Stakeholders have called for more discipline to curb excessive borrowing at all levels of government, especially in the face of the mounting national debt now in the excess of N87.4billion.
Statistics from the Debt Management Office (DMO) revealed that Nigeria’s total public debt stock as of June 30, 2023 amounted to N87.4 trillion.
This comprises external debt of about N33.3 trillion (or $43.2 billion) and domestic debt of about N54.1 trillion (or $70.3 billion). Meanwhile, domestic debt data for 36 states and the FCT stood at N5,815,684,819,242.35, as of June 30, 2023.
Experts at a stakeholder dialogue on Implementing Section 45 of the Fiscal Responsibility Act (FRA) 2007, in Lagos, revealed that reports have showed that some states borrow, not for development projects, but to pay salaries, adding that this can impede the growth of capital market and threaten financial stability which may create pressure on the federal government to provide financial assistance to ensure a continuing provision of public services.
The secretary to the government of the federation (SGF), George Akume, averred that the dialogue is not against borrowing, but borrowing in the right way and for the right reasons – for the good of the people of Nigerians.
He urged government officials at all levels to follow the due process when it came to borrowing.
Akume, who was represented by an official of the office of the SGF, Dr. David Eze, however, gave assurance on implementing the recommendations from stakeholders at the forum, while applauding Fiscal Responsibility Commission (FRC) for carrying out its functions under the FRA 2007, which, among other achievements, has helped to hugely improve the federal government independent revenue by mopping up surpluses in government-owned enterprises.
Section 44 (1) of the Act stipulates that any government in the federation or its agencies and corporations desirous of borrowing shall specify the purpose for which the borrowing is intended and present a cost-benefit analysis, detailing the economic and social benefits of the purpose to which the intended borrowing is to be applied.
The deputy speaker, House of Representatives, Benjamin Kalu, who was represented by the chairman of the House of Representatives Committee on Aids, Loans and Debt Management, Abubakar Hassan Nalaraba, said the stakeholders’ meeting is crucial considering the rate at which state governments are borrowing, just as he stressed the need for them to desist from borrowing for consumption, which, he says, is worsening the country’s inflation.
“We encourage states to stop depending on federal government and focus on what they can do to boost their internally generated revenue,” he added.
In his remark, Hon Nalaraba averred that billions of dollars come into Nigeria in the form of aids and grants, but that the country has no record of these funds.
“Those grants don’t come into Nigeria without processes and commercial banks are part of the processes. So it is important and imperative for commercial banks to work with the government to make disclosure on how those grants are coming in, for accountability,” he said.
The executive chairman, FRC, Victor Muruako, revealed that in the past two years, the Commission had reviewed some loans contracted at different times by 11 state governments and public institutions across six geopolitical zones of Nigeria, from five local banks,
“We note, with a sense of alarm, that none of these loans passed FRC’s basic test of compliance! This 100 per cent failure rate is enough to warrant a discussion of this nature,” he said.
According to him, failure to mind provisions of the FRA, could lead to grave consequences for both the banks and the Nigerian economy, Muruako averred.
On his part, the director general, Nigeria Governors’ Forum (NGF), Asishana Bayo Okauru, disclosed that over 25 states had passed the Fiscal Responsibility Law (FRL) while 30 states had passed Debt Management Laws, domesticating core principles of the FRA regarding fiscal planning and management.
Okauru, who was represented by the senior programme manager, NGF, Olanrewaju Ajogbasile, however, assured that the Secretariat would continue to advocate the tenets and provisions of the Act, through engagements, initiatives and discourse around fiscal transparency, accountability, and sustainability.