As Governors Borrow N2.2tn From Banks, Workers Are Up In Arms
As Governors Borrow N2.2tn From Banks, Workers Are Up In Arms

Amid deteriorating revenue challenges, state governments in Nigeria are facing a growing debt burden with commercial banks, amounting to N2.2tn, as reported by The PUNCH. Data from the Central Bank of Nigeria’s quarterly statistical bulletin revealed that as of March 2023, states and Local Government Areas (LGAs) collectively owed banks approximately N2.21tn, signifying an increase of about N240bn within the review period.

In response to this development, state government workers and pensioners’ unions criticized the governors, asserting that increased borrowing has worsened the financial situation in the states. According to the findings, the loans from banks account for about 40.33% of the total sub-national debt, which stood at N5.48tn as of March 31, 2023, an increase of 13.22% from the N4.84tn recorded in March 2022.

Among the states, Lagos emerged as the top debtor, owing about N812.38bn as of March 2023, followed by Ogun (N293.2bn), Rivers (N255.51bn), Akwa Ibom (N206.64bn), and Imo (N202.55bn). On the other hand, Jigawa had the lowest domestic debt of N43.59bn as of March 2023, followed by Kebbi (N60.94bn), Katsina (N62.37bn), Nasarawa (N71.45bn), and Ondo (N75.51bn).

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Additionally, about 25 states experienced a decline in their internally generated revenue (IGR) in the first quarter of 2023 compared to the previous quarter, as revealed in the budget implementation report analyzed by The PUNCH. These 25 states collectively earned N182.26bn in Q1 2023, representing a 3.07% or N5.77bn shortfall from the N188.03bn earned in Q4 2022.

A non-governmental civic organization, BudgIT, highlighted that many states heavily rely on revenue from the Federal Government. The same 25 states with declining IGR were also found to have a total domestic debt of N3.12tn in Q1 2023, an increase of N130bn within three months.

The World Bank, in its December 2022 Nigeria Development Update, warned that states’ debts were projected to exceed 200% of their revenues in 2022 and 2023. This situation arises from low allocations from the Federation Account, weakening the fiscal condition of the states and hindering their ability to meet expenditure needs, leading to an increase in debt servicing expenditures.

Various stakeholders, including state government workers, pensioners, economists, and experts, expressed concerns over the lack of tangible improvements in infrastructure and welfare despite the rising borrowing. They emphasized the need for more responsible utilization of borrowed funds and a focus on wealth creation to attract investors and bolster state economies.


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