what these funds are used for. The situation now is that many states will not function if they do not receive allocations from the Federal Government for three months. The debts are deducted from the money they have raised through bonds and they pay back with the IGR. That is the reality that will dawn on those new governors within their first 100 days in office.”
