The ballooning National debt

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The 2018 introduction of the World Bank- assisted States Fiscal Transparency and Accountability Programme (SFTAS) was to nudge sub-national governments into adopting fiscal transparency and taming their appetite for indiscriminate borrowing.

Unfortunately, the programme has not worked. If anything, recent statistics from the Debt Management Office shows disturbing signs that just as the government at the centre goes on a borrowing binge, the states are also neck-deep in debt accumulation.

Available reports indicate that no fewer than 28 state governors who are either leaving office or running for re-election,as well as the Minister of the Federal Capital Territory (FCT) had, as of 30th September 2022, piled up about N5.36 trillion in sub-national domestic debts. 

That figure is expected to be much higher when domestic borrowings from local creditors and external borrowings from foreign creditors like the World Bank. 

Governance without management is an affliction that affects both the FG and states in recent times. 

Unfortunately, the template under which state governments exist as mere pay offices for redistributing oil rent proceeds from Abuja, is fast losing value. As oil prices plummet and the number of oil producer nations multiplies, there may soon be little or nothing to re- distribute.

The states must therefore become centres of productive activities. But that would require a critical review of the socio-economic system operated in the country.

According to the World Bank, states’ debts will rise above 200 % of revenue this year. How these states will survive in the face of the increasingly suffocating fiscal squeeze caused by poor revenue generation remains to be seen.

What compounds this situation is that most of these debts are being incurred for future generations and are expended on projects that bring little or no return on investment.

The Nigeria Governors’ Forum (NGF), the umbrella body for the 36 states governors, admitted recently that most states were under fiscal stress and that governmental cut-off will mean inability to meet recurring expenditures. 

Indeed, many states are not only owing a backlog of workers’ salaries and pensions, but they are also yet to implement the National Minimum Wage that was passed in 2019.

This is in spite of the inflation which has goods and services beyond the reach of the majority of Nigerians.

However, despite the misery at their doorsteps, many governors are yet to adjust to the prevailing realities as they continue to indulge in ostentatious lifestyles and investing scarce public funds on frivolities. They still funnel public funds to political activities while the burial and wedding ceremonies of family members are turned into state carnivals at huge cost.

Ironically, while the humongous debts hang precariously on the neck of these states, some of them like Abia and Delta States among others, are moving to borrow more. Whereas it is important to understand that the current challenges do not call for more borrowing, but rather creative resource management and potent revenue generation drive.

The rising national debt raises serious concerns because most of the states have very feeble revenue bases and are in no position to repay their loans.

But federal bailouts and emergency handouts will not solve the problem. Nor will mass retrenchment help in an economy where unemployment and plain poverty have reached emergency dimensions. What the situation therefore calls for is a serious re-think of the national fiscal arrangements.

The feeding bottle mentality must begin to give way to a result-oriented public finance management system, if we’re to survive the incoming economic onslaught.

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