https://thestreetjournal.org/28-governors-accumulate-n5-8trn-debts-for-incoming-administrations/

The governors of 28 states who are leaving office on May 29 or running for re-election, and the minister of the Federal Capital Territory (FCT), have piled up N5.8 trillion 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 (DMO).

Out of the 28 states, 11 governors will be seeking re-election in March.

They include Governors Mohammed Yahaya of Gombe state, Babagana Zulum of Borno state, Abdullahi Sule of Nasarawa state, Seyi Makinde of Oyo state, Mai Buni of Yobe state, Bello Matawalle of Zamfara state, Babajide Sanwo-Olu of Lagos state, Ahmadu Fintiri of Adamawa state, Dapo Abiodun of Ogun state, Bala Mohammed of Bauchi state, and Abdulrahman Abdulrazak of Kwara state.

Those that will not be seeking re-elections are Emannuel Udom of Akwa Ibom state, Samuel Ortom of Benue state, Ifeanyi Okowa of Delta state, David Umahi of Ebonyi state, Mohammed Abubakar of Gombe state, Aminu Masari of Katsina state, Bello Bagudu of Kebbi state, Abubakar Bello of Niger state, Aminu Tambuwal of Sokoto state, Simon Lalong of Plateau state, and Darius Ishaku of Taraba state.

Other governors that are not seeking re-election include the Kaduna state governor, Nasiru El-Rufai, Abdullahi Ganduje of Kano state, Okezie Ikpeazu of Abia state, Ifeanyi Ugwuanyi of Enugu state, Ben Ayade of Cross Rivers state, and Nyesom Wike of Rivers state.

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 N4.38 trillion, while their external debts were about $3.15 billion or N1.42 trillion based on the exchange rate of the Central Bank of Nigeria (CBN) of N449.53 to a dollar as of Thursday, January 5.

The data further shows that Lagos state has the highest debt, with N877.04bn domestic debt and $1.27 billion foreign debt.

It is followed by Kaduna state, with a domestic debt of N86.86 billion and external debt of $586.78 million.

The third highest debt is Rivers state, with a domestic debt of N225.51 billion and foreign debt of $140.18 million.

In the fourth highest debtor position is Cross Rivers state, with N175.2 billion domestic debt and $215.75 million external debt.

It is followed by Ogun state with N241.78 billion domestic debt and $122.73 million foreign debt.

Others include Bauchi (N144.28 billion domestic debt and $172.76 million external debt), Enugu (N89.89 billion and $123.02 million), Kano (N125.19 billion and $109.42 million), Abia (N104.57 billion and $95.63 million) and Adamawa (N122.48 billion and $77.01 million).

Other debtor states are Akwa Ibom (N219.62 billion and $46.567 million), Benue (N143.37 billion and $30.47 million), Borno (N96.33 billion and $18.7 million), Delta (N272.61 billion and $60.05 million), Ebonyi (N67.06 billion and $59.84 million), Gombe (N139.1 billion and $46.93 million), Jigawa (N44.41 billion and $27.61 million), Katsina (N62.37 billion and $55.82 million), Kebbi (N60.13 billion and $42.40 million), Kwara (N109.55 billion and $45.94 million), and Nasarawa (N72.63 billion and $53.73 million).

Also on the list are Niger (N98.26 billion and $69.27 million), Oyo (N160.07 billion and $76.97 million), Plateau (N151.90 billion and $33.74 million), Sokoto (N85.58 billion and $37.13 million), Taraba (N90.81 billion and $22.28 million), Yobe (N92.86 billion and $23.09 million) and Zamfara (N109.69 billion and $29.33 million).

The FCT had a domestic debt of N112.49 billion and external debt of $25.38 million.

These states and the FCT owed up to 81.72 percent of the N5.36 trillion sub-national domestic debts and 69.08 percent of $4.56 billion external debts.

The director, portfolio management department of the DMO, Dele Afolabi, while speaking on Thursday, noted that each state was expected to send in quarterly information on their domestic debts.

Afolabi added that by being transparent with their debt profiles, states would be able to access more funding.

He further noted that the debt servicing is done by the federal government but it is deducted from the federal allocation to the states, The Punch reports.

In its December 2022 edition of the Nigeria development update, the World Bank noted that states’ debts would rise above 200 percent of the revenue generated in 2022 and 2023.

The report reads, “Debt levels for an average state are estimated to increase from 154.6 percent of revenues in 2021 to above 200 percent 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 that, “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, which is 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 percent for an average state in nominal terms, especially capital expenditure, which is estimated to increase by 17.3 percent 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 percent 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.

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