State Governors Ramp Up Borrowing Despite Increased Revenue: DMO Report

Patience Oniha, the Director-General of the Debt Management Office (DMO), saw a notable trend in the first six months of her tenure as 13 newly appointed state governors collectively acquired loans totaling N226.8 billion from both local and international lenders.

Further examination revealed that during this period, an additional 16 state governors contributed to the debt accumulation by increasing their states’ debt profiles by N509.3 billion, comprising N243.95 billion from domestic creditors and $298.5 million (N265.37 billion) from foreign sources, calculated using the DMO’s exchange rate of N889/$.

This information was gleaned from the latest sub-national debt reports released by the DMO, which categorized debts into domestic borrowings from local creditors and external borrowings from international entities like the World Bank and the International Monetary Fund. These reports, as of December 30 and June 30, 2023, respectively, shed light on the borrowing activities of states including Benue, Cross Rivers, Katsina, Niger, Plateau, Rivers, Zamfara, and the Federal Capital Territory.

The breakdown revealed that Cross Rivers Governor, Bassey Otu, secured the highest loan, with N16.2 billion from domestic and $57.95 million from foreign creditors between June and December 2023. Katsina State followed suit with a surge in debt from N62.37 billion to N99.3 billion by December 2023, amounting to N36.93 billion.

Niger State ranked third, experiencing an increase from N121.95 billion to N139.8 billion in domestic debt during the same period, totaling N17.85 billion. Plateau, Rivers, Zamfara, and the FCT, under the leadership of Nyesom Wike, also engaged in borrowing activities from domestic creditors.

On the foreign debt front, Governor Francis Nwifuru of Ebonyi State accumulated $37.54 million, while Governor Uba Sani of Kaduna State borrowed $17.69 million from external financiers. Similarly, governors from other states like Kano, Niger, Plateau, Sokoto, Taraba, and Zamfara also secured loans from external sources.

Despite prior assertions by the administration of President Bola Tinubu to curtail massive borrowings, the latest data suggests continuity of the controversial policy amid increased revenue. In 2023, state governors benefited from the highest Federal Account Allocation Committee (FAAC) allocations in at least seven years, driven by reforms implemented by the Tinubu administration, including the removal of petrol subsidies and currency reforms, resulting in a reported 40% boost in income.

Analysis of the 2023 FAAC monthly allocations showed a significant increase in funds distributed to sub-national and local government councils, reaching peaks of N627.73 billion in September and N610.5 billion in December, reflecting the impact of the aforementioned reforms.

CREDIT: Punch Newspaper