State governments’ debt to commercial banks has increased to N2.2 trillion as revenue issues deepen. According to the most recent figures from the Central Bank of Nigeria’s quarterly statistical bulletin, acquired by our correspondents, states and LGAs owed banks over N2.21 trillion as of March 2023.
CBN statistics also indicated that the states’ debts increased from N1.97tn to the present number, suggesting a N240bn rise throughout the review period. State government employees and pensioners’ unions slammed governors, claiming that growing borrowing by governments had only exacerbated the states’ finances.
According to the National Union of Local Government Employees and state chapters of the National Union of Pensioners, the bank’s loans did not result in enhanced infrastructure or welfare for workers and pensioners.
Bank borrowing accounted for approximately 40.33 percent of N5.48 trillion in subnational debt. According to data from the Debt Management Office, the 36 states and the Federal Capital Territory owed around N5.48 trillion as of March 31, 2023.
This is a 13.22% growth above the N4.84tn domestic debt as of March 31, 2022. As of March 31, 2023, Lagos was the largest debtor, owing around N812.38 billion. Ogun (N293.2 billion), Rivers (N255.51 billion), Akwa Ibom (N206.64 billion), and Imo (N202.55 billion) followed. As of March, Jigawa has the lowest internal debt of N43.59 billion.
Kebbi (N60.94bn), Katsina (N62.37bn), Nasarawa (N71.45bn), and Ondo (N75.51bn) came next. Meanwhile, according to the budget, around 25 Nigerian states had a decrease in domestically produced income in the first quarter of 2023.
According to the report, 25 states earned N182.26 billion in the first quarter of 2023. Based on a quarter-by-quarter examination, this was a 3.07 percent or N5.77 billion deficit from the N188.03 billion made in Q4 2022. Despite the fact that Nigeria has 36 states, Rivers and Sokoto have no data for Q1 2023; Akwa Ibom has no data for Q1 2022; and Kwara, Edo, Kaduna, Lagos, Bauchi, Zamfara, Yobe, and Ogun have no data for Q4 2022.
Therefore, the figure for IGR was limited to 25 out of the 36 states in the country. the 25 states projected an IGR of N219.56bn for Q1 2023 but only made about N182.26bn. A non-governmental civic organisation, BudgIT, in its 2022 State of States report, noted that states often rely heavily on revenue from the Federal Government. 25 states have a total domestic debt of N3.12tn in Q1 2023, an increase of N130bn in three months.
In its December 2022 edition of the Nigeria Development Update, the World Bank noted that states’ debts would rise above 200 per cent of the revenue generated in 2022 and 2023.
The report read, “Debt levels for an average state are estimated to increase from 154.6 per cent of revenues in 2021 to above 200 per cent of revenues in both 2022 and 2023.”
According to the Washington-based bank, the increase in debts will be due to low allocation from the Federation Account, which will likely weaken the fiscal condition of the states.
It warned that many states would be unable to meet up with their expenditures, adding that there was an increase in debt servicing expenditures of states.
