…Lagos, Rivers, Delta, A’Ibom, others owe N4tn
- Economists, pensioners warn against bankruptcy
States paying former governors and their deputies jumbo pensions, including houses, vehicles, fully-paid vacation, medical insurance, and other juicy perks, top the list of states with the highest domestic and external debts in the country, findings by Sunday PUNCH have revealed.
According to the information on the website of the Debt Management Office as of Wednesday, the about 26 states that have the pension laws for their ex-governors owe a total of N3,920,194,580,284.72 (about N4tn), comprising N2,906,789,725,341.46 domestic debt and $3,311,780,571.71 (N1,013,404,854,943.26) foreign debts as of June 30, 2019.
The debt being owed by such states, according to some analysts, is a clear indication that the jumbo pensions for former governors were not sustainable, especially with the low level of development in the states and the struggle by most of them to implement the new N30,000 minimum wage.
Due to the economic crises, many of the states and some others had had to rely on bailouts from the Federal Government to pay salaries and pensions.
Meanwhile, many of the states have continued to pay the jumbo pensions and other benefits to their former state executives despite the dwindling revenues accruing to them from the federation account. However, the benefits captured in the laws varied.
The states, with such pension laws, leading the chart of domestic debtors include Lagos, Rivers, Delta, Akwa Ibom, Imo, Osun, Bayelsa, Kano and Kogi states, in the order of their liability. Others are Oyo, Bauchi, Nasarawa, Borno, Edo, Gombe, Abia, Katsina and Zamfara states, which repealed its own law a few weeks ago.
The rest are Kwara, Enugu, Ebonyi, Niger, Jigawa, Sokoto, Anambra and Yobe states.
In the foreign debt category, the states, with the pension laws, leading the debtors’ list, in the order of their liability, include Lagos, Edo, Oyo, Bauchi, Enugu, Anambra, Abia, Osun, Rivers, Ebonyi and Imo states.
Others include Niger, Nasarawa, Delta, Kano, Katsina, Bayelsa, Kwara, Akwa Ibom, Sokoto, Gombe, Zamfara, Jigawa, Kogi, Yobe, and Borno states.
Among the states, Lagos State, which owes N479bn domestic and $1.4bn foreign debts, and tops the two debtors’ lists, has the first pension law for former governors in the history of the country.
It was signed into law by former governor Bola Tinubu at the twilight of his tenure in 2007.
According to the Public Office Holder (Payment of Pension) Law, former governors of the state, who completed two terms consecutively, are entitled to a house each in any location of their choice in Lagos and Abuja.
Also, a former governor is entitled to six new cars every three years, 100 per cent of the basic salary of the serving governor (N7.7m per annum), free health care for himself and members of his family as well as furniture allowance, which is 300 per cent of their annual basic salary (N23.3m).
Other entitlements include house maintenance allowance, which is 10 per cent of basic salary (N778,296); utility allowance, which is 20 per cent of the salary (N1.5m); car maintenance allowance, which is 30 per cent of the annual basic salary (N2.3m); and eight policemen and two officials of the Department of State Services, all for the rest of their lives.
Other benefits include entertainment allowance, which is 10 per cent of the basic salary (N778,296); and a personal assistant, who will earn 25 per cent of the governor’s annual basic salary (N1.9m). A former governor is also entitled to domestic workers comprising a cook, a steward, a gardener and others whose appointments are pensionable.
The former deputy governors in the state are also entitled to similar provisions in the law.
Also, Rivers State, which owes the second highest domestic debt; N266.93bn and over $80m foreign debt, has a pension law that says three new vehicles should be purchased for former governors, and the vehicles are renewable every four years.
This is in addition to the 100 per cent of their basic salaries, 300 per cent of their annual basic salary for furniture, free medical services and provision for their entertainment. Their deputies also enjoy certain perks.
In Delta State, which ranks third on domestic debtors list with N233.56bn and a foreign debt of $62.95m, its pension law for former governors include a furnished duplex in Delta State or any other state in the country; medical treatment for them and members of their immediate families; two vehicles including a utility vehicle, every two years; two armed policemen and one DSS officer; 15 days annual vacation in any place of their choice and other benefits. The former deputy governors are also entitled to certain perks.
Akwa Ibom State, which is the fourth highest debtor on the domestic list, with N206.4bn, and $44.9m foreign debt as of June 30, 2019, also makes provision for vehicles and other allowances for former governors of the state. A former governor of the state, Godswill Akpabio, drew the anger of Nigerians in 2014, when he allegedly sought to draw N100m medical allowance, as provided for in the law.
Kano State, which owes N117.3bn domestic debt and $62.2m foreign debt, also has a provision for former governors and their deputies, including 100 per cent of the incumbent’s basic salary, six-bedroomed house and free medical treatment for them and members of their families.
Edo State, which owes N84bn domestic debt and the second highest foreign debt, $277.7m, also has a similar law that, among other benefits, provides a house worth N200m for a former governor while that of the ex-deputy governor is N100m. The then Speaker, Justin Okonoboh, said in an interview with Saturday PUNCH in 2016 that the money was not too much as it could not buy a house in Victoria Island or Lekki in Lagos.
Zamfara State, which owes N61bn domestic debt and $33m foreign debt, had in its law the payment of N7m monthly to former governors and N2m to former deputy governors, until former governor Abdul-aziz Yari reviewed it to N10m and N5m monthly respectively.
Meanwhile, the law was repealed by the House of Assembly on November 26, 2019. Also provided for them were two vehicles to be replaced every four years, free medical treatment, vacation anywhere in the world and five-bedroomed house in any state of their choice.
