As at June 2019, the 36 states of the federation and the Federal Capital Territory (FCT) owed N3.97 trillion as domestic debt. When compared with 2015 when all the states and FCT owed local creditors N2.50 trillion, the 36 states’ domestic debt witnessed an increase of about 58 percent during the 42-month period. Another way to look at this development is that the sub-national governments and FCT borrowed an average of N34.8 billion on a monthly basis between December 2015 and June 2019.
In terms of growth, Anambra, Yobe, Katsina, Borno and Sokoto topped the debt chart in as those states have a combined debt profile of N247 billion representing 6 per cent of the domestic debts owed by the 36 states of the federation.
Among the states with the highest growth rate in domestic debt, Anambra State was indebted to the tune of N33.43 billion as at June 2019, and this represented a growth rate of 835 per cent when compared with N3.58 billion in December 2015. This value grew above the national growth rate of 58 per cent during the reference period.
Yobe State is second on the radar with a growth rate of 610 per cent, implying that its domestic debt rose from N3.88 billion in December 2015 to N27.47 billion as at the end of June 2019. Following the same trend, Katsina, Borno and Sokoto states grew their domestic debt profiles by 476 per cent; 289 per cent and 187 per cent respectively.
Taraba, Kogi, Benue, Nasarawa, Lagos, Oyo, Ondo, Imo, Abia and Adamawa states have the growth rates of their domestic debts at above the national growth rate. Put differently, the aforementioned states recorded growth in their domestic debts from 100 percent to 190 percent.
The states with double-digit growth rates include – Rivers, Kaduna Niger, Kwara, Edo, Kano, Jigawa, Bauchi and Ekiti. The growth rate of each of their domestic debts as of June 2019 ranged from 65 percent to 98 percent.
Niger State grew its domestic debt profile from N21.50 billion in December 2015 to N41.79 billion in June 2019, almost doubled the value of 2015. Kwara State doubled its domestic debt by 92 per cent when compared with the 2015 value of N31.97 billion as against N61.34 billion at the end of June 2019.
Edo State, with N84 billion and Kano, with N117.34 billion domestic debt, on the other hand, grew their debt by 81 per cent respectively. Similarly, Jigawa’s domestic debt grew by 74 per cent to a tune of N38.67 billion in June 2019 from N22.19 billion in December 2015. Bauchi and Ekiti states got the least double-digit growth rate at 69 per cent and 65 per cent respectively, yet still higher than the national growth rate of 58 per cent during the reference period.
Gombe, 49 percent, Cross River, 46 percent; Akwa Ibom, 40 percent; Zamfara, 33 percent; Bayelsa, 29 percent; Ogun, 25 percent; Ebonyi, 23 percent, and Plateau, at 2 percent, showed the order the states increased their domestic debt stock as at June 2019. The State of Osun maintained the same domestic debt stock as it was in 2015. Other states recorded growth in their domestic debt stock, albeit, below the national growth rate during the period.
On the other hand, FCT, Kebbi and Delta states witnessed a decline of 1 per cent, 7 per cent and 27 per cent respectively in their domestic debt portfolios.
The different amounts owed as domestic debt by the states carry varied implications. For instance, the national domestic debt per capita is N20, 497. That is if we add up the domestic debts of the 36 states and FCT and the sum were to be shared equally among Nigerians, each person would have been liable to pay N20, 497. However, sixteen states surpassed this threshold. Bayelsa, one of Nigeria’s oil-rich states has a domestic debt per capita to the tune of N58,535. Cross River’s domestic debt per capita is at N43,665. It is followed by Delta at N41, 241; Lagos, N38,169; and Akwa Ibom, N37,652.
On the flip side, twenty-one states have their domestic debt per capita below the national threshold. The five states at the bottom of this table are Yobe, N8,338; Niger, N7,522; Sokoto, N6,705; Jigawa, N6,636 and Anambra State, N6,048.
It is certain that the increasing domestic debt stock by state government has implications for current and future populations of each state. One of the implications is the tendency of governments to raise the level of taxes to meet up with debt servicing.
In August 2019, the 36 states of the federation paid N6.43 billion for servicing domestic debt under the Irrevocable Standing Payment Order (ISPO). Additionally, the 36 states also paid N17.9 billion for servicing debts incurred through the National water Rehabilitation Projects; National Agricultural Technology Support Programme, salary bailout, payment for fertilizers as well as for the National Fadama Project. Therefore, between January and August 2019, it means that the 36 state governments have paid N51.44 billion for servicing ISPO debts and N143.2 billion for servicing debts regarded as other obligations.
