Governors of 28 states who are leaving office on May 29 or running for re-election and the Minister of the Federal Capital Territory have piled up about N5.8tn sub-national debts amid an economic crunch.
The debt figures were based on an analysis of the sub-national debts reports by the Debt Management Office.
Out of the 28 states, 11 governors will be seeking re-election in March.
They include Governors Mohammed Yahaya of Gombe; Babagana Zulum (Borno); Abdullahi Sule (Nasarawa); Seyi Makinde (Oyo); Mai Buni (Yobe); Bello Matawalle (Zamfara); Babajide Sanwo-Olu (Lagos); Ahmadu Fintiri (Adamawa); Dapo Abiodun (Ogun); Bala Mohammed (Bauchi) and Abdulrahman Abdulrazak of Kwara state.
Those that cannot seek re-elections are Emannuel Udom (Akwa Ibom); Samuel Ortom (Benue) Ifeanyi Okowa (Delta); David Umahi (Ebonyi); Mohammed Abubakar (Gombe) Aminu Masari (Katsina); Bello Bagudu (Kebbi); Abubakar Bello (Niger); Aminu Tambuwal (Sokoto); Simon Lalong (Plateau) and Darius Ishaku of Taraba.
Other governors that are not seeking re-election include the Kaduna State Governor, Nasiru El-rufai; Abdulahi Ganduje (Kano); Victor Ikpeazu (Abia); Ifeanyi Ugwuanyi (Enugu); Ben Ayade( Cross Rivers) and Nyesome Wike of Rivers.
The sub-national debts are classified into domestic-borrowings from local creditors and external-borrowings from foreign or international creditors like the World Bank.
The domestic and external debts published on the DMO’s website were as of September 30 and June 30, 2022, respectively.
According to the reports, sub-national domestic debts were about N4.38tn while their external debts were about $3.15bn or N1.42tn based on the exchange rate of the Central Bank of Nigeria of N449.53 to a dollar as of Thursday.
The data further shows that Lagos has the highest debt, with N877.04bn domestic debt and $1.27bn foreign debt.
It is followed by Kaduna, with a domestic debt of N86.86bn and external debt of $586.78m.
The third highest debt is Rivers, with a domestic debt of N225.51bn and foreign debt of $140.18m.
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.
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, 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.
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.
The report added, “The fiscal condition of sub-national governments is expected to weaken in 2022, as Federation Account transfers for the average state are estimated to decline due to weak net oil revenue collection.
“For an average state, statutory transfers—the main source of state revenue—are estimated to decline by 5.5 per cent and internally generated revenue is estimated to remain at broadly the same levels as in 2021 (declining slightly by 0.8 percent).
‘’Nevertheless, total revenues for an average state are estimated to remain broadly unchanged in nominal terms as gains in VAT revenues are estimated to offset the declines in statutory transfers. However, expenditure is expected to increase by almost 4 per cent for an average state in nominal terms, especially capital expenditure, which is estimated to increase by 17.3 per cent in nominal terms in the run-up to the 2023 general election.
“Consequently, the fiscal deficit of an average state is estimated to reach 37.9 percent of revenues in 2022, as opposed to 31 percent of revenues in 2021 and 17 percent of revenues in 2020.
‘’Recurrent expenditure between 2021 and 2022 is estimated to have contracted by almost 5.4 per cent for an average state, raising concerns about accumulation of arrears. These trends are estimated to continue in 2023 with the fiscal position of the states weakening.”
The global lender had earlier said that Nigerian states will likely lose N18.8bn in oil and gas revenues in 2022, as worsening revenue collection at the federation level increases budgetary pressures for the states.
According to the bank, the declining revenue from the federation level has put many states in a precarious fiscal position.
It warned that many states would be unable to meet up with their expenditures, adding that there was an increase in debt servicing expenditures of states.
But the special Adviser Media and Publicity to the Cross River Governor, Christian Ita blamed the state’s debt burden on previous administrations.
He stated, “The debt burden on the state is something that was inherited by this administration. Indeed, as at May 29, 2015 when the current administration came on board, the state had attained the threshold of borrowing, a situation that made it impossible for the current administration to borrow.
“The disconcerting part is that while the administration was prevented from borrowing by the Debt Management Office, the federal government has been deducting between N1.6bn to N2bn monthly from the state’s allocation, thus leaving the state in dire straits.”
Speaking on its huge debt profile, the Lagos State government explained that its domestic and foreign debts were necessary because there was no other way the government could fund the projects executed in the state.
According to estimates, Lagos state has the highest domestic debt of N876bn and a foreign debt of $1.27 bn.
Punch
