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For a better society

Against state governments’ penchant for borrowing

102
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The recent disclosure by Debt  Management Office, DMO, that 13 of the first-term governors in Nigeria have borrowed a staggering cumulative sum of N226.8 billion within the first six months of their administration points to the fact that the nation is inching closer to bankruptcy considering Nigeria’s already existing huge debt stock and the concomitant cost of servicing them.

That the Federal Government and its sub-nationals have long developed a penchant for borrowing from both local and the international agencies is not as worrisome as the concerns around what those borrowed funds have been deployed to. It is only an individual, and by extension a nation that lacks vision and prudence that borrows for consumption as opposed to production. Unfortunately, that is the category to which Nigeria now belongs today.

It is disheartening that there has been no gap in Nigeria’s borrowing spree. In November of last year, President Bola Tinubu requested the Senate to approve $7.8 billion and €100 million loans. This came after his N2.18 trillion supplementary budget approval that would be partly financed by loans; the country’s financial health is looking feebler. Nigeria’s total debts both FG and the states stood at N107.38 trillion by January end.

We strongly advise that Tinubu and state governors should stop their current penchant for borrowing and adopt a computerized approach to generating revenue internally, block all leakages for the needed funds to execute strictly productive ventures. It is unpatriotic and unacceptable for public office holders to sustain their ostentatious lifestyles on borrowed funds at the expense of future generations.

Unfortunately, the fresh borrowing by first-term governors came on the heels of the confirmation that governors of 16 states have also increased the debt profile of their states by N509.3bn with domestic and external debt of N243.95bn and $298.5m respectively. The states, which include Benue, Cross River, Katsina, Niger, Plateau, Rivers, Zamfara, and the Federal Capital Territory got N115.57bn from domestic creditors, while governors of Ebonyi, Kaduna, Kano, Niger, Plateau, Sokoto, Taraba and Zamfara states borrowed $125.1m, about N111.24bn from external sources.

It is on record also that Cross River Governor, Bassey Otu took the highest loan of  N16.2bn from domestic and $57.95m from foreign creditors between June and December 2023. For foreign debt, Governor Francis Nwifuru of Ebonyi State accumulated external debt of $37.54m, while Governor Uba Sani of Kaduna State borrowed $17.69m from external financiers.

It is rather unfortunate that our presidential system of government is devoid of accountability, checks and balances by the legislature as guaranteed by the 1999 Constitution as amended especially at the state level thereby giving governors a free hand to plunder public resources to the extent that every new administration usually proclaims the state bankrupt upon assumption of office. Consequently, its first step at sourcing revenue is the resort to borrowing even at a high interest rate considering that many of our leaders are bereft of ideas.

We totally condemn the recent decisions by governors to further impoverish and mortgage the future of Nigerians yet unborn which is what this easy trip to the lenders’ table represents even as there is no concrete evidence that the loans are for productive purposes with clear cut plans and strategies on how to repay same other than the tacit adherence to income streams from the federation account.

We abhor the current system which does not focus on how to steer the ship of state to safe harbor through judicious application of funds for the welfare and protection of all citizens. Agreed that there is nothing wrong with nations borrowing for developmental purposes as is with the case of America and China but there is everything wrong in the unproductive utilization of such funds as is found to be the case with our country.

Nigeria’s apparent uncontrollable appetite for loans is clear evidence of the lack of functional democratic structures and institutions in which the legislative arm of government has abandoned its statutory oversight functions including the responsibility of monitoring the activities of the executive with the view to guiding and, when the need arises, whip the executive into line.

But rather than align with the populace in ensuring a fair spread of the dividends of democracy among them, basic necessities of life, the legislature in flagrant connivance and sometimes with the protection of the judiciary have forged an unholy alliance with the executive in looting the commonwealth.

As a result, loans were usually sourced and hitherto shared on the basis of budget allocations with the ingenuity of budget padding at the federal and state levels.

We demand that henceforth if the government must borrow, it must ensure that such funds are tactfully and prudently applied for the purposes for which the loan was obtained. Loans must no longer be used in funding the excesses or ostentatious appetite of state actors which the current situation of high cost of governance indicates nationwide.

For as long as the presidency and state governors are not been held firmly accountable by the legislators for the utilization of the funds borrowed locally and from international donor agencies, the more that we will see many more state actors collecting loans with nothing concrete to show for it. Nigerians watch with consternation when the president and by extension, state governors transform into Father Christmas in dolling out money to all and every shade of visitors at government houses with nobody stopping to wonder if such monies used for political patronages were actually budgeted for.

We strongly recommend any system of governance or structure that would lead to the devolution of more power and resources to states to the extent that they would be empowered to own and subsequently exploit their natural resources for the good of the people but remit a percentage of their revenues to the national treasury for shared services. It is an aberration for states to be sitting on huge deposits of mineral and solid resources without making concerted efforts at harnessing them but rather perpetually go cap in hand begging for loans for which they do not have any concrete repayment plans.

Similarly, there is an urgent need for states to intensify efforts at improving their internally generated revenues for both recurrent and capital expenditures. With the ever-increasing allocation from the federation account, following the fuel subsidy removal, it follows that states which are able to increase their internally generated revenue, IGR, adopt more prudent administrative processes which frown at leakages and wastes that may not, in the long run, have any strong reasons to go borrowing to save future generations from the huge debt burden.

 

For a better society

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