NEITI worried about states’ debt profiles
Lagos, Delta have highest exposures
Nigeria Extractive Industries Transparency Initiative (NEITI) has expressed concerns over the rising debt profile of state governments in the country.
Nigeria had secured over $18billion legacy debts cancellation from the Breton-wood institutions – World Bank and the International Monetary Fund (IMF) during the past administrations, but many states are plunging the country back into the debts, which are being guaranteed by the Federal Government.
Even worse is the fact that some of them do not utilise the funds for the purpose for which they were acquired, with many indebted to their employees for over six months in salary arrears, pensioners are not paid, and no development of new infrastructure or rehabilitation of existing ones.
NEITI in its Quarterly Review of the Federal Accounts Allocation Committee, FAAC Allocations released last week, listed Lagos State with the highest debt of N603.25 billion against its revenue of N410.5billion for 2016.
This is followed by Delta State with N331.95 billion debt against N142.77billion of its revenue. Osun and Akwa Ibom states came third and fourth with N165.91 billion and N161.23 billion respectively.
But Yobe and Anambra states stood out as those with the least debts. While Yobe owed N11.74 billion, Anambra owes N20.60 billion. With these rising debts, the states may continue to have the challenge of providing basic amenities as well as paying staff salaries and pensions.
In particular, NEITI felt that Osun, Cross River and Delta states were of major concern, given the fact that their total borrowings were more than double the total revenues accruing to the states.
The Review noted that “Considering that most states already have a high debt burden, the possibility of even higher debts for the states remain quite high.” A breakdown of the allocations put Akwa Ibom State with the highest allocation of N116.6 billion from the Federation Account in 2016.
This was followed by Lagos and Rivers states with N109.3 billion and 103.98 billion respectively, while Kwara and Ebonyi states received the least allocations of N30.08 billion and 30.09 billion respectively when compared with receipts by the 36 states of the Federation.
On allocations to local governments, Lagos State also topped the table with a total of N69.29 billion paid its 20 local governments while the 44 local governments in Kano State received a total of N56.16 billion in 2016.
The NEITI FAAC Quarterly Review highlighted that payments to the three tiers of government have continued to decline by an average of 40 per cent between 2013 and 2016.
Comparing the 2015 and 2016 figures, NEITI said the revenues disbursed by FAAC to the three tiers of government fell by 15 per cent from N6.011 trillion in 2015 to N5.121 trillion in 2016.
Other striking features of the NEITI FAAC Review were in the areas of internally generated revenue (IGR), the rising debt profiles and Nigerians concern for states to reduce their dependence on federal allocations through creative means of developing capacity to shore up their IGRs.
“IGR is very low in most states and it is only in two states of Lagos and Ogun that the IGR is higher than FAAC allocations. Figures show that total revenue by itself cannot fund states budget,” the report said.
The NEITI Review added that the revenues of all the states government fell drastically short of their budgetary projections. Speaking on the implication of the rising debt profile of the states, the Head, Programmes and Membership, Institute of Directors’ Centre for Corporate Governance, Nerus Ekezie, accused the governments of lack of professionalism in the management of the economic resources available to them.
He said there is need for states to begin to develop natural resources at their disposal to avoid over-reliance on Federal allocations.
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