On Saturday, March 30th, 2024, Kaduna State Governor, Uba Sani, disclosed that he inherited a huge debt burden of $587 million, N85 billion and 115 contractual liabilities from the immediate past administration of Nasir El-Rufai, lamenting that the huge debt has eaten deep into the state’s federal allocation.
Governor Sani, who spoke during a town-hall meeting, lamented that because of the huge debt burden left behind by the former administration, he is unable to pay salaries as money coming from the federation account is being used to service debt. He said Kaduna State receives only N3.6 billion after deduction of N7.5 billion for debt servicing.
“What we received from the federal allocation in Kaduna this month was N3.6 billion out of over N10 billion. The sum of N7.5 billion was deducted from our allocation to service debts,” Sani said.
“We cannot pay salaries without borrowing. Our salary bill is N5.2 billion. We will have to borrow N2 billion to be able to pay salaries,” he said.
Speaking further, the governor said he had approached President Bola Tinubu to cry out to him over the deductions.
“The President told me that the debt of $556 million is a World Bank debt and there is nothing he can do about it. He however promised to see how he could help us. Some of my governor colleagues have also promised to approach the President to assist Kaduna. In the next three months we will be collecting N3.6 billion from the federal allocation,” he said.
Similarly, Abia State Governor, Alex Otti, on Friday, 5th April 2024, said that his administration inherited N192.2 billion debt from his predecessor, Okezie Ikpeazu. He said Ikpeazu, on his part, inherited N34.5 billion from his predecessor.
Speaking during an interaction with journalists in Umuahia, the Abia State capital, Otti said, however, that some of the debts have been paid off as they are with high-interest rates, adding, “It is tough, but we have to do it. We manage our expenses well and are able to live.”
Otti also expressed delight that the state did not feature in the list of debtor states recently released by the Debt Management Office (DMO).
“Opposition said we borrowed N148bn, and we debunked it. We will borrow when the need arises, but for now, we are managing.
“I have been consistent with the cost of governance and management. Borrowing money is not bad, but what you do with the money you borrowed. Where the money for projects I am doing in the state is coming from is my secret. We have been able to manage and cut costs. We are doing financial engineering,” he said.
Kaduna and Abia States are not alone in this. Debt burden has been a recurring decimal across the country as the 36 states of the Federation and the Federal Capital Territory continue to battle huge debt profiles.
Since 1999 when Nigeria returned to democracy, state governments have been taking both domestic and foreign loans to provide infrastructural development and sometimes to pay salaries, in addition to the monthly federation account allocation (FAAC) and Internally generated revenue (IGR). Many states are now caught in the quagmire of debt overhang and debt servicing, leading to paucity of funds to finance the day-to-day running of government and carry out developmental projects.
Meanwhile, the Socio-Economic Right and Accountability Project (SERAP) has disclosed the domestic debt figures of the 36 states in Nigeria and the Federal Capital Territory (FCT).
SERAP, in a post on its verified official X account on Saturday, April 6th, 2024, gave the domestic debt of the 36 states and the FCT as follows: Abia: N138,638,007,432.32; Adamawa: N138,261,010,699.22; Akwa Ibom: N190,476,345,365.94; Anambra: N74,196,577,787.14; Bauchi: N160,808,088,694.22; Bayelsa: N151,155,583,528.17; Benue: N187,181,205,478.46; Borno: N98,771,221,990.27; Cross-River: N220,201,482,435.66; Delta: N373,407,744,509.06; Ebonyi: N70,435,753,895.14; Edo: N123,879,949,054.12; Ekiti: N110,573,532,309.52; Enugu: N92,213,239,076.87; Gombe: N88,974,631,780.44; Imo: N217,112,608,530.49; Jigawa: N42,757,073,964.49; Kaduna: N85,519,766,061.70; Kano: N122,361,942,618.03; Katsina: N99,313,694,044.20; Kebbi: N60,690,877,475.46; Kogi: N121,808,350,345.34; Kwara: N109,162,798,865.21; Lagos: N1,048,703,617,143.87; Nasarawa: N71,151,081,271.86; Niger: N139,802,106,979.14; Ogun: N278,675,120,734.01; Ondo: N71,502,242,507.74; Osun: N144,604,559,829.88; Oyo: N159,944,726,303.69; Plateau: N173,932,825,607.72; Rivers: N232,576,206,164.34; Sokoto: N89,215,926,510.84; Taraba: N81,329,559,172.30; Yobe: N91,419,360,969.06; Zamfara: N110,567,180,885.79; and FCT: N91,519,931,195.71.
In spite of these huge borrowings, most state governments do not have much to show. Often, this huge debt profile is not justified as the money is hardly utilized judiciously. Most of it is squandered through misappropriation and other corrupt processes. This has posed a major challenge to infrastructural development across many states.
This is even as FAAC allocation to the 36 states and the FCT has increased massively since the removal of fuel subsidy by President Bola Tinubu on May 29, 2023. Many state governments have also been announcing an increase in their Internally Generated Revenue (IGR), meaning more funds available.
In order to reduce excessive borrowing and cut down on debt, pundits advise that state governments must block illicit funds leakages and cut down on cost of governance by reducing political appointees and unnecessary trips with large numbers of contingents.
