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The Promise To Pay off Abia Outstanding Salaries is on Course But.....


About 6 weeks ago, Governor Okezie Ikpeazu through his Chief Press Secretary, Enyinnaya Appolos, promised to prioritize and pay off outstanding workers salaries in the state, latest 31st July 2017, in recognition of the wonderful contributions of Abia workers to the current industrial peace, progress and massive development being witnessed in the state.


That statement obviously came from a strong feeling of responsibility and concern for the welfare of workers in the state and with verifiable insights into expected short term improvements in the state's cash flow.

Two days after the Governor's official statement, the Commissioner for Finance, Mr Obinna Oriaku, gave further impetus to the pledge of the Governor and publicly confirmed that the state was expecting inflows from the second tranche of Paris Club refunds which, in his estimation, will be enough to take care of all the outstanding salaries and pensions and possibly leave "change" for investment in infrastructure development.

While I do not know the exact amount required to settle the total salary and pension outstanding in the state, based on the public statements of the commissioner, it was obvious the state was expecting between N13b and N15b as second tranche of Paris funds refund. From studying past statements of the Commissioner I believed about N12b will be needed to clear the whole outstanding, excluding gratuities.

Unfortunately we didn't receive anything near N12b.

Permit me to briefly explain that "Paris Fund refunds" emanate from over-deductions made from states statutory allocations for Paris Club Loans repayments by the Federal Government between 1995 and 2002 . Paris club is actually a group of officials from major creditor countries whose role is to find coordinated and sustainable solutions to the payment difficulties experienced by debtor countries. They handled the repackaging and repayment of most of Nigeria's external debts to different lending nations and institutions.

At the time of final settlement, under the watch of Obasanjo, debts owed by states, FCT and federal government were all aggregated and negotiated with the members of Paris Club through a single channel with the federal government leading. But before then money was being deducted from the allocations of the states for external debt service between 1995 and 2002.

As part of the final debt settlement arrangement, the Federal Government also deducted funds due to the states, from the statutory allocation out of the federation account, in lieu of debts associated with each state. These debt service deductions were in respect of the Paris Club, London Club and Multilateral debts of the FG and States. By the time Nigeria reached a final agreement for debt relief with the Paris Club in October 2005, some States had already been overcharged.

In essence, Paris Club refund is not a bail out facility or loan but rather a legitimate refund of money belonging to the states which were wrongly deducted from their statutory federal allocations.

Last week Abia State Government emerged as the first in Nigeria to announce that it has received the long expected second tranche of Paris Club refund totaling N5.7b. It was after the show of transparency by Abia State that other states started admitting that they have also received and subsequently the federal government published all the refunds made to states. The figures from the federal government confirmed the N5.74b Abia state government stated as amount received.

Prior to releasing the latest funds, FGN pleaded with the states to commit a minimum of 70% to pay off outstanding workers salaries and pensions. Of course that advice is not legally binding on the states as the FGN cannot legally dictate to the states how to apply their own money. It is a FEDERAL REPUBLIC of Nigeria as against a UNITARY STATE of Nigeria. (At least on paper.)

Yet when Governor Ikpeazu received the N5.7b he immediately constituted a committee made up of labor leaders and pensioners association to decide on how the FULL MONEY will be distributed in tackling outstanding salaries and pensions in the state. Rather than subtract one naira from the N5.74b the Governor is gearing up to add about N60m to make it up to N6b that will be committed to payment of salary and pension outstanding this month of July 2017.

Abia is therefore committing more than 100% of the refund to pay outstanding workers salaries and pensions.

To understand the enormity of the decision of the Governor, in this regards, there are certain key points you need to note.

1. A Nigerian state govt has publicly stated that they will only apply 40% of their refund to salaries while another state publicly agreed to deploy only 70%, even with expected unpaid balance due to workers.

Only Abia is deploying 100+% of the refund to salaries and pension arrears. Some other neighboring states even have long started paying workers a fraction of their monthly salaries with options to quit if you don't like it. Others are asking pensioners to forfeit part of their outstanding in order to receive some part.

But Governor Ikpeazu will rather keep all his verified workers and pay them 100% of salaries, even if with some delays due to emergent payment constraints arising mostly from reduced national revenue inflows.

2. The total population of Abia State is currently estimated at around 5m. Out of the 5m Abians only about 24,000 are civil servants. Do the maths and see exactly the percentage of the population that will receive the N5.74b belonging to all the 5m citizens of the state.
Yet the Governor is convinced enough about the need to clear outstanding salaries to go ahead and deny the larger population and favor our civil servants.

In essence, he is sacrificing democracy dividends to nearly 5m Abians so that 24,000 workers will be happy.

3. I currently do not have official figures of exactly how much the state needs to clear all the outstanding salaries and pensions. Based on my analysis of recent publications I strongly believe it is far more than the N5.7b received from the FGN as Paris Club refund. Possibly close to N12b, without adding gratuities. Once I am able to acquire actual numbers I will certainly share the information, in the spirit of transparency in managing the affairs of Abia State, as enunciated and practiced by Governor Ikpeazu and his team.

4. Yet I know with reasonable certainty that as at today, most of the MDAs, which make up about 70% of Abia's workforce, have only one month salary outstanding. Workers at the state house of assembly have received June salary and that means they are up to date. Most of the remaining 30% are not more than 4 months outstanding, as confirmed by Nigeria Labour Congress, except State and LGA pensioners, Abia Poly, ABSUTH, College of Edu Tech, College of Health Sciences, CSDP and Secondary school teachers.

It is instructive to note that LGA salaries and pensions are not ordinarily state government responsibilities. Same with salaries of primary school teachers. It is also reasonable to expect that revenue generating agencies of Government with statutory autonomy should be able to pay their workers from their earnings. Yet the State Government, led by Dr Okezie Ikpeazu, is committed to clearing all of the outstanding salaries and pensions. Regardless of source and nature of the outstanding.

In summary, Abia workers will receive the total N5.7b before 30th July but there will likely still be shortfalls due to the Federal Government not giving Abia all the due amount expected from Paris Fund loan reimbursements.

Having discussed this issue with our state Commisioner of Finance, Mr Obinna Oriaku, I can confirm that whatever is left after this payment cycle will be paid to the affected workers as soon as the state receives the balance due her from the Federal Government. Normal monthly payments will continue though.

It is therefore my position that we are on course to fulfilling the Governor's promise of clearing all outstanding salaries and pensions for most of our workers but there will be some that will be delayed for may be a month.

I strongly doubt that any Abian armed with the above facts will recommend that the Governor approach commercial banks to borrow at double digit rates to fulfill his fervent desire and commitment to end the era of outstanding salary and pensions in Abia State. All most of us that want this issue done and dusted with can only do is pray that the FGN releases the remaining funds belonging to Abians very expeditiously while pleading for a little more patience from those affected workers who will still have backlogs.

This is certainly not a situation for intellectual "piririparara" (apologies to KOK) but simply requires, in my view, telling the people the truth, the whole truth and nothing but the truth.

Thank you for reading the truth I know.

JOK