Headline

22 States Spent N251bn On Debt Servicing In Nine Months – Report

Published

3 weeks ago

June 9, 2024

Twenty-two states have spent a total sum of N251.79bn to service debt borrowed by past administrations within nine months of assuming office, according to The PUNCH.

It was also gathered that the states obtained fresh loans of N310.99bn between July 2023 and March 2024, despite increased monetary allocations from the Federation account.

The information was obtained from the budget implementation reports of each state sourced from the Open Nigerian States, a budgIT-backed website that serves as a repository of government budget data. BudgIT is a Nigerian civic organisation promoting transparency.

The performance report is prepared quarterly and issued within four weeks from the end of each quarter. It includes the original approved budget and revised/final budget appropriation for the year 2023 against each organisational unit for each of the core economic classifications of expenditures (personnel, overheads, capital, and others). It also includes the actual expenditures for the quarter Q3, attributed to each organisational unit, as well as the cumulative expenditures for the year to date, and balances against each of the revenue and expenditure appropriations.

An analysis by The PUNCH showed that the states include Abia, Akwa Ibom, Anambra, Benue, Cross River, Delta, Ebonyi, Ekiti, Jigawa, Kaduna, Kano, Katsina, Kebbi, Kogi, Niger, Ondo, Osun, Plateau, Rivers, Sokoto, Taraba and Zamfara.

Further analysis of the report indicated that the states faced an uphill task of stimulating the economies of their respective states after they inherited at least N2.1tn in domestic debts and $1.9bn in external debts from their predecessors.

Investigations also showed that the states were confronted with many months of unpaid workers’ salaries and mounting pension liabilities amidst agitation for the implementation of the nationally agreed minimum wage, rising inflation, escalating prices of goods and services, and dwindling purchasing power.

In Abia State, Dr Alex Otti, who emerged as the only governor on the platform of the Labour Party inherited a total domestic debt of N104,573,334,025.73, and an external debt of $95,632,239.04.

While Benue State Governor, Hyacinth Alia, got N143,368,150,982.89 in domestic debt, and $30,472,977.14 obligations to foreign creditors.

The Governor of Cross River State, Bassey Otu, carried the burden of N175,198,799,155.96 and $215,754,975.33 in domestic and foreign debts.

Also, Akwa Ibom State Governor, Umo Eno, met a domestic debt of N219,617,660,991.63 and $46,569,647.22 in external debt among others.

Recall that following the removal of fuel subsidy and the unification of the foreign exchange markets, there was a notable increase in states’ earnings from the Federation Account Allocation Committee, reaching a total of N3.34tn in the post-fuel subsidy era.

With the improved earnings, states had the freedom to settle outstanding loans acquired by the previous administration, particularly during the third and fourth quarters of 2023. This financial enhancement provided the states with the opportunity to address fiscal obligations, and alleviate financial burdens inherited from previous administrations.

Experts have, however, attributed the significant increase in debt servicing cost partly to the devaluation of the naira, which drove up the cost of servicing foreign debt obligations as the CBN grappled with the forex liquidity crisis and exchange rate volatility.

A breakdown of the implementation report showed that the states spent N75.47bn to service domestic and external loans in the third quarter of 2023. This increased by 5.12 per cent or 3.87bn to N79.34bn in the fourth quarter, and N96.99bn in the first quarter of 2024 (January – March).

According to the report, Abia state disbursed N2.62bn to service inherited debts, while Akwa-Ibom spent N21.96bn in nine months on debt servicing. Anambra spent N5.12bn, Cross River spent N13.82bn, and Delta State spent N30.31bn to service loans obtained by former Governor Ifeanyi Okowa.

Ebonyi State under the leadership of Francis Nwifuru has spent N7.50bn on servicing loans obtained by past administrations, while the Ekiti State Governor, Biodun Oyebanji, approved a sum of N9.88bn for repaying debts.

Other states including Jigawa spent N4.34bn, Kebbi (N1.98bn), Kogi (7.29bn), Niger (N3.66bn), Ondo (N11.35bn), Osun (N14.76bn), Plateau (N51.39bn), Rivers (N4.12bn), Sokoto (N4.04bn), Taraba (N9.49bn), Zamfara (N3.1bn) and Kaduna (N16.04bn).

Despite this heavy debt servicing burden, the report indicated that the state governments had continued to obtain more loans to take care of different expenditures.

Further analysis showed that the states obtained credit facilities totalling N310.99bn within the review period, despite heavy financial allocations from the federal government.

The report revealed that states, in 2023, got the highest Federal Account Allocation Committee allocations in at least seven years with N627.73bn obtained in September, followed by N610.5bn in December, N555.75bn in August, N533bn in November, N514bn in July, and N497.97bn in October.

Findings also revealed that the majority of these loans were sourced from international creditors, contrary to the Federal Government’s emphasis on borrowing from the domestic market.

The PUNCH had earlier reported that 13 new state governors collectively borrowed N226.8bn from domestic and external financiers in the first six months after taking office.

