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States pile up N1.06tn debt despite record allocations

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States across the country owe contractors and retirees a combined N1.06tn in outstanding obligations despite receiving record revenue inflows in 2024, according to new data from BudgIT’s 2025 State of States report.

The organisation found that contractor arrears amounted to N434.87bn, while pension and gratuity arrears stood at N626.81bn, bringing total unpaid obligations to N1.06tn. The figures underline persistent fiscal stress at the subnational level, even in a year when federal allocations more than doubled and many states reported higher internal revenues.

A total of 30 states reported owing either contractors or retirees in the 2024 fiscal year, based on the BudgIT report. Twenty-six states recorded contractor arrears, while 27 states owed pension and gratuity arrears to retirees.

Only three states, Borno, Kano, and Nasarawa, reported zero liabilities in both categories, making them the only states without outstanding obligations to contractors or retirees in 2024. According to an analysis of the data, Kaduna State is the largest debtor to contractors and retirees in 2024, owing a combined N139.36bn.

The state reported contractor arrears of N56.07bn and pension and gratuity arrears of N83.29bn, the highest pension backlog in the country. Ogun State followed with N107.18bn in total arrears, driven mainly by a massive N81.54bn pension and gratuity backlog and N25.64bn in unpaid contractor obligations.

Benue State ranked third with combined arrears of N99.68bn, split between N27.42bn owed to contractors and N72.25bn in pension arrears. Edo State came fourth with N95.46bn, including N37.54bn in contractor arrears and N57.92bn in unpaid pensions.

Enugu State followed closely, reporting a combined N90.18bn, made up of N54bn owed to contractors and N36.18bn in pension liabilities. Imo State owed N57.25bn, Akwa Ibom N43.71bn, Delta N42.35bn, and Oyo N41.97bn, while Plateau completed the top bracket with combined arrears totalling N40.98bn, driven by N16.03bn in contractor arrears and N24.95bn in pension liabilities.

These 10 states collectively account for almost half of the N1.06tn burden carried by subnational governments. At the lower end of the ranking, Kano and Nasarawa reported no arrears, making them the least indebted states to contractors and pensioners in 2024.

Lagos, which recorded only N48.74m in contractor arrears and no pension backlog, ranked third-lowest. Ebonyi followed with N88.89m, then Borno with N1.10bn, Jigawa with N1.79bn, and Katsina with N2.22bn.

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Yobe owed N3.99bn, Ondo N4.77bn, and Kogi N6.52bn, completing the list of the 10 states with the smallest arrears nationwide. The PUNCH observed that while some northern states, such as Kano, Nasarawa, and Jigawa, maintained minimal arrears, others, like Kaduna, Benue, and Plateau, accumulated large pension backlogs over the years.

The report noted that total liabilities for the 35 states analysed — excluding Rivers, which had no audited accounts due to the 2025 state of emergency — stood at N1.24tn.

On the reason for excluding Rivers, the report read, “Due to the political climate in Rivers State, the state government did not produce an audited financial statement for 2024, also, given that the Federal High Court nullified the 2024 budget of the state and counted it as void, any reporting done by the state on that budget is also regarded as unconstitutional. Hence, the decision to exempt Rivers state from the 10th Edition of State of States.”

Besides contractor and pension arrears, states owed N33.74bn in salary and staff claims, N62.33bn in judgment debts, and N73.25bn in other liabilities.

“About N434.87bn is owed in contractor arrears, N626.81bn is owed in pension and gratuity arrears, N33.74bn is owed in salary and other staff claims, N62.33bn is owed in judgement debt and other pending litigation, and other liabilities amount to N73.25bn,” the report read.

BudgIT warned that these outstanding obligations, if left unmanaged, could undermine state-level fiscal sustainability, delay capital projects, and weaken public confidence, especially among vulnerable retirees depending on monthly benefits.

Despite the backlog, states received unprecedented revenue in 2024. Gross FAAC allocations surged to N11.38tn, up from N5.4tn in 2023, driven largely by subsidy removal and exchange-rate adjustments. Yet the report observed that arrears persisted because many states continued to prioritise recurrent expenditure over clearing historical obligations.

