If latest data from the Nigerian Bureau of Statistics is anything to go by, state governments in Nigeria are amassing debts that far outweigh their revenue and income. The federal government is not left out either in this borrowing spree that threatens the prospects for sustainable long-term growth in Africa’s largest economy.
Last quater Nigeria managed to exit an economic recession that lasted more than 15 months. Revenue accruable to the government has declined sharply since 2015 due to the slump in global oil prices. This has left many states unable to pay worker’s salaries, depending on bailout funds from the federal government and refunds from the Paris Club funds.
The federal government as well has been forced to fund major capital projects through loans from the IMF and other channels. Sadly, most of the states cannot account satisfactorily for these borrowed funds, opting to finance wasteful schemes like pilgrimages.
According to Nairametrics
According to the data made available Osun State’s debt has risen from N5.4 billion in 2011 to N147 billion as at June 30th 2017. This represents a compounded annual growth rate of about 73% annually. The person at the center of this borrowing is the State Governor, Ogbeni Rauf Aregbesola. He has been the governor of the state since November 2010 and has another year before he leaves office. At this rate he might end of with a debt of over N200 billion.
Next up is Oyo state with about N115.8 billion and was about N4.8 billion as at 2011. This represents an annualized growth rate of about 70%. The Governor of this state is Abiola Ajimobi, another Governor at the tail end of his second term. With a domestic debt of over N115 billion the governor is likely to leave his state in a worse debt profile than it was when he met it.
The third on the list is war torn Borno State with a total local debt profile of N30.9 billion as at June 2016. This represents a CAGR of about 62% for a state that is grappling with the activities of Boko Haram and has received major funding from the Federal Government in the form of North East Development Commission. Again, at the helm is a two term Governor, Kashim Shettima.
Nasarawa State is also on the list having grown its debt by 49% compounded annually to about N59 billion. The governor, Umaru Tanko Al-Makura is currently in his second term and basically led the charge to grow the states debt when he took office in 2013.
The Cable also reports that:
In the Nigerian domestic and foreign debt report released on Tuesday, the bureau revealed that the federal government’s debt accounted for 74% of the country’s total foreign debt and 78.66% of the total domestic debt.
“Nigerian states and federal debt stock data as at 30th June 2017 reflected that the country’s foreign and domestic debts stood at $15.05 billion and N14.06 trillion respectively.”
As of December 2015, the total foreign debt of the federal government and 36 states stood at $11.41 billion while the total domestic debt stood at N14.02 trillion.
“A breakdown of the FGN domestic debt stock by instruments reflected than N7.56 trillion or 68.41% of the debt is in federal government bonds, N3.28 trillion or 29.64% are in treasury bills and N215.99 million or 1.95% are in treasury bonds.
“Lagos has the highest foreign debt profile among the 36 states and the FCT accounting for 37% while Kaduna (6%), Edo (5%), Cross River (4%) and Ogun (3%) followed closely.
“Similarly, Lagos has the highest domestic debt profile among the thirty-six and the FCT accounting for 10.39% while Delta (8.04%), Akwa Ibom (5.18%), FCT (5.09%) and Osun (4.90%) followed in that order.”
It remains to be seen how the government hopes to manage this rising debt profile in light of other economic demands.