James Emejo

he concerns over the country’s rising debt stock came to the fore once more, following the recent disclosure by Director-General of the Debt Management Office (DMO), Ms. Patience Oniha, that total public debt stood at N24.387 trillion ($79.437 billion), indicating a growth of 12.25 per cent or N2.66 trillion year-on-year as at December 31, 2018, compared to N21.7 trillion posted over the same period in 2017.

A breakdown showed that external debt stood at N7.759.23 trillion ($22 billion) while the domestic component was valued at N16.627.84 trillion ($56 billion).

According to the DMO, the debt figure comprised those owed by federal and state governments as well as the Federal Capital Territory Administration.

However, Oniha noted that the share of domestic debt dropped to 68.18 per cent from 73.36 per cent as at December 31, 2017, thereby achieving a mix of 68.18 per cent and 31.82 per cent in the debt stock.

Notably, the DMO public debt update was succeeded by a similar report released by the National Bureau of Statistics which also put the country’s total domestic debt stood at N16.63 trillion while the foreign component was valued at $25.27 billion as at 31 December, 2018, according to the National Bureau of Statistics (NBS).

It is however, unclear, why there was variation in the external debt figures released for same period by both agencies.

While the NBS put the external debt stock at $25.27 billion, the DMO had estimated the figure to be about $22 billion.

Nevertheless, a further breakdown of the foreign debt profile showed that $11.01 billion represented the multilateral portion including $344.63 million as bilateral (AFD) and another $2.75 billion bilateral from the Exim Bank of China, JICA, India and KFW.

The sum of $11.17 billion was commercial, basically Eurobonds and Diaspora Bonds.

Instructively, Lagos State had the highest foreign debt profile among the 36 states and the FCT, accounting for 5.64 per cent while Edo (1.09 per cent ), Kaduna (.0.90 per ) and Cross River (0.75 per cent ) followed closely.

In the same vein, out of the total domestic debt stock of N16.63 trillion, Lagos accounted for 3.19 per cent of the total domestic debt while Yobe had the least debt stock in the category with a contribution of 0.17 per cent to the total domestic debt stock.

But, there had been concerns by economic analysts as well as the opposition political party that the rising debt profile was unjustifiable and unproductive to the economy, particularly as infrastructural challenges largely remained unsubdued.

There are further worries that the rising debts have not translated into meaningful development and better living conditions as a larger portion is mismanaged.

The government has continued to defend the borrowings, insisting that it remains sustainable and still within the global threshold.

However, there is no gainsaying the fact that the heavy debt repayment obligations have begun to exert pressure on state government finances as most of them currently struggle to meet their contractual obligations to contractors and workers.

The states’ deplorable fiscal conditions had in the recent times, necessitated the intervention of the federal government which provided some sort of reprieve by way of the now famous “bailout”, which includes helping them to access their share of the Paris Club refund recently.

Severally, the states have been challenged to devise other innovative means of generating alternative revenues, beside the monthly allocation from FAAC, which in itself had arguably rendered state governments lazy and incompetent, as local resources remain largely untapped.

This, perhaps, explains why the diversification agenda of the present administration, particularly in the area of agriculture remains a far cry given that not so much has happened to the sector as the various tiers of government still rely on oil proceeds amid mounting debts.

There are several illegal mining activities going on in some states, which if tackled and formalised could boost revenue receipts.

The State Disaggregated Mining and Quarrying Data - 2018, released recently by the NBS showed that limestone is the most produced solid minerals in 2018 with 27,195,278.76 tonnes of minerals representing about 49 per cent of the total tonnes of minerals produced.

Granite and Laterite followed closely with 9,627,160.29 and 5,076,092.07 tonnes produced representing 17 per cent and 9 per cent of the total tonnes of minerals produced in 2018.

However, Garnet and Ruby are the least produced solid minerals in 2018.

The report reflected serious mining activities in a few states as the country produced 55,850,075.43 tonnes of solid minerals. Ogun State produced the highest tonnes of solid minerals among the 36 States and the FCT. The state produced 16,497,405.35 tonnes of solid minerals representing 30 per cent of the total tonnes of

solid minerals produced in the year under review.

Kogi and Cross River States followed closely with 15,134,541.35 and 3,493,458.00 tonnes of solid minerals produced, representing about 27 per cent and 6 per cent of the total tonnes of the minerals produced while Bayelsa and Borno States produced the least tonnes of solid minerals with zero and 8,403.30 tonnes of minerals produced respectively.

Even though almost every state had evidence of one mineral resource or the other, most of the natural endowments are largely under-utilised.

Also, of concern is the fact that the Internally Generated Revenue at State Level (Q3 2018) report released by the NBS, indicated 20 states recorded decline quarter on quarter at the end of Q3, while 17 states recorded growth in IGR.

The figure indicated a negative growth of 5.08 per cent quarter on quarter.

Also, a recent report by the NBS on the Federation Account Allocation Committee (FAAC) February 2019 Disbursement already indicated that external and domestic debt repayment obligations were affecting their monthly net receipts.

For instance, Bayelsa State, which had gross statutory allocation of N10.78 billion had deductions for external debt valued at N34.37 million, contractual obligation of N421.54 million and other deductions valued at N1.09 billion.

Also, Benue State had gross statutory allocation of N3.49 billion with N26.89 million in external debt, N103.85 million in contractual obligations as well as N423.54 in other deductions.

Others are Cross River with gross allocation of N3.13 billion, external debt of N229.32 million, N633.13 million in contractual obligations and N714.42 million in other deductions.

Ekiti had total gross revenue of N2.78 billion, which was subject to N53.51 million deductions for external debt, a contractual obligation of N102.45 million and other deductions, totalling N456.64 million. Several other states are in similar dilemma. The ensuing scenario could only be addressed, if state governments heed the advice from all quarters to be creative in alternative resources mobilisation and be less dependent on monthly allocations from FAAC.