Thirteen states plan to borrow or get aid assistance of N2.31tn in 2024 to fund their budget deficits, a breakdown of their 2024 proposed budget has shown.
This will increase the states’ debt profile to at least N4.73tn. As of the end of September of 2023, the domestic debts of the states amounted to N2.61tn, according to data from the Data Management Office. The external debt profile of the states has not yet been published hence it was not added.
The Nigerian Labour Congress said in an interview with The PUNCH on Monday that the states’ rising debt profile was worrisome
The workers union lamented that many states were mortgaging the future for the present.
The National Secretary-General, NLC, Chris Onyeka, said, “We are worried, as workers, who are the ones that create wealth, who generate the fund that will be used to pay these loans. We are worried. If these loans will be invested in productive activities that can by themselves generate revenue for repayment, we don’t have any problem. But our history has shown that loans do not repay themselves in this part of the world.”
The states covered in this report with their domestic debts as of the end of September 2023 include Lagos (N960.49bn), Abia (N138.78bn), Niger (N120.19bn), Zamfara (N96.77bn), Borno (N102.04bn), Ondo (N72.75bn), Anambra (N73.72bn), Bayelsa (N129.33bn), Edo (N126.26bn), Enugu (N92.21bn), Kano (N122.36bn), Kogi (N92.32bn), and Ogun (N293.21bn).
With a budget of N2.25tn, Lagos plans to raise a revenue of N1.85tn (internally generated revenue of N1.25tn and federal transfer of N596.63bn), leaving it with a deficit financing of N398.28bn
NLC kicks
The National Secretary-General of the NLC, Onyeka, said that the country is headed for dangerous times with record levels of borrowing from the federal and state governments.
He said, “It is very clear that we are in dangerous times in Nigeria, when the head is bad then the rest of the body will become bad. If the FG is borrowing excessively, the states will also follow likewise because there is no one to check them, and there is no one to set the moral tone.
“We need to ask why they are borrowing. They blame it on fiscal inefficiencies, in essence, they do not have enough cash to meet their obligations. Naturally, it is not too bad to borrow, but it is what you do with the money that is critical. When you borrow, what are you borrowing for? If they borrow for productive activities, there is nothing wrong with that. But in Nigeria, borrowed funds are looted, not used for productive activities, and shared too. This is why we have problems.”
He lamented that despite all the borrowing going around, some states are still owing workers’ salaries. “Most of these borrowed funds do not trickle down to the people of the state,” Onyeka noted.
He expressed concern that many states are incapable of paying their loans and are borrowing against their future.
“A responsible state government will not eat the future of its people. States should cut their expenditure to within their means, but many of them have become profligate. States must rein in the reckless borrowing,” he added.
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