South-South Most Burdened By Debt, Owes N852bn Domestically At Q2

(Sundiata Post) – The South-South region has the highest foreign and domestic debt stock among all the six geopolitical zones of Nigeria, as at 30th June 2017 according to official figures from National Bureau of Statistics (NBS).

The regions cumulative foreign debt stands at US$602.3 million, while the domestic debt stands at N852 billion. Edo state, with external debt of US$214 million, has the highest dollar debt in the region, followed by Cross Rivers, with total external debts of US$168 million and Rivers, with US$ 66 million.

On the domestic side, Delta state had the highest debt in the region, with total domestic debt of N241 billion, followed by Akwa Ibom, with total debts of N155 billion and Rivers, with total debts of N142 billion. The oil rich region of the South-South, besides federal allocation, also gets the 13 per cent derivation. This means that on the average, they are relatively richer than many other states outside the region. The states have however, also complained that their geographical terrain means that average costs of projects in the region is significantly higher than in many other areas. Many analysts also believe that corruption plays a key part in the high cost of contracts dished out in the region.

The North Central region, including the Federal Capital Territory (FCT) has the second highest domestic debts in the country, with total domestic debts of N527 billion. The FCT is the most indebted in the region, with total debts of N153 billion.

States in the North Central region also have a combined external debt of US$264 million, which is the least among all the regions.

The South West states, without Lagos, have the third highest combined domestic debts in the country, with total domestic debts of N477 billion. However, when Lagos debts are added, the total domestic debts in the region rises to N789 billion, making it the second highest after the South-South.

The South West region, except Lagos, also has a combined external debt of US$402 million, the third highest in the country, but if Lagos state’s external debt position of US$1.4 billion is added to that of the region, total debt rises to US$1.85 billion, the highest in the country.

The size of the Lagos State economy, estimated at about US$136 billion, dwarfs all the other states in the region, while its strong revenue generation capacity gives it greater room to accumulate debts.

The Northwest had the fourth highest domestic debts in the country, with total cumulative debts of N341 billion. Kano has the highest domestic debt in the region of N94 billion, followed closely by Kaduna, with total debt of N63 billion.

However, the Northwest has the second highest foreign debts in the country, with a cumulative external debt position of US$563 million. Kaduna State, with external debts of US$232 million, however accounts for about 41 per cent of the debts in the region.

Katsina has the second highest external debt of approximately US$68 million, followed closely by Kano, with total external debt of US$66 million. All other states in the region have external debts of less than US$50 million each.

The troubled North East part of the country has total domestic debts of N264 billion, which is just higher than the least borrowed region in the country, the South East, with total domestic debts of N227 billion.

But the South East external debt position of US$427 million is the third highest in the country, while the North East has the least external debts of US$273 million with almost half of it owed by Bauchi, which has total external debts of US$109 million, the highest in the region.

Many Nigerian states have recently struggled to pay staff salaries and other allowances due to their high debt profiles.

NBA data shows that the total domestic debt of the 36 States and the FCT stood at N3 trillion as at June, while external debts stood at US$3.94 billion, with Lagos alone accounting for about 37 per cent of the external debts of states and FCT.

The International Monetary Fund (IMF) had earlier this year, warned Nigeria and Angola that increasing debt service burden is worsening their economies, thereby stifling growth.

The IMF further explained that tighter financing conditions and increased debt financing in countries like Nigeria, with low debt level, have started to worsen debt service burdens, with an upward trend in both the debt-service-to-revenue ratio and the external debt-service-to-exports ratio.

From January to March, the Debt Management Office announced the country spent N474.06bn in servicing only domestic debts and that figure is looking certain to increase in the coming months. (BusinessDay)

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