The total external and domestic debts of States in Nigeria hit N5.15 trillion in 2018. This is revealed in the latest Domestic and External Debt Stocks Report, released by the Debt Management Office (DMO) for the last quarter of 2018.
According to DMO’s report, total external debts owed by States in Nigeria fell from N1.304tn in the second quarter to N1.29 trillion in the last quarter of 2018, while domestic debts increased from N3.47tn to N3.85tn for the period under review.
- Total debts accrued to States government increased by 8%
- Domestic debt for States as at Q4 stood at N3.85tn
- External debt for States at the end of Q4 stood at N1.29tn
- For Domestic debt, Lagos, Delta and Rivers top list of domestic debts
- Also, Lagos, Edo and Kaduna top external debts stock list
- Yobe, Borno and Taraba recorded the least external debt stock
- Anambra, Katsina and Yobe recorded the least domestic debts stock
Total debts accruing to States up by 8% in 2018
DMO’s report shows that debts accruing to states in Nigeria for the last quarter of 2018 increased by 8% between the second and last quarter. In the second quarter of 2018, total debts accruing to State Governments stood at N4.78tn, while it increased to N5.15tn for the period under review.
Furthermore, breakdown shows that external debts dropped in the last quarter of 2018. However, domestic debts increased in the last quarter, spiralling to N3.85tn from N3.47tn. The rise in domestic debts may be traceable to periodic bailouts given to States by the Federal Government.
Domestic debts rise, Lagos, Delta and Rivers are highly indebted
Domestic debt which recorded an increase for the last quarter shows that Lagos state tops the list with N530.2bn. Also, Delta State ranked second highest domestic debtor (N228.8bn), while Rivers State ranked third with N225.5bn. Similarly, Akwa Ibom (N198.6bn) and Cross-River (N167.9bn) ranked 4th and 5th respectively.
Conversely, Anambra, Katsina, and Yobe recorded the least domestic debts for the last quarter with N33.4bn, N30.8bn and N27.7bn respectively.
Lagos also maintain a distant top on external debt list, accounting for 33.7% of total debt
The report shows that Lagos state external debt amounted to N437.9bn in the last quarter, representing 33.7% of the total external debts. However, this is a decline when compared to the external debt figure in Q2 2018, which stood at N445.6bn.
Similarly, Edo Kaduna an Cross River all recorded N84.8bn, N69.7bn and N57.9bn respectively.
How the economy reacts to rising debt
According to the U.S Congressional Budget office, the consequences of large and growing national debts include:
i. Lower national savings and income
ii. Higher interest payments, leading to large tax hikes and spending cuts
iii. Decreased ability to respond to problems
iv. Greater risk of a fiscal crisis
Similarly, David Primo, a scholar at the Mercatus Centre and a professor at the University of Rochester said:
“The economy is not going to implode tomorrow because of the national debt or federal deficit, but it is a long run problem and the sooner we start dealing with it, the better off we’ll be as a country.”
Nairametrics earlier reported that Nigeria’s total external and domestic debts rose to N24.387 trillion in 2018.
Investors need to be aware of what rising national debt means for the future of the economy and financial markets.
Rising debt works against investors. For instance, as consumers’ budgets get tighter, so do their purse strings. And when people stop spending on goods and services, company revenues take a hit, thereby resulting in falling profits and declining stock prices.
National debt drags on economic growth
Once government debt reaches a certain size, it really drags on long-term economic growth. It can also drag on the creditworthiness of the government.
Also, as the country’s debt increases, the government will spend more of its budget on interest costs, increasingly crowding out public investments and subsequently growth.
Governments often borrow to address unexpected events, like wars, financial crises, and natural disasters. This is relatively easy to do when the debt is small. However, with a large and growing debt, the Nigerian government has fewer options available.
DPR says it has accurate data of country’s crude production volume
Head, Public Affairs of DPR, Mr Paul Osu, said every litre of crude produced in the country was adequately captured during the process of extraction.
The Department of Petroleum Resources (DPR) has said that the agency has an accurate record of the crude oil produced in the country.
This is in reaction to claims that the exact volume of crude oil produced in the country has remained unknown.
While making this disclosure in a statement in Lagos, the Head, Public Affairs of DPR, Mr Paul Osu, said every litre of crude produced in the country was adequately captured during the process of extraction.
What the Head, Public Affairs of DPR is saying
Osu said DPR has the responsibility of monitoring and accounting for crude oil production which is the basis for determining the government’s revenue through royalty payments by operators for sustainable development.
He said: “As a further step to boosting crude accounting process from production to export, DPR recently launched the National Production Monitoring System (NPMS).
NPMS is an online platform for direct and independent acquisition of production data from oil and gas facilities in Nigeria.
