In 2023, 32 Nigerian states collectively owed a total of N933.32 billion to contractors and retirees, according to the 2024 State of States report by BudgIT, a civic organization focused on transparency and effective governance.
The liabilities included N408.69 billion in contractor arrears and N524.63 billion in unpaid pensions and gratuities. States like Bayelsa, Edo, and Kebbi had no reported contractor debts, while Ogun and Ondo did not report pension arrears.
Delta State had the largest contractor liabilities, amounting to N76.26 billion, followed by Imo with N43.47 billion and Cross River with N39.12 billion.
In contrast, Jigawa and Yobe had minimal obligations, owing N98.19 million and N2.79 million, respectively. For pensions, Benue had the highest arrears at N74.3 billion, with Oyo following at N40.05 billion. Lagos, however, had the smallest pension arrears at N2.69 million.
The states’ operating expenses accounted for 47.36 percent of their total expenditures in 2023, rising by 21.17 percent from N3.8 trillion in 2022 to N4.64 trillion. Debt servicing was also a major burden, with N1.25 trillion (12.8 percent of the total expenditure) used to service loans.
Additionally, states spent N287.56 billion on liabilities, which was not officially recorded in their fiscal records, suggesting the financial strain may be even greater.
The states’ additional liabilities amounted to N1.19 trillion, which includes N408.69 billion in contractor arrears, N521.36 billion in pension and gratuity arrears, N79.64 billion in salary claims, N4.36 billion in judgment debts, and N182.79 billion in other payables.
The backlog of pensions owed by both federal and state governments has surpassed N193 billion. Despite efforts to clear these arrears, over N88 billion of contributory pensions remain unpaid by the federal government, and several states are struggling with pension backlogs estimated at over N105 billion.
Bunmi Ogunkolade, Assistant General Secretary of the National Union of Pensioners, criticized state governments for delaying the payment of retirees’ gratuities and the implementation of the new pension scheme.
He emphasized that while states may be paying monthly pensions, they are failing to settle outstanding gratuities. Some states, such as Lagos and Ondo, have implemented the new pension scheme, but many others are still using outdated schemes that do not reflect inflation or retirees’ contributions.
The Anambra State chapter of the Nigeria Association of Pensioners has called on Governor Chukwuma Soludo to address outdated pension rates, referencing a circular from the National Salaries, Incomes, and Wages Commission.
In Ekiti State, Governor Biodun Oyebanji approved the payment of two months’ pension arrears to local government pensioners and N1 billion in gratuities to state pensioners as part of efforts to reduce the backlog.
In 2023, Ekiti State owed N2.32 billion in contractor arrears and N12.41 billion in pension and gratuity arrears, bringing its total liabilities to N14.73 billion.
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