BudgIT argued that rising personnel costs, increased overheads, and expanding political commitments may have constrained the capacity of some state governments to settle legacy debts.

The PUNCH further observed that four states carried contractor and pension liabilities that far exceed what they generated internally within the same year, raising fresh concerns about subnational fiscal sustainability. The four states were Kaduna, Benue, Adamawa, and Taraba, with arrears that significantly outpaced their 2024 Internally Generated Revenue.

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Kaduna’s total arrears stood at N139.36bn, more than double its 2024 IGR of N70.07bn. The arrears were driven mainly by the state’s pension and gratuity backlog of N83.29bn, alongside contractor debts of N56.07bn. This means Kaduna owed almost N2 in unpaid obligations for every N1 it generated internally.

Benue showed similar vulnerability. The state generated N20.92bn internally in 2024, yet owed N99.68bn in contractor and pension arrears—almost five times its IGR. Pension liabilities alone amounted to N72.25bn, while contractor arrears totalled N27.42bn, leaving Benue’s obligations far beyond its revenue capacity.

The situation suggests that the state would need nearly five full fiscal years of IGR, assuming no other expenditures, to clear its outstanding debts. Benue’s case reflects a structural mismatch between revenue capacity and expenditure commitments built up over several administrations.

Adamawa also recorded liabilities significantly above its IGR. The state generated N20.30bn in 2024, but owed N27.5bn in pension and gratuity arrears. Although Adamawa posted zero contractor arrears in the 2024 table, its pension debt alone exceeded its IGR by about 35 per cent, demonstrating a rising retirement-cost burden relative to the state’s revenue base.

This gap, while smaller than those of Kaduna and Benue, still points to a fragile fiscal structure that could widen if pension obligations continue to accumulate. Taraba’s imbalance was even more pronounced relative to its revenue size. The state generated N16.06bn in IGR but owed a combined N23.53bn, including N226.37m to contractors and N23.30bn in pension and gratuity arrears.

Taraba’s liabilities exceeded its internally generated revenue by more than N7bn, amounting to an overhang of approximately 46 per cent above what the state earned from domestic sources.

The disproportionate pension burden indicates a long-running accumulation of retirement obligations that the state has been unable to clear. The Nigerian Pension Commission earlier said only 17 states out of Nigeria’s 36 states are currently implementing the Contributory Pension Scheme.

The commission noted that 12 states have not started at all, while seven states are at various stages of establishing their pension bureaus.

Speaking at the Second Run 2025 Consultative Forum for States and the FCT held in Benin, Edo State, the Director-General of PenCom, Omolola Oloworaran, who was represented by the Commissioner for Inspectorate, Samuel Uwandu, said, “17 states out of the 36 states in the country are currently implementing the contributory pension scheme. Twelve states have not started at all, while seven states are at various stages of establishing their pension bureaus.”

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The CPS was introduced by the Pension Reform Act of 2004, and under this law, employees and employers jointly contribute to a Retirement Savings Account for each worker, making pensions more sustainable.

The law set the minimum combined contributions at 15 per cent of an employee’s monthly earnings. The Pension Reform Act of 2014, which amended the 2004 law, further improved the CPS by increasing contributions to a combined minimum of 18 per cent and tightening regulations to ensure compliance by both private and public sector employers.

Speaking earlier with The PUNCH, the spokesperson for the Nigerian Union of Pensioners, Bunmi Ogunkolade, said state governments were foot-dragging on matters related to the payment of retirees’ gratuities and the implementation of the new pension scheme. Ogunkolade urged state governments to pay retirees their entitlements.

Earlier this month, The PUNCH reported that operations at the National Assembly were disrupted as aggrieved local contractors, lawyers, and civil society activists barricaded the major entry and exit points of the complex in protest over an alleged N3tn debt owed to them by the Federal Government.

Brandishing placards and chanting solidarity songs, the contractors vowed to sustain the blockade “for as long as it takes” until payment alerts hit their phones for government projects they claimed to have completed.

Speaking during the protest, the National President of the All Indigenous Contractors Association of Nigeria, Jackson Nwosu, said the group had no choice but to protest after years of unmet promises.