Further analysis showed that Katsina State was among the states that got the highest loan of N20.14bn between January and March. It was followed by Ondo State with N18.33bn loans. Third on the list is Niger State with loans worth N16.19bn.

Kogi State also obtained loans worth N11.33bn from creditors within the quarter.

Other states including Zamfara got N6.23bn, Ekiti (N5.65bn), Abia (N3.37bn), Kaduna (N2.27bn), Ebonyi (N173.36m), Osun (N174.24m), Plateau (N322.12m) and Taraba (N6.23bn).

In April, The PUNCH reported that most of the FAAC funds for Osun, Ondo, Kaduna, and Cross River states will be used in servicing debts this year.

This is because these states currently have a deficit of N10.94bn, N27.72bn, N15.83bn, and N10.02bn respectively, following debt servicing deductions by FAAC.

The states, as indicated in their 2024 budget may have to rely on Internally Generated Revenue or borrow from domestic/external sources to finance payment or possibly seek alternative solutions to settle their civic obligations to their workers throughout this year.

A further breakdown of the data revealed that Lagos, Akwa-Ibom, Delta, Ogun, Zamfara, Plateau, and Sokoto will be the highest debt-paying sub-nationals.

Commenting on the issue, economist, Paul Alaje, said debt servicing and loans were burdens that could limit economic development at the sub-national level.

Paul, speaking in an earlier interview, stated that the huge debts left by past administrations was inimical to growth, and added that loans collected by state governments and the projects the governors spent the money on should be properly investigated.

He said, “Debts are like a burden, especially when the money collected is not spent on capital expenditure or projects that can create revenue for the government in the future. In Osun State, for instance, Gboyega Oyetola’s administration took over a huge debt profile from his predecessor, Rauf Aregbesola, and when Aregbesola left, Oyetola started struggling not to borrow more money. Few new governors can borrow more, because lenders will also consider their ability to pay.”

Efforts made to get the reaction of the Director General of the Nigeria Governors’ Forum, Abdulateef Shittu, were unsuccessful. He declined to comment when The PUNCH reached him on the issue, stating that the situation could only be well analysed by the Debt Management Office.

Debt repayment part of governance – Sokoto govt

Efforts to get the reaction of the Sokoto State Commissioner for Information and Orientation, Sambo Danchadi, were not successful, as his number was not available at the time of filing this report.

However, a top government official in the state who spoke on condition of anonymity said debt servicing was part of the government’s work, adding that it was difficult to ascertain if all the debts were from the immediate past administration.

He said, “Some of these debts we are talking about were owed during the days of the old Sokoto State, comprising of Sokoto, Kebbi, and Zamfara.

“The unfortunate thing is that the immediate past government did not hand over any document whatsoever to the incumbent administration to ascertain many things,” he added.

Debt servicing not affecting Ondo

However, the Ondo State Governor, Lucky Aiyedatiwa, admitted that the state government had been servicing debt incurred by the past administrations in the state without problem.

The governor, who spoke through his Chief Press Secretary, Ebenezer Adeniyan, said his administration had not borrowed any money since it came on board.

However, the governor noted that the debt had not made any negative impact on the state’s economy, saying the government was running smoothly.

He said, “Servicing debt is a responsibility of the government, and this administration is not defaulting on repaying those debts.

“However, the Aiyedatiwa administration has not incurred any debt since it assumed office. Also, debt servicing did not have much impact on the state’s economy. The repayment was captured in the budget. So, it was prepared for.”
PUNCH

Headline

Account For Missing N100bn Dirty Notes, Others, SERAP Drags CBN Gov

Published

4 hours ago

June 30, 2024

Editor

The Socio-Economic Rights and Accountability Project has urged the Governor of the Central Bank of Nigeria, Mr Olayemi Cardoso, “to account for and explain the whereabouts of the over N100 billion ‘dirty and bad notes’ and ‘other large sum of cash awaiting examination’ which are kept in various branches of the CBN.”

In a letter dated June 29, 2024, and signed by its Deputy Director, Kolawole Oluwadare, SERAP said the allegations are documented in the latest annual report recently published by the Auditor-General of the Federation.

The organisation said these allegations by the Auditor-General suggest grave violations of public trust, the provisions of the Nigerian Constitution, the CBN Act, and national and international anti-corruption obligations.

SERAP also asked Cardoso to “explain the whereabouts of the N7.2 billion budgeted for the construction of the CBN Dutse branch in 2010 and the N4.8 billion budgeted for the renovation of the CBN Abeokuta branch in 2009, and to publish the names of the contractors who collected the money but failed to complete the projects.”

SERAP urged the CBN boss “to explain the whereabouts of the allegedly missing outstanding loan of N1.2 billion granted to the Enugu State Government in 2015 and the outstanding loan of N1.9 billion granted to the Anambra State Government between 2015 and 2016 and to fully recover and remit the public funds to the treasury.”

It also asked him “to refer these grave violations of the Nigerian Constitution 1999 (as amended), the CBN Act and the country’s national and international anti-corruption obligations to appropriate anti-corruption agencies for investigation and prosecution, as appropriate, and the recovery of the public funds.”

