The recent report of the Lagos State government’s fiscal status has startled not a few Lagosians and concerned Nigerians. The state has in excess of about N420billion debt profile. It is interesting that the state government has downplayed this issue. It would be recalled that the Fiscal Responsibility Commission, FRC, had disclosed that unless some drastic measures were taken to forestall continued reckless spending by most of the states in the federation, efforts by the Federal Government to instill financial discipline in administering Nigeria would yield no positive impact. The Commission revealed that as at the end of 2011, more than nine states of the federation over-borrowed their limits, suggesting that their financial health is in dire straits. The states listed are Lagos, Ekiti, Kaduna, Cross Rivers, Ondo, Edo, Bayelsa, Ebonyi and Kwara.
According to the report, for Lagos State, the debt to revenue ratio stood at 155.4 per cent, with the annual statutory revenue standing at N125.48bn and a debt profile of N193.44bn. On a revenue profile of N44.97bn and a debt profile of N35.98bn, Ekiti State’s ratio stood at 80 per cent. Kaduna had a revenue profile of N63.94bn, debt profile of N40.08bn and debt to revenue ratio of 62.68 per cent. For Cross River State, the ratio stood at 61.44 per cent on revenue of N56.92bn and a debt of N34.97bn. The ratios for Edo, Ondo, Bayelsa, Ebonyi and Kwara States stood at 56.03 per cent, 55.12 per cent, 54.5 per cent, 51.85 per cent, and 51.75 per cent, respectively.
Four other states whose debt to revenue ratio exceeded the states’ average of 36.36 per cent are Imo, 49.4 per cent; Ogun, 45.45 per cent; Bauchi, 41.97 per cent; and Osun, 36.52 per cent while the least indebted states by the debt to revenue ratio include Rivers, 2.02 per cent; Borno, 3.28 per cent; Akwa Ibom, 3.88 per cent; Taraba, 6.79 per cent; Plateau, 8.02 per cent; and Adamawa, 8.72 per cent.
More worrisome is the report of external debt status of some of the states. Lagos, Kaduna, Cross River, Ogun and Oyo top the list of external debts incurred by state governments as of June 30, 2012.
According to the list, Lagos topped the list of external debtors with $517,677,672 as of June 30, 2012. Next to Lagos is Kaduna with $197,155.525 foreign debt. Cross River comes next with $109,351,503 external debt. Following Cross River is Ogun State as the fourth most indebted state with $96,285.547 as of June 30, 2012. Oyo is the fifth most indebted state as far as external debt is concerned with $78,878,401 being owed as of June 30, 2012. The Fiscal Responsibility Commission revealed that it drew its data from the DMO, banks, Securities and Exchange Commission and the Office of the Accountant-General of the Federation. According to the commission standard borrowing limit set for states is put at 50 per cent to ratio of revenue. Although after the reports of some states’ indebtedness were made public, there were refutations of the allegations by some of them.
Considering the dire socio-economic consequences of this development, we align with the calls for deep and introspective reflection by all concerned Nigerians, particularly the affected states. To posit that this situation is worrisome is to put it mildly looking at the level of infrastructural decay, unemployment and tardy pace of socio-economic development in some of these heavily indebted states.
The affected state governments cannot be vilified for borrowing, especially if such borrowed funds were for the development of the states and their people. What we disapprove is the seeming general situation in most of the states where recurrent expenditures are indiscriminately over-bloated for political reasons as against economic expediency, tidy fiscal management and budget discipline.
Our other fear is not far-fetched. When states go into high indebtedness without sincere appraisal of their Internally Generated Revenue (IGR) and federal quota vis-avis a programme for timely repayment of loans, their future and that of their people is mortgaged. This trend of borrowing and indebtedness has been the bane of genuine development in Nigeria since the end of the civil war in 1970. This should be stopped.
We urge governments at all levels and other stakeholders to use necessary legal framework to tame this flagrant abuse of credit window from further abuse.
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  • Udom

    The Chinese adage states: give a man a fish and you feed him for a day; teach him to fish and you’ve fed him for life.
    The ancient Chinese were indeed wise. This wisdom seems to have trickled down to Mao Zedong and Chou en-Lai. They laid the foundation in the 50s for the Asian powerhouse. In China today, even culinary specialities are found in certain regions just like we have key manufacturing centers placed in certain provinces. These architects of modern China were able to transform a rudimentary agricultural nation into a hotbed of modernized industries which enabled skyscrapers to rise like Phoenix, in places like Shanghai and Guangdong. As a testament to its place in world economy, the west catches a cold when China sneezes.