“We are here because the Federal Government refused to pay contractors, and we have brought the case to the parliament to address our grievances,” he said. “These things are capital projects that had already been executed, and we have been pushing for payment since 2024. They are owing our association alone over N3tn.”

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Police comb forest after terrorists abduct NECO students in Borno

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The Borno State Police Command has deployed security operatives to Lassa community in Askira/Uba Local Government Area following the abduction of an unspecified number of students writing the National Examinations Council examinations by suspected terrorists.

PUNCH Online had earlier reported that the attackers stormed the school at about 9 a.m. on Monday, shooting sporadically before abducting students and women selling food items within the school premises.

Confirming the deployment to PUNCH Online, the spokesperson for the Borno State Police Command, Nahum Daso, said security operatives confronted the attackers, preventing a larger-scale abduction.

“Around 9 a.m. in the morning, ISWAP attacked Lassa Day Secondary School. They shot sporadically. An unspecified number of students have been abducted.

“Security forces confronted them. For now, we have an unspecified number of students who were abducted. The CP deployed the Area Commander in Askira/Uba. They are currently combing the bush,” Daso said.

The Special Adviser to Adamawa State Governor, Ahmadu Fintiri, on Media and Strategy, Mr Solomon Kwamagar, a resident of Lassa, also confirmed the incident to PUNCH Online on Monday morning.

He disclosed that the attackers arrived on motorcycles and invaded the school.

“Today is Lassa market day. I was informed that they came through the market on motorcycles and went to Government Day Secondary School, Lassa. They shot and killed one teacher and took away all the students who were in their classrooms,” he said.

Kwamagar added, “Lassa in Borno State is predominantly inhabited by my people, the Margi. We are in both Adamawa and Borno states. I am from Lassa, but I chose to reside in Madagali Local Government Area of Adamawa State.”

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He further said, “I’m still making contacts to ascertain the total number of students and teachers who were kidnapped from the school.”

Earlier, the President of the Borno South Youth Alliance, Samaila Kaigama, told PUNCH Online that the attackers wore military and forest guard uniforms.

“Yes. There was an attack on students writing NECO exams. The terrorists came around past nine. They passed the military checkpoint. They wore military and forest guard attire. They shot sporadically,” he said.

Kaigama said one teacher was killed while another sustained gunshot injuries.

“They killed one teacher from Chibok. They shot another, but not dead yet. They also kidnapped some students and women selling on the school premises. The numbers are not yet out,” he said.

When contacted, the Chairman of Askira/Uba Local Government Area, Mada Saidu, declined to comment.

“I am very busy now. We are in a situation,” he said.

Efforts to obtain comments from the state Commissioner for Information and Internal Security, Usman Tar, were unsuccessful as he neither answered calls nor responded to messages.

However, residents who spoke to PUNCH Online claimed that two teachers and one student were killed during the attack.

“They killed two teachers and one female student. The student was shot in her mouth,” a resident who requested anonymity said.

On May 16, PUNCH Online reported that 42 students and pupils were abducted after suspected Boko Haram terrorists attacked Mussa Primary and Junior Secondary School in Askira/Uba Local Government Area.

The senator representing Borno South, Ali Ndume, had said the abductees comprised four students of Government Day Secondary School, 28 primary school pupils and 10 children abducted from their homes.

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NASS sends state police bill to 36 states’ assemblies

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The National Assembly is set to transmit the Constitution Alteration Bill seeking the establishment of state police to the 36 state Houses of Assembly this week, marking the next critical stage of one of Nigeria’s most far-reaching security reforms.

The development comes days after the Senate passed the landmark constitutional amendment, with lawmakers now racing to secure the approval of at least 24 state legislatures before the bill can be transmitted to President Bola Tinubu for assent.

Chairman of the Senate Committee on Media and Publicity, Yemi Adaramodu, disclosed the development in an exclusive interview with The PUNCH on Sunday, saying all the necessary arrangements had been concluded for the transmission.

According to him, the state legislatures and governors were already awaiting the bill following consultations held ahead of its passage by the National Assembly.

“The bill for the creation of state police will get to the states this week. The states’ speakers have met and are awaiting the bill from the National Assembly.

