Nigerian Economic Viability and N3.9trn indebtedness Face by the New Governors
Written by Ibraheem Sikiru
Published on 6/4/2019 4:11:22 PM
Nigerian electorates have exercised their civic rights by voting individuals who are considered to be more preferred in actualizing the demanded dividends of democracy. Some serving governors were returned while new ones have emerged from some states. The election is gone, it is time for delivering but can these governors survive the two obstacles before them? One is blindfolded indebtedness; the other is the low Internally Generated Revenue rate.
According to the Economic Confidential
the External and Domestic Debts of the 36 states of the Federation, including the Federal Capital Territory has hit N3.853 trillion. This figure does not include the bonds raised by the states and foreign states.
Governor Gboyega of Osun State is already nurturing total debt of N183,771,983,958.14 with domestic debt of N148,101,2337,664.94 as Governor Kayode Fayemi of Ekiti State sits on the total debt of N156,246,510,162.74 with domestic debt of N118,011,414,814.34. Neither Osun nor Ekiti had up to 20% Internally Generated Revenue of what it collects as the Federal Allocation.
Among the most indebted states are Lagos State with newly sworn-in governor Babajide Sanwo-Olu, the state will either need to do wonder or burrow more to survive total indebtedness of N1,043,758,190,703.60. This debt includes external debt of N513,514,416,769.20 and domestic debt of N530,243,773,934.40. If, at all, the external debt is long-term, Lagos state newly awron-in governor Sanwo-Olu will be nurturing internal debt of N530.24 Billion. Lagos State could be considered viable to exist with the huge debt profile thus it generates revenue worth 146.61% (=N382.182 Billion) of what it received as the Federal Allocations.
However, Governor Sanwo-Olu will need more viable economic policies to build on maximizing the Internally Generated Revenue and minimize the debt profile of the state. Despite these, he must execute both infrastructural and human-capital developmental oriented projects to acknowledge the decision of the electorates to have chosen him among others.
Governor Emeka Ihedioha of Imo state will also be facing the same resource management task as Imo state is currently owing N120,208,105,454.68 as lump sum of both external and domestic debt. However, the internal debt of Imo state is standing at N98,782,494,271.48
The deepest concern with Imo state is that it does not fall within Economic Viable states. Imo state's Internally Generated Revenue is lesser than 20% of what it collects as monthly Federal Allocation.
Governor Dapo Abiodun of Ogun State will also be governing the state on total debt sum of N135,889,116,678,.90 of which the domestic debt is N98,716,941,494.10.
Governor Abiodun will need to build on the good Internally Generated Profile of the state as it currently enjoys 90.65% (=N466.736 Billion) of the Federal Monthly allocation being paid to the state.
Governor Bala Muhammed of Bauchi State will be governing Bauchi with the side battling of N140,582,243,155.41. The domestic debt incurred by the previous governors of Bauchi State stands at N92,367,170,606.61. The worst about Bauchi State is that it does not generate revenue that worth the burden of the debt.
Of the newly sworn-in governors; Seyi Makide of Oyo State will be battling total debt of N129,314,814,415.35 of which the domestic debt is N91,515,756,366.15 and the Internally Generated Revenue of the state is nothing to write home about. Also, governor Unmaru Fintiri of Adamawa State will battle total debt of N124,863,671,998.26 with domestic debt of N89,659,119,455.46.
By geopolitical zones, the debt profiles stand at
South-South: N1.037 trillion
South-West: N1.035 trillion
FCT & North-Central: N633.213 billion
South-East: N309.920 billion
North-West: N433.682 billion
North-East: N403.028 billion
Considering the Internally Generated Revenue by Geopolitical zones. we have
South-West: Generates 49.53% of the Federal Allocation being received by the states in the zone
South-South: Generates 21.4% of the Federal Allocation being received by the states in the zone.
Fact:Without Lagos, South-West contributes 30.11% of the Federal Allocation which is more than what is being contributed by the North-East and North-West combined; North-East and South-East Combined; North-West and South-East Combined; South-South and North-East combined.
South-East: Generates 16% of the Federal Allocation being received by the states in the zone.
FCT & North-Central: Generates 13.44% of the Federal Allocation being received by the states in the zone.
North-West: Generates 13% of the Federal Allocation being received by the states in the zone.
North-East: Generates 6.9% of the Federal Allocation being received by the states in the zone.
In fact, Lagos State's IGR of N382.182 billion is more than what is being generated by the North East, North West and North Central combined.
Also, Lagos and Ogun combined IGR of N466.736 billion is higher than the N447.572 billion, the Federal Allocation got by the entire states in South-East combined in 2018.
The Federal Allocation being collected by states by geopolitical zones stands at
South-South: N1.191 trillion
North-West: N865.131 billion
South-West: N774.916 billion
FCT & North-Central: N620.737 billion
North-East: N588.468 billion
South-East: N309.920 billion
With this understanding, there is no doubt that;
- Only Lagos, Ogun and FCT-Abuja, are only economically viable, Economic Confidential Annual State Viability Index could confirm better.
- FCT and 36 States only contributed about 30.95% of the Federal Allocation they received in 2018
- No geopolitical zone in Nigeria can settle its domestic debt and perform business of government with her IGR
- No geopolitical Zone in Nigeria is serious enough to perform independently of Federal Government.
- Nigerian geopolitical Zones are not economically competitive.
Hence, Nigerian State Governors and concerned individuals across the geopolitical zones must come together to setup a robust economic policy that will see the states surviving without depending on the Federal Government.
Also, Federal Government should relax policies that are restraining states from being economic viable and competitive.
Regional economic integration should rather be adopted instead or regional resource sharing.
Lawmakers at Local, State and Federal Levels should do more to prevent the Executive Officers from incurring white elephant loan and should stay, effectively, on the executive for transparency and accountability. For more suggestion and/or observation, kindly use the comment section.
Thanks. Ibraheem Sikiru Adekunle
Political Commentator, Public Affair Analyst, Computer Scientist, Data Miner, Software Developer and Admin at Facebuk Academy.