The debt stock of states in Nigeria rose to N5.27 trillion in June 2019. This is reflected in the latest report released by the Debt Management Office (DMO) for the second quarter of 2019.
According to the DMO debt report for states in Nigeria, the total external and domestic debt stock of all states increased to N5.3 trillion in June 2019 from N5.15 trillion recorded in December 2018. This implies that net borrowing across the states increased by 2.9% or N126.2 billion.
Debt Stock by numbers
The report showed that external debt for states increased from N1.3 trillion as at December 2018 to N1.31 trillion in June 2019. However, the total domestic debt stock for the states increased to N3.97 trillion from N3.85 trillion within six months.
- The report further showed that states like Rivers, Imo and several others led the train in the amount of debt borrowing during the period. Meanwhile, Lagos and a few others may have settled some debt as their debt stock reduced.
- As at June 2019, Nigeria’s biggest commercial city, Lagos, stayed top on the debt list with N915.2 billion debt stock. However, the state’s debt stock dropped by N52.7 billion in 6 months.
- The other states that made the top 10 states with the highest debt stock for the period under review include Rivers (N291.7 billion), Delta (N252.8 billion), Cross River (N227.9 billion) and Akwa-Ibom (N220.2 billion).
- Other states in the top 10 are Osun (N174.7 billion), Imo (N169.7 billion), Edo (N169.7 billion), Kaduna (N169.2 billion) and Bayelsa (N150.5 billion).
States with the biggest borrowing in 6-month (January – June 2019)
One of Nigeria’s oil-rich states, Imo, borrowed the sum of N52.6 billion between January and June 2019. The state also ranks 7th with the biggest overall debt stock across all the states in the country.
- Also, Rivers and Katsina rank 2nd and 3rd respectively with the biggest debt borrowed within the period. Specifically, Rivers and Katsina borrowed a total of N42.1 billion and N34 billion in just 6-month.
- Other states in the top 10 with the biggest borrowing in the last 6-month are Kogi (N20.06 billion), Borno (N93.4 billion), Oyo (N141.6 billion), Gombe (N16.1 billion), Taraba (N11.8 billion), Kaduna (N11.5 billion) and Akwa Ibom (N7.5 billion).
Lagos’ and other states’ debts dropped by N155.4 billion
- Despite the increase in the cumulative debt profile of the states between December 2018 and June 2019, some states repaid a total of N155.4 billion within six months.
- Lagos State, which had a total of N968 billion in December 2018, now has a debt profile of N915.8 billion, indicating a shortfall of N52.8 billion.
- Also, FCT’s debt depleted by N32.2 billion; Ekiti State by N31.5 billion while Ebonyi State’s debt reduced by N10.7 billion.
- Others that made up this list include Kebbi, Sokoto, Ogun, Osun, Edo, Benue, Plateau, Yobe and Kano States.
Borrowing and Revenue Rigmarole
At the state level, just like the Federal, the amount of borrowing in recent times has dwarfed revenues. While revenue dropped for some of the states in Nigeria, borrowing to pay salaries and other overhead expenses has almost become a norm.
- A quick check at the IGR numbers for half-year 2019 showed that some states in Nigeria borrowed over 700% of revenue generated within just 6 months.
- For instance, Imo State generated N10.5 billion IGR while the state borrowed N52.6 billion between January and June 2019. This implies the state borrowed 499% of its IGR.
- Another example is Katsina with an IGR of N4.8 billion while the state borrowed N34.9 billion in 6-month.
- This implies that several states in Nigeria are technically bankrupt without debt financing and Federal Government monthly allocation.
It should be noted that borrowing may not be bad in its entirety but the core of borrowing must be targeted at financing infrastructure and other developmental projects. According to the World Bank, this will not only have huge effects on the economy but also guarantee the repayment plan of the debts borrowed.
However, despite the building debt stock, most of the states (if not all) still have huge infrastructural deficit which has characterized low ebb development and standard of living.