The Debt Management Office (DMO) has released figures indicating that the total domestic debt of Nigerian states has increased from N4.8 trillion in March 2022 to N5.28 trillion as of June 30, 2022. Lagos, Delta, and Ogun states are the top three most indebted states in Nigeria, with Lagos having the highest domestic debt figure of N797.3 billion, followed by Delta with N378.9 billion and Ogun with N241.8 billion. However, Ogun’s debt profile has marginally reduced from N241.9 billion in March 2022.
Rivers state is fourth on the list with a debt stock of N225.5 billion as of September 2021, according to the DMO. Imo state rounds out the top five with a domestic debt of N210.4 billion, which has increased from N204.6 billion in March 2022. Akwa Ibom, Cross River, Oyo, Osun, Bayelsa, Plateau, Benue, Bauchi, Kano, Gombe, Adamawa, Ekiti, Zamfara, Edo, Kwara, Abia, Borno, Yobe, Taraba, Kogi, Sokoto, Enugu, Niger, Kaduna, FCT, Nasarawa, and Anambra are among the other states that have taken on debt.
Jigawa State has the lowest debt profile of all Nigerian states, with a total domestic debt of N45.1 billion. However, the debt profile of Jigawa has risen by over N3 billion between March and June 2022. Ebonyi has the next lowest debt profile, with N59.1 billion, followed by Kebbi with N60.4 billion, Ondo with N62.2 billion, and Katsina with N66.6 billion.
Many Nigerians are seeking explanations for the modes of borrowing these loans, the repayment plans, and the purpose for which the monies are borrowed. Domestic debt is the amount of money owed by a government or its agencies to its own citizens and organizations within the country’s borders. The increase in domestic debt by Nigerian states can have negative consequences for their creditworthiness, as well as the country’s overall economy. If states continue to take on more debt without a clear plan for repayment, they may become unable to pay their debts, which could result in a default.
The reasons for the increasing domestic debt in Nigerian states are not entirely clear, and it is possible that states are borrowing more money than they can repay. The federal government has implemented policies to address this issue, such as the Fiscal Sustainability Plan, which was launched in 2016 to help states improve their financial stability and reduce their debt burdens. However, some states have struggled to comply with the plan, and the federal government has been criticized for not doing enough to address the issue.
One possible reason for the increasing debt is the inability of states to generate sufficient revenue to cover their expenses. This can lead to a situation where they have to borrow money to meet their obligations. Another possible reason is the lack of transparency in the borrowing process, which can make it difficult for citizens to understand how their money is being used. Additionally, corruption and mismanagement of funds can also contribute to the increasing domestic debt.
To address the issue of domestic debt in Nigerian states, it is essential to improve transparency in the borrowing process. States should provide clear information about their borrowing activities, including the purpose of the loans, the repayment plans, and the interest rates. Citizens should also be given the opportunity to provide feedback and suggestions for improving the borrowing process. Additionally, states should explore alternative sources of revenue to reduce their reliance on borrowing.
Enhance research and development: Nigeria needs to invest in research and development to improve the quality of seeds, fertilizers, and other inputs used in agriculture. This will help farmers to improve yields, reduce costs, and increase profitability.
Develop infrastructure: Nigeria needs to develop infrastructure such as roads, storage facilities, and processing plants to improve the efficiency of the agricultural supply chain. This will help farmers to get their products to market more quickly and at a lower cost, which will benefit both farmers and consumers.
Provide extension services: Extension services can play a critical role in improving food production by providing farmers with access to information and training on best practices in agriculture. The government and private sector can work together to develop extension programs that provide farmers with the knowledge and skills they need to succeed.
