Connect with us
iubh
Advertisement
Alpha
Advertisement
Hotflex
Advertisement
Advertisement
UBA
Advertisement
Patricia
Advertisement
app

Business News

State Governors parted with N33.9 billion to external debt deductions

While Nigeria’s debt profile hits a new high of N24.9 trillion in March 2019, state governors have parted with the sum of N33.9 billion referred to as external debt deductions in just one year.

Published

on

President Buhari Inaugurates National Economic Council, National Economic Council, State Governments seek refund over repaired federal roads

While Nigeria’s debt profile hits a new high of N24.9 trillion in March 2019, state governors have parted with the sum of N33.9 billion referred to as external debt deductions in just one year. This is reflected in the analysis of reports of revenue disbursement to states by the Federation Account Allocation Committee (FAAC).

Analysis of the data obtained from the National Bureau of Statistics (NBS) reveals that the sum of N33.9 billion was deducted from monthly allocation entitled to states between June 2018 and May 2019. This is believed to be deductions in the form of loan servicing obtained from external sources. 

[READ MORE: How State Governments will become richer without FAAC allocation]

Number breakdown: Across the 36 States of the Federation, unsurprisingly, Lagos State parted with the biggest amount from its allocation. Specifically, the sum of N10.3 billion was deducted from the allocation due to the State. This is largely expected as the State’s domestic debt stock is the biggest of all, rising to N542 billion in March 2019.

  • Kaduna State ranks third, with the sum of N2.28 billion deducted, leaving the State with an estimated N93 billion debt profile.
  • Cross River follows Kaduna slowly, having repaid N2.1 billion debt in the last one year, with N167 billion debt stock.
  • Oyo, Rivers, Osun and Katsina all repaid above N1 billion each within the period.

Recent developments: Last week, the Debt Management Office (DMO) released the country’s debt stock data, and the report shows that only domestics debts accruing to States Governments rose to N3.97 trillion in March 2019. On the other hand, a proportion of the total N7.8 trillion total external debt is still accruable to the states.

  • Recent reports on FAAC disbursement have revealed some worrying trends, as revenue allocation declined by N1.3 billion in May 2019.
  • In April, a total of N617.5 billion was disbursed, while the disbursement dropped to N616.2 billion in May 2019.
  • This means that while states’ allocations are depleting, a portion of their monthly allocation is still constantly bookmarked to service debt.

[READ ALSO: Nigeria’s total debt stock rises to N24.9 trillion]

Debt management: Specifically, loans or debt granted to countries and states come with terms or conditions which may include cash to cover repayment of interest and principal on a debt for a particular period.

Sigma Pensions
  • Debt can be flexible or otherwise, with a wide choice of financial conditions that are specifically tailored to meet a country’s overall debt management strategy.
  • Nigeria’s debt category is largely dominated by 41% of multilateral and bilateral sources from the World Bank, Bank of China, the African Development Bank and so on.
  • In order to manage the debt, billions are periodically substracted from both States and the Federal Government in the form of debt servicing being collected.
  • As of March 2019, the Federal Government paid N719 billion to service both external and domestic debt.

Bottom line: Debt is not entirely bad, as developing nations sometimes need a big push to meet financial obligations, but state governments need to be wary of building the country’s overall debt stock.

  • Another critical downside to billions being parted by states to service debt is that these monies are being surcharged from already depleted revenue.
  • With most states running on low internally-generated revenue, there appears to be no concrete plan to manage the rising debt stock across the states.
  • In an attempt to deliver promises made to their citizens, many state governors may already be considering other debts accumulation strategies and this calls for great concern.

[READ FURTHER: Accountant General says no problem paying N293 billion debt servicing]

 

Samuel is an Analyst with over 5 years experience. Connect with him via his twitter handle

Click to comment

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Business

FG to commence construction of 4 new rail projects across the country

The listed rail line projects include Ibadan-Kano, Port Harcourt-Maiduguri, Kano-Maradi and Lagos-Calabar rail lines.