“The state governors are expecting it too, even with their presence in the Senate chamber when the bill was being considered and passed,” Adaramodu said.

The planned transmission signals the beginning of the final constitutional hurdle for the proposed amendment, which requires endorsement by not less than two-thirds of the 36 state Houses of Assembly in line with Section 9 of the 1999 Constitution before it can become law.

Momentum has continued to build behind the proposal since the Senate approved the amendment after a clause-by-clause consideration of the report presented by the Senate Committee on the Review of the Constitution, chaired by Deputy Senate President Barau Jibrin.

The legislation seeks to establish a dual policing structure that will empower state governments to establish and maintain police services within their jurisdictions while preserving the constitutional responsibilities of the Nigeria Police Force over national security matters such as terrorism, border security, cybercrime, arms trafficking and other federal offences.

To address longstanding concerns over possible abuse by state governments, lawmakers incorporated several safeguards into the bill, including provisions prohibiting state police authorities from targeting individuals or groups for criticising governments and empowering the Federal Government to intervene in cases involving threats to national security, breakdown of public order or violations of fundamental human rights.

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The proposed reform has received unprecedented backing from governors, speakers of state legislatures and major political stakeholders across the country.

The Conference of Speakers of State Legislatures in Nigeria had earlier endorsed the bill, with its Chairman and Speaker of the Delta State House of Assembly, Emomotimi Guwor, assuring Nigerians that all state houses of assembly would give the proposal diligent consideration.

Several governors have also welcomed the amendment, describing it as a timely response to worsening insecurity across the federation.

Among them, Benue State Governor, Hyacinth Alia, described the Senate’s passage of the bill as a landmark step towards strengthening Nigeria’s security architecture, arguing that state police would possess a better understanding of local terrain and community dynamics, thereby improving intelligence gathering and response to criminal activities.

Similarly, the Forum of Progressive Speakers of State Legislatures under the All Progressives Congress pledged to facilitate speedy ratification in APC-controlled houses of assembly while promising robust oversight mechanisms to ensure professionalism and respect for human rights.

The Labour Party also threw its weight behind the proposal, describing the Senate’s action as a significant milestone in the quest to strengthen internal security through community-based policing.

Though it acknowledged concerns over possible abuse by governors, the party expressed confidence in the constitutional safeguards embedded in the amendment.

The proposal also attracted opposition from the Peoples Redemption Party, which questioned the timing of the initiative and urged Nigerians to reject it, arguing that the current administration lacks the credibility to oversee such a fundamental restructuring of the country’s policing system.

Despite the reservations expressed by critics, the planned transmission of the bill to the states this week is expected to trigger deliberations across the 36 Houses of Assembly, where lawmakers will conduct public hearings, stakeholder engagements and legislative scrutiny before voting on the constitutional amendment.

If at least 24 state assemblies endorse the proposal, it will pave the way for President Bola Tinubu’s assent, potentially ending decades of debate over the decentralisation of policing and ushering in what many stakeholders believe could be the most significant reform of Nigeria’s internal security architecture since the return to democratic rule in 1999.

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Meanwhile, the Senate on Sunday defended the passage of the state police bill, insisting that its passage, which 84 senators supported, is a response to Nigeria’s worsening security challenges.

The upper chamber said the bill emerged from years of consultations, public engagements, and broad national consensus, stressing that it would be wrong to delay the proposal for political calculations ahead of the 2027 general election.

The position comes amid growing debate over the constitutional amendment bill, with supporters arguing that decentralising policing will improve security at the grassroots, while critics fear that state police could be abused by governors to intimidate political opponents.

Defending the Senate’s decision in a statement issued by his media office on Sunday, the Leader of the Senate, Opeyemi Bamidele, said the proposal was “purely a child of necessity and not of political expediency as well as a product of national consensus and not of cynicism.”

He maintained that the establishment of state police had become a matter of urgent national importance that should not be sacrificed because of anyone’s political ambition.

According to him, the process leading to the passage of the bill did not begin recently but evolved through extensive constitutional review engagements involving key stakeholders across the country.

Despite some dissenting views, Bamidele said observations had shown that Nigerians largely welcomed the passage of the bill with the belief that it would significantly improve security at the sub-national level.

