The recent Fatshimetrie report highlights a worrying trend: a significant increase in the domestic debt of public entities in Nigeria. According to data released by the organization, there was an 11% increase in the domestic debt component of total debt, from ₦59.12 trillion in December 2023 to ₦65.65 trillion in March 2024.
This increase in domestic debt was attributed to increased borrowing to partly finance the 2024 budget deficit and the securitization of part of the ₦7.3 trillion advances from the Central Bank of Nigeria.
Looking at the numbers, it is interesting to note that Nigeria’s five most indebted states had a total of ₦1.88 trillion in domestic debt as of March this year.
Top-ranked Lagos State had a domestic debt of ₦929.41 trillion as of March 2024. This figure marked a significant decline from the ₦1.0487 trillion recorded in December 2023.
Delta State stood in second place with a domestic debt of ₦334.9 trillion in March 2024, compared to ₦373.4 trillion in December 2023.
Rivers State was in third place with a domestic debt of ₦232.58 trillion as of March 2024, the figure being similar to that of December 2023.
Ogun State was fourth with a domestic debt of ₦221.21 trillion as of March 2024, after being third on this list in December 2023 with a debt stock of ₦278.6 trillion.
Rounding out the top five most indebted states was Imo State with a domestic debt of ₦163.11 trillion as of March 2024, down from ₦217.1 trillion as of December 2023.
It is undeniable that Nigerian state governments often resort to borrowing to finance infrastructure development, civil servant salaries and other government obligations. This increased reliance of public entities on debt raises questions about long-term financial sustainability and calls for deeper reflection on economic and fiscal policies.
Ultimately, it is crucial that relevant authorities take appropriate measures to ensure responsible debt management and ensure effective use of borrowed funds for the benefit of citizens and the sustainable development of the country.