The Federal Government of Nigeria has officially declared an end to financial bailouts for states, signaling that it will no longer take responsibility for their unpaid liabilities.
This decision affects states struggling with salary arrears, pension backlogs, contractor payments, and other debt obligations, including the controversial Paris Club bailout.
States Must Manage Their Finances Independently – AGoF
During her visit to the Federal Pay Office in Kano on Monday, the Accountant General of the Federation (AGoF), Dr. Oluwatoyin Madein, emphasized the need for financial discipline and self-reliance among state governments.
“The Federal Government will no longer be burdened by unpaid liabilities. States must block revenue leakages and improve their revenue generation,” she stated.
A statement issued by Bawa Mokwa, Director of Press and Public Relations at the Accountant General’s office, reinforced the new policy stance.
31 States Owe CBN ₦339.9 Billion in Bailout Loans
Between 2015 and 2023, 31 Nigerian states collectively borrowed ₦339.9 billion from the Central Bank of Nigeria (CBN) in salary bailout loans.
Moving forward, states will be required to generate their own revenue rather than depending on the Federal Government for financial lifelines.
Push for Financial Reform and Digitalization
Dr. Madein also directed Federal Pay Officers (FPOs) to enforce public financial management reform initiatives in Ministries, Departments, and Agencies (MDAs).
🚀 Key financial reform measures include:
✅ Ending manual accounting processes – The government will transition to modern digital financial systems.
✅ Implementing an Enterprise Concept Management System to fully digitize financial activities.
✅ Replacing the Annual Performance Evaluation Report (APER) with a Performance Management System to measure financial efficiency.
She urged FPOs to become digitally proficient and adapt to new financial technologies.
FPOs Commend Reforms
Aminu Umar, Chairman of the Committee of FPOs, expressed gratitude for the AGoF’s leadership and reform efforts, describing the visit as a "pace-setter for the incoming Accountant General."
What This Means for Nigerian States
With federal bailouts now off the table, state governments will have to:
📌 Improve internal revenue generation to sustain governance.
📌 Ensure transparency in financial management to prevent salary and pension arrears.
📌 Find alternative funding sources to pay debts owed to contractors and civil servants.
This major policy shift is expected to reshape Nigeria’s fiscal landscape, pushing state governments towards greater financial independence and accountability.