    It is important for all to understand one fundamental reason for such a sustained growth. It is the legacy of continued policy from Mao to Deng Xioping, Hu Jintao to the present leader, Xi Junping. There has been a singular purpose–the growth of China into an economic and military power. Every successive leadership has adhered to that policy with consistency. It is no wonder the Silk Road, expanded by the Han dynasty (207 BCE – 220 CE) with the help of its imperial envoy, Zhang Qian, became an important vehicle for economic growth. It was so vital to the Chinese, that special interest in the security of their trade products propelled them to expand the Great Wall to include and protect the Silk Road trade routes.

    Fast forward to the present day, to a location at least a 1,000 miles away from the Great Wall. Fiery Cross Reef in South China sea. Why did China stake a claim back in the 1980s to this section of the sea? You guessed it! Rich fishing grounds (possible oil reserves) and securing its access to the Pacific ocean. The Silk Road scenario playing itself out again. Chinese leaders are never forgetful of history.

    One might be tempted to ask why this writer has focused on China in response to a Nigerian news item regarding the state of our states, economically-speaking. There is no doubt they are in a sorry mess collectively. It is doubly sad that economic disaster is primarily self-inflicted. One can list numerous reasons and site specific examples ad infinitum.
    Two great books that most Nigerians are familiar with and are supposed to guide us in our daily activities, have passages specifically dealing with good governance. The parable of the faithful servant says: To whomever much is given, of him will much be required; and to whom much was entrusted, of him more will be asked — Luke 12:35-48, World English Bible. 2:188 Quaran says: And eat up not one another’s property unjustly (in any illegal way e.g. stealing, robbing, deceiving, etc.), nor give bribery …
    Sadly, the stewardship of our states have been in the hands of leaders who felt that the people’s wealth is theirs to do as they pleased. Every single Nigerian state is endowed with resources to sustain its economy and ensure the livelihood of its citizens. Cocoa is a crop that provided income to the old western region. Groundnuts, kola nuts, hides and skins were economic mainstays in the nirth. Palm oil sustained the east. Lagos had the port and its vibrant manufacturing and trading industries to keep its economy humming. What happened? Our old Silk Roads became overgrown with weeds and sand. Petroleum happened. It fueled laziness, introduced greed with hunger for power with a corresponding diminished ability to think outside the box. Unlike Singapore, we failed to adjust our educational system to align with the changing world economy. Through an inept leadership, Bakasi was ceded to Cameroon while China was busy building islands, runways and beefing up its military presents in South China Sea.

    Rather than prepare students in the field of sciences and agriculture, our leaders were busy stuffing foreign accounts with stolen petrodollars. A poor Nigerian state governor decided to play Santa Claus (Father Christmas) by buying expensive SUVs and giving them as gifts to the state legislators. This is a state where workers have not been paid for months and same governor has asked the federal government for help to pay his workers. What display of irresponsibility and economic madness.

    No sizeable investments were done to shore up our cash crops. A nation like Brazil, on the other hand, saw the need to invest early in ethanol for fuel. It saw the need to use cassava and corn as cash crops. It was able to turn vast arid lands into oasis to grow grass for its beef industry while we encroach on vital agricultural land to keep cattle. This is a case of short-sightedness and the inability to think constructively. It borders on insanity.
    Interesting anecdote here. I grew up eating canned corned beef as most of you. Brazil has edged Argentina as the largest producer of this particular product. Surprisingly and it came as a shock to make this discovery. Most Brazilians don’t know and have never seen a corned beef can in their lives, despite being one of the major forex sources for the South American nation. Food for thought. Digest that my fellow country men and women.