The Debt Management Office (DMO) has just published a report that reveals the overwhelming debt loads carried by the six Southwest states in Nigeria.
By – Abayomi Odunowo.
According to a document obtained by TribuneTimes, Ogun, Oyo, Osun, Lagos, Ekiti, and Ondo states collectively owe a whopping N4.4 trillion. This staggering amount is broken down into domestic and external components, with domestic debt totaling N1.8 trillion and external debt standing at N2.6 trillion, equivalent to N1.7 billion dollars. The depreciation of the naira against the dollar has played a significant role in the escalation of the debt burden, with the exchange rate hitting N1500 per dollar in 2024, up from approximately 700-715 naira in 2023.
The external debts of these states are sourced from a variety of international lenders, highlighting the global nature of the financial entanglements. Lenders include China Exim Bank, Japan International Cooperation Agency (JICA), India, KFW Development Bank in Germany, Islamic Development Bank (IsDB) in Saudi Arabia, and Agence Française de Développement (AFD) in France. Each state has its own unique debt profile, reflecting individual financial challenges and the need for prudent economic policies.
Ogun state, for example, owes $168.8 million in external debt and N253.2 billion in domestic debt. Ondo State, on the other hand, has a lower external debt of $80.2 million but a significant domestic debt of N150 billion. Osun State’s debt profile reflects a similar pattern, with $87.2 million in external debt and N130.8 billion in domestic debt. Oyo State’s debt burden consists of $63.8 million in external debt and N159.9 billion in domestic debt, highlighting the complexities of balancing fiscal responsibilities with developmental aspirations.
Ekiti State, known for its reliance on multilateral loans, has an external debt of $121 million and a domestic debt of N110 billion, underscoring the challenges faced by smaller states in managing international borrowing. As the economic powerhouse of the region, Lagos State stands out with a staggering 1.2 billion dollars in external debt and over N1 trillion in domestic debt. With a total debt nearing N2.8 trillion, Lagos shoulders a significant portion of the Southwest’s debt burden and requires robust fiscal strategies for sustainable economic growth.
The implications of these debt revelations extend beyond financial concerns. They have socio-economic ramifications that could shape the region’s future trajectory. It is crucial for the states involved to prioritize debt management practices and develop prudent economic policies to navigate the complexities of international borrowing. Sustainable debt management will be key in ensuring long-term financial stability and fostering economic growth in the Southwest region.
The breakdown of debts by state provides a detailed look into the challenges faced by each jurisdiction and the need for strategic financial planning. As the Southwest states navigate their debt burdens, it is essential for them to work towards sustainable debt management practices to secure their economic future and promote prosperity for their citizens.
Otunba Abdulfalil Abayomi Odunowo
National Chairman AATSG
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