Kwara State, which owes N61.3bn domestic debt and $47.9m foreign debt, in its law provides that former governors and deputies would be entitled to two vehicles to be replaced every three years, five-bedroomed house, 300 per cent of the governor’s basic salary as furniture allowance, three DSS officials and provisions for medical care, entertainment and car maintenance, among others benefits.
Yobe State, which owes N27bn domestic debt and $27m foreign debt, in its pension law, provides that former governors be given a severance gratuity of N200m, two vehicles to be replaced every four years, free medical care and a house in the state or the Federal Capital Territory, among others provisions.
Jigawa State, which owes N38.6bn domestic debt and $31.5m foreign debt, in its law provides for a former governor two vehicles to be replaced every four years, a new house, monthly pension equivalent to the salary of the incumbent, vacation and free medical treatment whether at home or abroad, among other benefits. Former deputy governors also enjoy similar benefits.
Many other states, like Oyo and Sokoto, who made it to the list of debtors, have similar provisions for their former governors and deputies.
Meanwhile, following the outrage that surrounded Yari’s letter to the state governor, Bello Matawalle, to demand for the payment of his N10m monthly pension, which made the state House of Assembly to repeal the law, some speakers and members of some states’ Houses of Assembly told The PUNCH that they would not repeal the pension laws in their states.
The Speaker of the Edo State House of Assembly, Frank Okiye, said the House had no plans to repeal the pension law for political office holders in the state.
He said, “In Edo State, we have a law guaranteeing pension for a governor and his deputy. I do not think that it is anything less than playing to the gallery for any state government to repeal the law in its entirety.”
Also, the Osun State House of Assembly said it would not repeal the pension law for ex-governors in the state because the judgment of the Federal High Court in Lagos that ordered the recovery of N40bn collected by some former governors now serving as senators and ministers, did not say the (pension) law was bad.
Pension laws could lead states to bankruptcy – Economists
Meanwhile, given the adverse effect the payment of the jumbo pensions was having on states’ revenue, some economists have warned that states could become bankrupt if the practice continued.
A former Director-General, West African Institute of Financial and Economic Management, Prof Akpan Ekpo, said former governors and their deputies do not deserve pensions the way they were being paid, especially as states still depend heavily on federal allocations given their low IGR that could not pay salaries.
He said, “Those states can become bankrupt in the long term because some governors are still young. They govern for eight years and you keep paying them that kind of money. It is not done anywhere else in the world that I know of. Those monies can be used to better the lives of the people in the states.”
Also, the Registrar, Chartered Institute of Finance and Control of Nigeria, Mr Godwin Eohoi, said given the limited resources available to states, it was practically impossible for the payment of such pensions to be sustained in the next 10 years.
He said, “Pension for life for former state governors is a financial fraud. Although they have enacted laws through the state assemblies for this purpose, it is uncalled for.
“Such laws should be repealed. It’s not in the interest of states where they served.”
He said the huge salaries and allowances the former governors received in office were enough to sustain them afterwards.
While commending Zamfara State for repealing its own law, Eohoi added, “States cannot survive the huge pensions that the governors are collecting. In a state where you have new governors every four or eight years, now if you have 20 former governors what would happen to the states’ finances?
“This should be stopped. How will states survive? The IGR is not increasing as it should be. In the next 10 years, states cannot survive it, it should be stopped. We don’t need that law in Nigeria, it’s killing and day robbery of the states.”
Also, a former President, Nigerian Economic Society, Prof Akin Iwayemi, in a telephone interview with one of our correspondents, described the jumbo pensions being paid to ex-governors and their deputies as “blatant fiscal rascality.”
He said it was a known fact that there had been fiscal crisis at the state and local government levels to the extent that states had to request for bailout from the Federal Government.
While noting that many states had been burdened by debts, he said the pension laws for former governors and their deputies had worsened their debt profile, adding that the new minimum wage to be paid by states would worsen the fiscal status of many of them.
He added, “It is a tragic situation for Nigeria; it is a political decision that has to be reversed by the political process. The pensions should be reduced to a reasonable level.
In his reaction, a former Director-General of the Abuja Chamber of Commerce and Industry, Chijioke Ekechukwu, described the development as unfortunate, saying it did not reflect the current economic realities.
He said, “It is unfortunate that too many wrong things happen without being challenged in this country. These jumbo pensions amount are fixed by these governors and or their stooges in state Assemblies and nobody else can fault them.
“We know how much the highest paid civil servants receive in Nigeria as pension. If we must fix pension amounts for ex-governors, if necessary, why are they fixed as if they are from outer space; amounts that don’t reflect the economic realities of such states. We need to be a serious minded in this country.”
‘Jumbo pensions for governors unfair to pensioners’
Disturbed by the situation, the Head of Information, Nigeria Union of Pensioners, Bunmi Ogunkolade, told one of our correspondents in a telephone interview that it was unfair that pensioners were being owed several months after serving the country for 35 years while the governors paid themselves huge sums.
According to him, some of the governors play along to ensure that when they also leave office, their financial interest would be protected by their predecessors.
Ogunkolade said, “People served Nigeria for 35 years but got nothing. Whereas, political office holders served for four years and are being paid millions of naira after leaving office.
“It is unfortunate that we have to serve them for life. This is apart from the huge allowances they take while in office. It is unfair to Nigerians. They offered to serve but they come to settle themselves. Thank God a court is looking into it. Government should show genuine interest and cut this waste.”