He said, “The state police proposal was part of memoranda submitted to the Senate Ad hoc Committee on the Review of the 1999 Constitution. The memorandum had been subjected to a rigorous process and multi-tiered consultation across the federation due to its sensitive nature.

“During this process, the National Assembly broadly consulted the executive, the Nigeria Governors’ Forum, the Conference of Speakers of the State Legislatures of Nigeria and the leadership of the Nigeria Police, among others.

“In July 2025, the National Assembly conducted public hearings in all geopolitical zones, and the participants overwhelmingly approved it.

“At each level of our consultation, nearly all stakeholders embraced the State Police Bill in the light of stark realities we are facing today.”

The Senate Leader said the Nigerian Police actively contributed to the drafting of the constitutional amendment by offering recommendations that helped lawmakers build safeguards against potential abuse of state police by political actors.

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According to him, those recommendations formed part of accountability and oversight mechanisms embedded in the legislation to ensure that state police operate within constitutional limits.

He added that the willingness of the Nigerian Police to support the proposal underscored its strategic importance in addressing insecurity at the local and state levels.

Beyond the contributions of the police hierarchy, Bamidele said the bill was subjected to extensive debates in both chambers of the National Assembly before its eventual passage.

He noted that support for the legislation cut across party lines.

He said: “Even though the APC is the majority, there are members of opposition parties – PDP, ADC, NDC and Labour Party – that exercised their discretion in favour of the Bill, mainly in the national interest and not on a parochial basis.

“In the Senate, for instance, 84 out of 109 members voted clause by clause in support of the Bill. This accounted for 77.06 per cent approval at the Senate alone.”

Bamidele argued that security should transcend political affiliations, noting that countries facing security threats often unite behind reforms aimed at strengthening national safety.

Globally, he said, security “is a collective public good that benefits citizenry across ethnic, political and religious divides.

“Political actors elsewhere always throw off their togas of partisanship and parochialism to support initiatives that will boost and reinforce national security.”

He, therefore, urged opposition parties to contribute constructive ideas that would strengthen peace and stability across the federation rather than oppose initiatives solely on political grounds.

Bamidele also challenged opposition parties and leaders to come forward with ideas that would deepen the peace and stability of the federation.

“Even when they disagree on some grounds, they are under obligations to provide credible and useful ideas that can make our nation better and greater. Unfortunately, they have not passed this critical test of opposition democracy,” Bamidele said.

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Chaos as flooding shuts Lagos airport temporary terminal

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There was chaos at the temporary terminal of the Murtala Muhammed International Airport, Lagos, on Sunday after heavy rainfall caused severe flooding at the facility.

The departure hall, boarding gates, airline temporary offices, and other sections of the makeshift terminal were submerged. The situation forced the Federal Airports Authority of Nigeria to shut the terminal abruptly, as airlines operating from the facility could no longer process passengers.

As a result of the flooding, airlines, including Air France-KLM, Ethiopian Airlines, and Fly Gabon, were relocated from the terminal. According to officials, the terminal’s powerhouse was also flooded, forcing the authorities to switch off electricity.

Consequently, all airlines operating from the facility were moved to Terminal Two of the MMIA. FAAN officials alleged that the flooding was caused by blocked drainage channels, which they attributed to the Chinese company currently reconstructing the old international terminal.The incident came just months after FAAN shut the old MMIA terminal for a major reconstruction project estimated to cost more than N600bn. A few months ago, a fire also broke out at the old terminal, damaging parts of the facility.

Sources said the ongoing reconstruction of the old terminal by the Chinese contractor has caused several disruptions at the airport.

Reacting to Sunday’s flooding, FAAN spokesperson Henry Agbebire confirmed the incident, attributing it to the ongoing construction work at the airport.

According to Agbebire, the construction temporarily affected the drainage system, resulting in flooding. He said, “It was the construction works that affected the drainage. And for operational reasons, we have moved airlines operating from that terminal to Terminal 2, and the development has not really affected their operations.

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“There were no cancellations at all. We have taken immediate action to fix that problem to the extent that it doesn’t happen again. You can rest assured of that.”

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