Kaduna, Sokoto, FRC officials parley agency

Following its successfull implementation of financial prudence principles, some states have adopted Debt Management Office (DMO)’s guidelines for debt management, New Telegraph’s findings have showed. As part of strategies to managing states’s debts, DMO initiated migration of debt guidelines and fiscal policy laws across the 36 states and the Federal Capital Territory ( FCT) with a view to entrenching prudent management of debts at that level of government. Sharing debt perspective with New Telegraph at DMO’s event recently in Abuja, an official of the agency said most states, if not all, had put in place legislations, which incorporate, amongst others, responsibilities for contracting debt, for record-ing and reporting, as well as fiscal and debt rules and/or limits for the states. Last year, the DMO schooled states on Disbursement Link Indicator (DLI) that centred on strengthening public debt management and fiscal responsibility framework. DLI requires states to have robust state-level legislations, which incorporates, amongst others, responsibilities for contracting state debt, for recording and reporting state debt, as well as fiscal and debt rules and/or limits for states.

Years ago, the agency entered into partnership with state governments and the Federal Capital Territory on a number of debt management initiatives including capacity building, debt data capturing and legislations. As a follow up on the initiave, DMO, on Tuesday, engaged members and representatives of Kaduna and Sokoto States’ Fiscal Responsibilities Commission (FRC) on prudent management of states’ resources. The study visit, New Telegraph learnt, was organised to afford the members the opportunity to gain deeper insights on the roles of the FRC in monitoring debt management practices at state levels and avenues through which they can collaborate better with the DMO towards fulfilling these roles.

The debt agency DG, Ms. Patience Oniha, confirmed the visit via her verified tweeter handle on Wednesday. “I mentioned at the meeting that @DMONigeria maintains a good working relationship with @FRCabuja and utilizes the Fiscal Responsibility Act, 2007 and the DMO Establishment (Etc.) Act, 2003 for the processing of all approvals for borrowing as part of efficient debt management,” she said.

Latest data on Nigeria’s total public debt released last week by DMO put it at N39.556 trillion as of December 31, 2021 against the previous figure of N32.915 trillion as of December 31, 2020. The figures comprise external and domestic debt of the federal and 36 state governments and the Federal Capital territory (FCT). According to DMO data, domestic debts owed by state governments and the Federal Capital Territory rose to N6.43 trillion at the end of 2021. While sub-national domestic debt stock was N4.46 trillion, the sub-national external debt stock was N1.97 trillion in 2021. Lagos, Ogun and Rivers became the three most indebted states.

The N4.46 trillion domestic debt represents 11.27 per cent of the country’s domestic debt stock of N23.70 trillion as of December 2021, up from N20.21 trillion in the previous year. Lagos, Ogun, Rivers, Akwa Ibom and Imo emerged as the top five debtors, with a combined domestic debt stock of about N1.56 trillion.

The five states account for 34.98 per cent of the total domestic debt owed by the sub-national governments in the country as of December 31, 2021. Lagos owed N658.96 billion, Ogun, N232.62 billion, Rivers N225.51 billion, Akwa Ibom N214.61 billion, and Imo N205.19 billion as of Q4’21. DMO boss, Oniha, last week, at an interactive session with the media, presented latest figures on total debt. With N39.556 trillion total debt stock, Oniha said the ratio was still within tolerable limit. “With this level, the ratio is within Nigeria’s self-imposed limit of 40 per cent, the World Bank/IMF’s recommended limit of 55 per cent for countries within Nigeria’s peer group and 70 per cent for ECOWAS countries. “Governments across the world borrow for various reasons. Rising debt levels is a global phenomenon and Nigeria is not a new trend as debt levels were growing even before COVID-19. “It was recognised that Nigeria has a double challenge of low revenue base and a huge infrastructure gap. While government has remained committed to infrastructure development with significant improvements recorded over the years, the country’s revenue to GDP Ratio has remained low at 9.0 per cent compared to comparable countries like Ghana – 12.5 per cent, Kenya – 16.6 per cent, Angola – 20.9 per cent and South Africa – 25.2 per cent,” she explained.