To address their budget deficits, according to a breakdown of their proposed budgets for the same year. This move is anticipated to elevate the cumulative debt profile of these states to at least N4.73tn. As of September 2023, the domestic debts of these states stood at N2.61tn, as reported by the Data Management Office, with the external debt profile yet to be disclosed.
Expressing concerns over this escalating debt trend, the Nigerian Labour Congress (NLC) emphasized that the rising debt levels among states are alarming. Chris Onyeka, the National Secretary-General of the NLC, highlighted worries that several states are jeopardizing the future for immediate gains. He remarked that while borrowing for productive activities with the potential to generate revenue is acceptable, historical patterns indicate that loans in the region are not efficiently repaid.
The states covered in this report, along with their domestic debts as 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).
Lagos, with a budget of N2.25tn, plans to generate revenue of N1.85tn (internally generated revenue of N1.25tn and federal transfer of N596.63bn), resulting in a deficit financing of N398.28bn. Governor Babajide Sanwo-Olu assured that the deficit financing would adhere to fiscal sustainability parameters.
Abia, on the other hand, intends to borrow N385.27bn to cover a deficit of N401.16bn, potentially increasing the state’s total debt profile to N524.05bn, a rise of 277.61 percent. Governor Alex Otti justified the borrowing as part of the state’s strategy to enhance public infrastructure and boost service delivery in critical sectors like education and health.
Niger State is planning to secure new borrowings of N256.46bn, anticipating an increase in its debt profile to at least N376.65bn, marking a surge of 213.38 percent. Other states, including Zamfara, Borno, Ondo, Anambra, Bayelsa, Edo, Enugu, Kano, Kogi, and Ogun, also have varying plans for borrowing or relying on capital receipts to fund their budgets in 2024.
Critics, including economists and the NLC, have expressed worries about the implications of excessive borrowing, especially for recurrent expenditures like salaries. The NLC emphasized the need for responsible borrowing, with a focus on productive activities rather than funds being misused and not trickling down to benefit the people. The NLC called for states to cut expenditures to match their means and cautioned against borrowing that risks compromising the future welfare of the citizens.