Huge debts await Buhari, in-coming govs

AFTER the euphoria of their electoral victories, one of the major challenges that will confront the President-elect, Major-General Muhammadu Buhari (retd), and 20 or 21 new governors is the level of debt stock the out-going administrations will leave behind.

According to the Debt Management Office, DMO, the Federal Government has a stock of $6.445 billion in external debt (N1.29 trillion at the rate of one dollar to N200)) and another N7. 9 trillion domestic debt totalling N9.19 trillion, as of December 31, 2014. This is the equivalent of two years budget.

The huge debt stock, if not properly managed, can hamper the delivery of democracy dividends.

According to external debt figures released by the DMO, Lagos State is the most indebted state in the country with a debt of $1,169,712,848.65 (N233.94 billion). The state had also borrowed N167.5 billion from the bond market. Thus, Lagos is owing at least N401.44 billion. This is one of the issues that Governor-elect, Mr Akinwunmi Ambode will confront when he takes over from Governor Babatunde Fashola, next month.

Among the 29 states where governorship elections were held last Saturday, new persons will take over in 20 states, if Governor Rochas Okorocha of Imo State is re-elected after the April 25 supplementary elections otherwise the number of newcomers will be 21.

The other states where fresh men will take over are Abia, Adamawa, Akwa Ibom, Bauchi, Benue, Cross River, Delta, Ebonyi, Enugu, Jigawa, Kaduna, Kano, Katsina, Kebbi, Lagos, Niger, Plateau, Rivers, Sokoto and Taraba.

Most of these states are highly indebted. Following declining oil prices in the international market and inability to boost their internally generated revenue, many states, in addition to obtaining loans and overdraft from banks, had approached the capital market in the last four years to raise funds. The amount of money they borrowed through the issuance of bonds has tripled over the period, rising to N673 billion from N298 billion in 2011. About 12 states have issued bonds totalling N375 billion, surpassing the total bonds issued by all states in the country since 1978. Lagos State tops the list of borrowers from the bond market, at N167.5 billion. Rivers recently launched a N100 billion bond. Delta State is third with N50 billion. Others include Gombe (N30 billion), Ekiti (N25 bn), Niger N21 billion), Bauchi (N15 billion) and Benue (N13 bn).

As of last December, Nigeria’s total public debt stock, according to the DMO stood at about $67.73 billion and N11.24 trillion, which is about N1.2 trillion higher than the 2013 figure of N10.04trillion.

A breakdown of the figures showed that external debt, including those of the states, was $9.71 billion and N1.63 trillion. The Federal Government’s domestic debt was $47.05 billion and N7.9trillion, while those of the states stood at $10.97 billion and N1.708 trillion.