Published

on

Rotimi Amaechi, Minister of Transport, Nigerian railway contract with CCECC and CRRC, China Civil Engineering Construction Corporation, Chinese Railway Rolling stock Corporation

The Minister of Transportation, Rotimi Amaechi, has said that the Federal Government is about to commence 4 new rail line projects in various parts of the country.

The listed rail line projects include Ibadan-Kano, Port Harcourt-Maiduguri, Kano-Maradi and Lagos-Calabar rail lines.

This disclosure was made by Amaechi while speaking at the annual ministerial press briefing on programmes, projects and activities of the Federal Ministry of Transportation and its agencies on Friday in Abuja.

READ: FG to fully launch E-ticketing platform for NRC next week

What the Minister of Transportation is saying

Although the Minister announced that the Federal Government was about to start the rail lines project, he was not specific on the exact dates the projects would start.

Amaechi, in his statement, said, “We have awarded the following contracts and we are about to start and we have even tried to solve the financial problems. This is because we have the problem of having to hire consulting engineers.

READ: $2 billion Kano-Maradi rail would be completed in 36 months – FG

“The ones we are about to start include Ibadan to Kano, we are waiting for funds from China. We are about to start Port Harcourt to Maiduguri, we are waiting for the cabinet to approve consulting shares. We are also to start the Kano-Maradi and Lagos to Calabar.

Sigma Pensions

“But one thing that is unique about these contracts is that the president early enough directed that all rail lines must stagnate at the seaports.

“That is why there may be a bit of adjustment in the pricing of Kano-Maradi because we have to adjust it to link up to Kano-Lagos so that it can terminate at Lagos seaport.’’

The Minister pointed out that the 185.5km Lagos-Ibadan double standard gauge line with extension to Apapa seaport was nearing completion, while the 186km Abuja-Kaduna and 302km Warri-Itakpe standard gauge lines had been completed and were functional.

READ: FG urges contractors to complete Ebute Meta–Apapa seaports railway extension by January 2021

What this means

  • The various rail line projects are part of the ambitious plan by the Federal Government to create a nationwide rail network that is intended to help in the country’s diversification efforts, away from crude oil.
  • Some of these rail projects will also help to decongest the Apapa ports in Lagos and serve as a route for the import and export of goods in the West African sub-region.

Stanbic 728 x 90
Continue Reading

Business

Customs Tin-Can Island Command generates N112.7 billion in Q1 2021

This is a N21.1 billion increase in revenue compared to a revenue of N91.6 billion in Q1 2020.

Published

on

The Nigerian Customs Service revealed that its Tin-Can Island Command has a first-quarter revenue of N112.7 billion in 2021. This is a N21.1 billion increase in revenue compared to a revenue of N91.6 billion in Q1 2020.

This was disclosed by Mr Mba Musa, Customs Area Controller, in a statement on Friday.

“The comparative analysis of quarter one revenue collection from 2018 to 2021 are as follows: in 2018, N76,789,721,107.42; in 2019, N78,857,106,168.27; and in 2020, N91,635,998,490.73,” the customs boss said.

READ: Customs revenue rises by N200 billion to hit N1.5 trillion in 2020

“This improvement is despite the twin threat to lives and livelihood posed by the COVID-19 pandemic. The command has inspired their officers to continue to work hard while observing all the safety measures to achieve the best of performance.

“We kept our lines of communication open and concerted effort was made to ensure that the supply chain is not disrupted,” he added.

READ MORE: Customs officers must declare their assets annually – Customs boss

What you should know: The Nigeria Customs Service (NCS) generated a revenue of N1.5 trillion for the year 2020, a rise compared to N1.3 trillion in 2019.

Sigma Pensions

Continue Reading

  





Nairametrics | Company Earnings

Access our Live Feed portal for the latest company earnings as they drop.