NPMS as an electronic data transmission tool at production and export terminals is designed to better predict the performance of oil and gas reservoirs and better production forecasting.”
Osu noted that the NPMS tool enables DPR to exercise surveillance, perform production monitoring and data analysis for utilisation and forecasting.
He said DPR as a business enabler and opportunity house would continue to develop robust and strategic initiatives to ensure timely and accurate payment of rents, royalties and other revenues due to the government.
In case you missed it
- It can be recalled that the Executive Secretary of the Nigeria Extractive Industries Transparency Initiative (NEITI), Orji Ogbonnaya-Orji, on Thursday said the exact volume of crude oil produced in Nigeria, especially at the deep offshore fields, is not known by anyone.
- He said the exact volume of crude oil produced in Nigeria had remained unknown because of the absence of meters at wellheads and the lack of capacity to monitor deep offshore fields.
Sanwo-Olu flags off Red line rail project as Lagos compensates property owners
The 37-km Rail Mass Transit Red Line will traverse from Agbado to Marina, moving over 1 million commuters daily.
The Lagos State Governor, Babajide Sanwo-Olu, has flagged off the construction of the 37-km Rail Mass Transit Red Line, which will traverse from Agbado to Marina, moving over 1 million commuters daily.
This is as the state started the compensation of identified project-affected persons of the Lagos Rail Mass Transit Red Line project with the Governor handing over cheques to displaced property owners who were affected by the right-of-way.
The groundbreaking ceremony which took place at the Ikeja Train Station on Thursday was witnessed by the Minister of Transportation, Rotimi Amaechi, who was represented by the Director-General of the Nigerian Maritime and Safety Agency (NIMASA), Dr Bashir Jamoh, and the Deputy Governor of Lagos State, Dr Obafemi Hamzat.
What the Lagos State Governor is saying
Sanwo-Olu said the Red Line project which is to be fully operational in the last quarter of 2022 with 8 train stations from Agbado to Oyingbo, is another initiative of his administration to deliver enduring infrastructure for the transport system and make Lagos a competitive megacity.
The Governor said: “Today’s flag-off of the construction of infrastructure for the standard gauge Red Line is another promise kept and it demonstrates, in practical terms, our commitment to achieve the objectives of traffic management and transportation pillar in our development agenda. This is because we recognise the role which an efficient transportation system plays in enhancing people’s quality of life and as a major driver of socio-economic development.
The State’s Strategic Transport Master Plan, which encompasses a number of projects that are germane to achieving our vision for a Greater Lagos, is founded on imperatives that seek to increase transport choices for all users and make the transit system integrated, attractive, convenient, affordable and accessible.
Since efficient transportation is the backbone of any economy, we are happy to be committing this investment in our transport infrastructure, so that our people can meet their daily targets and aspirations. This all-important transport project we are all gathered to witness today represents a major step in this direction.”
Sanwo-Olu said that in order to facilitate smooth operations of the Red Line, the State Government would be constructing ancillary infrastructure, including 6 overpasses at strategic level crossing points along the rail corridor to eliminate interactions between the rail system, vehicular and pedestrian traffic.
The overpasses will provide grade-separated crossings that will enhance safety for the rail system and road users.
He said: “The unique characteristics of the Red Line is its integration with the Ikeja Bus Terminal, Oshodi–Abule Egba Bus Rapid Transit (BRT) lane, the future Orange Line, which goes from Ikeja to Agbowa, and the General Aviation Terminal One of the Murtala Muhammed International Airport through a skywalk.
Another unique feature of the Red Line is that all the stations have elevated concourses with either at grade island or side platforms for easy boarding and alighting of passengers. The Red Line also integrates with our Bus Terminals at Oyingbo, Yaba, Oshodi, Ikeja and Iju, giving modal options to our people in their daily commute, either for business or leisure.”
The Governor presented cheques of different amounts as compensation to 25 residents whose properties, businesses and accommodation will be affected by the project. Over 263 properties are affected with many of the property owners and tenants smiling as they got their cheques.
What you should know
- The Red Line is part of the state government’s vision of an integrated multimodal transportation system contained in the State’s Strategic Transport Master Plan (STMP), developed by LAMATA, which aims ultimately to birth a world-class transportation network that will support the state’s profile, as the economic capital of Nigeria and Africa.
- It is to raise mass transportation capacity in the State, complementing the Blue Line that traverses from Okokomaiko to Marina.
- The rail corridor will be constructed in three phases. The first phase (Agbado-Iddo), which will be completed in 24 months, will be sharing the track with the Federal Government’s Lagos-Ibadan Railway Modernisation Project up to Ebute – Metta and will have its dedicated track from Ebute – Metta to Oyingbo and reduce travel time from about two and a half hours to just 35 minutes.
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