Lagos, 4 Others Owe 34% Of States’ N5.34trn Domestic Debt

Five states account for more than a third of the total domes-tic debt owed by the subnational governments in the country. The states are Lagos, Delta, Ogun, Akwa Ibom, and Imo.

According to the Debt Management Office, the total domes-tic debt owed by 36 state governments  and  the  Federal  Capital  Territory increased by N879.50 billion  last  year  to  N5.337  trillion as at December 2022.This  is  16.47  percent  in-crease  from  N4.458  trillion  as  at the end of 2021.Of  the  total  domestic  debt,  Lagos  owed  the  highest  debt  of  N807.20  billion,  followed  by  Delta  with  a  total  debt  of  N304.24 billion.

Ogun  ranks  third  with  a  total  debt  of  N270.45  billion,  followed  by  Akwa  Ibom  and  Imo states with a total domes-tic  debt  of  N219.26  billion  and  N204.22 billion respectively. Jigawa  had  the  least  debt  of  N43.95  billion  as  of  December, followed by Kebbi (N61.31 billion).  Others  are  Katsina,  Nasarawa,  and  Ondo  with  domestic  debts  of  N62.  37 billion, N71.43 billion and N77.15 billion respectively. 

Chief executive officer of the Centre  for  the  Promotion  of  Private  Enterprise,  Muda Yusuf, said  that  most  state  governments  have  accumulated  “huge  and  unsustainable debts, which are affecting  their  ability  to  meet  their obligations.”

He said while some state governments have the capacity to generate a measurable level of revenue, others do not have enough revenue to run their affairs. “Most  state  governments  run heavy bureaucracies, and this  is  of  great  concern,  given  the  current  status  of  their  internally  generated  revenues,”  he said. “They end up borrowing  funds  for  the  day-to  -day  running  of  the  government  instead  of  investment.  

governments must cut down the size of public services and political appointees,”

Yusuf stressed the need for state governments to build capacity to repay loans and generate substantial revenues.

According to him, some states are faced with legacy debt burdens, which are owed by past governments.

For him, there is a need to effectively monitor    how state governors spend funds they borrow, as it also affects their ability to pay back.

Yusuf said: “The use of these borrowed funds must also be checked. Some governors spend funds  frivolously  while  others  spend on infrastructure which lead to improved production as well  as  help  to  generate  more  income for their states.“

Government  is  expected  to use debts to fund infrastructure that  will  yield  income  for the state and not for day-to-day  running  of  government.  Governors have a lot to do in addressing revenue generation and exorbitant spending.”

Also speaking with Business day, Chijioke Ekechukwu, former director general of Abuja Chamber of Commerce and Industry,    decried the lack of political will by some members of state Houses of Assembly.

He stressed the need for states’ lawmakers to rise to the task of holding governors ac-countable for debt accumulated while in service.

He said: “Most of the debts is  because  state  governments’  borrowings  are  not  properly  monitored. It is wrong for governors to borrow at will but this is  what  we  see  when  the  state  Houses  of  Assembly  will  not  do the needful.“

The federal government must implement the sovereign guarantee, set up a committee to look into debt issues at state levels. This will make it difficult for governors to borrow. It is time governors, both past and current, were made to account for the debt they borrowed, before our states get impoverished.”

For Auwal Rafsanjani, executive director of Civil Society Legislative Advocacy Centre, it is imperative for the governors to seek ways of improving revenue generation. According to him, most states have been in deplorable conditions for years, as they spend a huge part of their revenues in servicing debts.

He said:  “Over 30 states of the federation cannot carry out infrastructural projects, due to poor revenue generation. States now borrow to pay salaries; it is a bad and serious issue that we are dealing with. Unfortunately these governors are not able to address  many  issues  in  their  states,  due  to  the  weak  governance structure and corruption.“

Most states are in a bad shape in terms of debt stock and internal revenue generation.  Under normal circumstances, states should declare insolvency because as it is right now, many of them rely on federal allocation to meet their obligations.