N3.9trn states’ debts worrisome

A recent report to the effect that Nigeria’s 36 state governors, especially 12 of them, who are first timers, face a debt burden of N3.9 trillion that may hurt their ambitious plans for their states is quite worrisome. It is even more disturbing that this deplorable situation is compounded by the low internally generated revenue, which has rendered many of the states non-viable as they depend on federal allocation for survival.

According to domestic debt data for the 36 states and the Federal Capital Territory, FCT, Abuja as at December 31, 2018, the states are indebted to the tune of N3.853 trillion. The debt stock figure for Katsina state was N30.853bn as at December 31, 2017. The N3.853 trillion debt excludes bonds raised by the states and foreign debts. 

Among the new governors, Babajide Sanwo-Olu of Lagos is shouldering the biggest debt burden. Lagos is owing N530.244 billion, which is higher than the N309.920 billion debt stock of the five states of the South-east; N403.028 billion of the North-east; and N433.682 billion of the North-west. Following Sanwo-Olu is Governor Emeka Ihedioha of Imo state, who has a debt of N98.782 billion to pay.

Others include Dapo Abiodun of Ogun (N98.717 billion), Bala Mohammed of Bauchi (N92.367 billion), Seyi Makinde of Oyo (N91.516 billion), and Umaru Fintiri of Adamawa (N89.659 billion). Gboyega Oyetola of Osun had earlier inherited a debt of N148.101 billion like his Ekiti state counterpart, Dr Kayode Fayemi, who inherited N118.011 billion debt.

Among the least indebted states are Anambra (N33.491 billion), Jigawa (N35.163 billion), Katsina (N30.853 billion as of 2017), Sokoto (N38.605 billion), and Niger (N41.832 billion). Conversely, the most indebted are Lagos (N530.244 billion), Delta (N228.806 billion), Rivers (N225.593 billion), Akwa Ibom (N198.633 billion), Cross River (N167.956 billion), Osun (N148.101 billion), Bayelsa (N130.044 billion), Ekiti (N118.011 billion), Kano (N117.082 billion), and Plateau (N100.367 billion).

Among the six geo-political zones, the South-east is the least indebted with N309.920 billion. It is followed by North-east (N403.028 billion) and North-west (N433.682 billion). The most indebted zones are South-south (N1,037.882 trillion), South-west (N1,035.713 trillion) and North-central (N633.213 billion).

The yoke the governors will bear is made heavier by the miserly funds most of the states generate as revenue. Going by their revenues generation profile according to Economic Confidential Annual State Viability Index, ASVI, 2018, only FCT, Abuja, Lagos and Ogun are viable.

The FCT generated N65.520 billion or 224.86 per cent of the N29.138 billion it received as federal allocation. Lagos generated 146.61 per cent of what it received as allocation while Ogun state generated 90.65 per cent. Rivers state generated 47.51 per cent of what it received as allocation. None of the remaining states generated up to 30 per cent of their federal allocation. States that did up to 20 per cent are Delta, Kaduna, Ondo, Enugu, Kano, Edo and Kwara. The average revenue generation for all the states is 25.08 per cent.

On zonal basis, the South-west (49.53 per cent) is the best revenue generator, followed by North-central (43.65 per cent), and South-south (21.4 per cent). Lagos state’s N382.182 billion IGR is higher than N303.570 billion generated by the three zones of the North. Also, Lagos and Ogun N466.736 billion IGR is higher than the N447.572 billion the South-east zone got as federal allocation in 2018.

The least revenue generating zones are North-east (6.9 per cent), North-west (13 per cent) and South-east (16 per cent). Without Lagos, the South-west did 30.11 per cent just as without FCT, the North-central did 13.44 per cent. In terms of federal allocation, the South-east is the least with N447.572 billion followed by the North-east (588.468 billion). Conversely, the South-south had the highest allocation with N1,191.287 trillion. It is followed by North-west (N865.131 billion), South-west (N774.916 billion), North-central (N620.737 billion) and North-east (N588.468 billion).

However, some immediate past governors such as Mohammed Abubakar of Bauchi state has refuted the allegation that his government left behind a debt of N137 billion to the new administration. He said his government left N11.6 billion in the state government’s account, being refund of projects undertaken on behalf of the federal government in the state

 “Throughout the four-year tenure of the former leader, the government didn’t take a single commercial loan. We, however, acknowledge the receipts of various intervention loans from the federal government that totalled N34.6 billion. These were concessionary loans by the federal government to, especially states, with heavy financial burden and lean purse”, he said.

Nevertheless, there is no denying the fact that despite their lean revenue most governors embark on frivolous spending and white elephant projects or projects that do not have any positive impact on the people. This unfortunate trend has over the years resulted in these governors’ inability to meet certain statutory obligations, including the payment of workers’ salaries and the provision of basic infrastructure, among other dividends of democracy.

We, therefore, advise Nigeria’s political leaders, particularly the presidency and the National Assembly, to address the high cost of governance across all levels with a view to curtailing the profligacy of governors in order to enthrone good governance in the country.  We also call for the enforcement of the financial autonomy granted to the local governments by the Nigeria Financial Intelligence Unit (NFIU), an agency in the presidency, to ensure good governance at the grassroots.

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