28 govs pile up N5.8tn debts for incoming govts

In the fourth highest debtor position is Cross Rivers, with N175.2bn domestic debt and $215.75m external debt.
It is followed by Ogun with N241.78bn domestic debt and $122.73m foreign debt.

Others include Bauchi (N144.28bn domestic debt and $172.76m external debt); Enugu (N89.89bn and $123.02m); Kano (N125.19bn and $109.42m); Abia (N104.57bn and $95.63m) and Adamawa (N122.48bn and $77.01m).

Other debtor states are Akwa Ibom (N219.62bn and $46.567m), Benue (N143.37bn and $30.47m), Borno (N96.33bn and $18.7m), Delta (N272.61bn and $60.05m), Ebonyi (N67.06bn and $59.84m), Gombe (N139.1bn and $46.93m), Jigawa (N44.41bn and $27.61m), Katsina (N62.37bn and $55.82m), Kebbi (N60.13bn and $42.40m), Kwara (N109.55bn and $45.94m), and Nasarawa (N72.63bn and $53.73m).

Also on the list are Niger (N98.26bn and $69.27m), Oyo (N160.07bn and $76.97m), Plateau (N151.90bn and $33.74m), Sokoto (N85.58bn and $37.13m), Taraba (N90.81bn and $22.28m), Yobe (N92.86bn and $23.09m) and Zamfara (N109.69bn and $29.33m).

The FCT had a domestic debt of N112.49bn and external debt of $25.38m.

The PUNCH observed that these states and the FCT owed up to 81.72 per cent of the N5.36tn sub-national domestic debts and 69.08 per cent of $4.56bn external debts.

Speaking with our correspondent on Thursday over the phone, the Director, Portfolio Management Department of the DMO, Dele Afolabi, noted that each state was expected to send in quarterly information on their domestic debts.
He added that by being transparent with their debt profiles, states would be able to access more funding.
The PUNCH observed that the debt servicing is done by the Federal Government but it is deducted from the federal allocation to the states.

States’ debts

In its December 2022 edition of the Nigeria Development Update, the World Bank noted that states’ debts would rise above 200 per cent of the revenue generated in 2022 and 2023.

The report read, “Debt levels for an average state are estimated to increase from 154.6 per cent of revenues in 2021 to above 200 per cent of revenues in both 2022 and 2023.”

According to the Washington-based bank, the increase in debts will be due to low allocation from the Federation Account, which will likely weaken the fiscal condition of the states.

But the state Commissioner of Information, Mr Gbenga Omotoso, insisted that the debts were sustainable and would not hinder any development after May 29, adding that what the debts were used for was what mattered.
He said, “The debts are more than sustainable. Recently, Lagos State got a Fitch AA+ rating and what it means is that we are running our finances very well and we are super creditworthy. I think we are the only state in Nigeria to have had such a rating.

“Apart from that, people say Lagos State debt is high but the problem is not the high domestic or foreign debts but what they are used for. The United States of America has the highest debt profile in the world, yet many are flocking there. To borrow money to pay salaries is bad but to borrow it to fund projects that will generate revenue and provide jobs is good.

“Lagos has a high debt profile because it has embarked on and executed a lot of infrastructural and transport projects, among many that will in turn generate income. We have not expended up to 50 per cent of our Gross Domestic Product so we still have enough room to borrow money and that is why you see that people are turning over to Lagos because they know that the state is creditworthy.

“There is no way you can embark on the big projects that the Lagos State Government has executed without borrowing money. Where will the cash come from? Look at the Blue Rail, can you imagine the number of people it will be conveying daily and the jobs it has created? So there is no way you can fund that kind of project without borrowing money at all.

“This will never affect any development after May 29. In fact, if anything, it will bring more developments. By the time you say you save billions of naira to build a railway, even the people who should ride on it would have died, so one needs to find a way of funding it, and the better way is to borrow money, and local financial institutions are coming to Lagos to lend money to the government because they know the economy has a bright future.”

When contacted about the debts Governor Wike would be leaving for the incoming administration, the Rivers State Commissioner for Finance, Isaac Kamalu said he was in a meeting and could not comment.

Kaduna government

Similarly, there was no reaction from the Kaduna State Government when asked about its plans to address the huge debts on Thursday.

The Special Adviser on Media and Communication to the governor, Mr. Muyiwa Adekeye could not be reached on the phone and he did not respond to the query sent to him on the Whatsapp platform.
Officials of Ogun State Government kept mum as both the state Commissioner for Information and Strategy, Waheed Odusile and Chief Press Secretary to the state governor, Kunle Somorin did not respond to calls or messages sent to their phones.

Meanwhile, the All Progressives Congress in Delta State has kicked against alleged plan by Governor Okowa to borrow N40b.

The party in a statement on Thursday warned all commercial banks and lending institutions in the country to be wary of the outgoing PDP government in the state.

The party said, ‘’It has come to the notice of the public and to the knowledge of the All Progressive Congress that the government of Delta state is yet again negotiating a loan facility for N40b.’’