CBN To Monitor States, Abia, Niger, Ondo, Five Others Get Bailout Funds

CBN to Monitor States, Abia, Niger, Ondo, Five Others Get Bailout Funds
Godwin Emefiele, CBN Governor

The Central Bank of Nigeria (CBN) has set up a monitoring mechanism using its branches nationwide to ensure that the N338 billion special intervention fund it disburses to the 27 states of the federation to pay the backlog of workers’ salaries is not diverted by the state governments to other uses.

This is coming on the heels of the central bank’s disbursement of N65.334 billion from the N338 billion to eight more states.

The states which accessed the fund in the last two weeks include Abia – N14.152 billion, Adamawa – N2.378 billion, Bauchi – N8.60 billion, Ebonyi – N4.063 billion, Gombe – N16.459 billion, Kebbi – N0.690 billion, Ondo – N14.686 billion and Niger – N4.306 billion.

With the disbursement to the eight states, this brings to 11 states which have accessed the special intervention fund of the CBN.
Kwara (N4.320 bilion), Osun (N34.988 billion) and Zamfara (N10.020 billion) were the first three states to be paid by the CBN last month.

A top CBN official, who confirmed the disbursement to eight more states, however said the central bank was concerned about the diversion of funds by the state governors to other uses other than the payment of workers’ salary arrears.

To prevent this from happening, he said the CBN was setting up a monitoring mechanism to ensure that funds are not diverted to other uses.

He also said the central bank would solicit the support of civil society groups and labour unions to ensure that workers are paid their salaries.

The official expressed optimism that if the state governors stick to the terms of the agreement, the injection of N338 billion would go a long way in relating the economy because of the rise in disposable income of public sector workers across the states.

As part of the federal government’s resolve to end the lingering crisis of unpaid workers’ salaries in the country, especially in several states of the federation, President Muhammadu Buhari had approved a comprehensive relief package designed to salvage the situation. Part of the relief package was the CBN special intervention fund, which is in the form of soft loans available to states to access solely for the purpose of paying the backlog of salaries.

The loans attract an interest rate of 9 per cent and are repayable over 20 years.

The approval of the special intervention fund was sequel to the decision by the National Economic Council (NEC) at its meeting of June 29, 2015, that had requested that the CBN, in collaboration with other stakeholders, should appraise and consider ways of liquidating outstanding workers’ salaries owed by state and local governments.

The conditions for accessing the facility included resolutions of the respective state executive councils (SECs) authorising the borrowings and state Houses of Assembly consenting to the loans, as well as issuance of Irrevocable Standing Payment Orders (ISPOs) to ensure timely repayment at source from the states’ Federation Account allocations.

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