The letter read in part, “We would be grateful if the recommended measures are taken within seven days of the receipt and/or publication of this letter. If we have not heard from you by then, SERAP shall take all appropriate legal actions to compel you and the CBN to comply with our request in the public interest.

“Explaining the whereabouts of the missing public funds, publishing the names of those suspected to be responsible and ensuring that they are brought to justice and the full recovery of any missing public funds would serve the public interest and end the impunity of perpetrators.

“According to the recently published 2020 audited report by the Auditor General of the Federation (AGF), the Central Bank of Nigeria (CBN) has since 2017 been keeping over N100 billion ‘dirty and bad notes’, and other large sums of cash awaiting examination in various branches of the CBN.

“The Auditor-General fears that the ‘dirty and bad notes’ initially planned to be destroyed may have been ‘diverted and re-injected into the economy.’

“The CBN in August 2010 also reportedly budgeted N7.2 billion [N7,286,500,476.76] for the construction of the Dutse branch building. The Dutse branch was due to be completed in November 2012 but the contractors have failed to complete the project.

“The Auditor-General is concerned that the project may have been ‘awarded to an incompetent contractor,’ and wants the ‘job completed without further delay.’

“The CBN in 2009 reportedly budgeted N4.8 billion [N4,812,608,028.10] for the renovation of the CBN Abeokuta branch. The Abeokuta branch was due to be completed in 2012 but the contractors have failed to complete the project.

“There is no significant renovation work on the site, several years after the proposed completion date. The Auditor-General is concerned that the project may have been ‘awarded to an incompetent contractor,’ and wants the ‘job completed without further delay.’”

SERAP said these violations also reflect a “failure of CBN accountability more generally and are directly linked to the institution’s persistent failure to comply with its Act and to uphold the principles of transparency and accountability.”

It added, “The CBN also reportedly failed to account for the missing outstanding loan of N1.2 billion granted to the Enugu State Government in 2015 and the outstanding loan of N1.9 billion granted to the Anambra State Government between 2015 and 2016. The Auditor-General fears the public funds may have been diverted. He wants the money fully recovered and remitted to the treasury.

“Paragraph 708 of the Financial Regulations 2009 provides that, ‘on no account should payment be made for services not yet performed or for goods not yet supplied.’

“Section 35(2) of the Public Procurement Act 2007 provides that, ‘once a mobilization fee has been paid to any supplier or contractor, no further payment shall be made to the supplier or contractor without an interim performance certificate.

“Section 16(6) of the Public Procurement Act states that ‘all bidders shall possess the necessary professional and technical qualifications to carry out particular procurements; the financial capacity and adequate personnel to perform the obligations of the procurement contracts.’”

SERAP asserted that these alleged violations have seriously undermined the ability of the CBN to effectively discharge its statutory functions and the public trust and confidence in the bank.

According to the organisation, the apex bank ought to be committed to transparency and accountability in its operations.

It added, “SERAP notes that Section 15(5) of the Nigerian Constitution requires public institutions to abolish all corrupt practices and abuse of power.” Section 13 of the Constitution imposes a clear responsibility on the CBN to conform to, observe and apply the provisions of Chapter 2 of the Constitution.

“Paragraph 3112(ii) of the Financial Regulations 2009 provides that, “Where a public officer fails to account for government revenue, such officer shall be surcharged for the full amount involved and such officer shall be handed over to either the Economic and Financial Crimes Commission (EFCC) or the Independent Corrupt Practices and Other Related Offences Commission (ICPC).

“Nigeria has made legally binding commitments under the UN Convention against Corruption to ensure accountability in the management of public resources. Articles 5 and 9 of the UN Convention against Corruption also impose legal obligations on the CBN to ensure proper management of public affairs and public funds.

“Nigerians have the right to know the whereabouts of the public funds. Taking the recommended measures would advance the right of Nigerians to restitution, compensation and guarantee of non-repetition.

“The Nigerian Constitution, Freedom of Information Act, and the country’s anti-corruption and human rights obligations rest on the principle that citizens should have access to information regarding their public institutions’ activities.”

Headline

Executing Four National Budgets Concurrently A Recipe For Disaster – Peter Obi Chides Tinubu

Published

1 day ago

June 29, 2024

Editor

The Labour Party presidential candidate in the 2023 elections, Peter Obi, has faulted what he described as a concurrent implementation of four national budgets by the Nigerian government, saying that it is a recipe for chaos, confusion, and catastrophe.

In a post on his X handle on Saturday, Obi said it is a blatant disregard for fiscal responsibility, transparency, and accountability.

The former Anambra State Governor also stated that the government’s action will lead to frivolous items in the approved budgets competing with essential projects for limited resources, further exacerbating the suffering of the Nigerian people.

He wrote: “All available evidence has confirmed that the Nigerian government is implementing four national budgets concurrently. This is in blatant disregard for fiscal responsibility, transparency, and accountability.

“It is also a recipe for chaos, confusion, and catastrophe.

“This intentionally reckless action will lead to frivolous items in the approved budgets competing with essential projects for limited resources, further exacerbating the suffering of the Nigerian people.

“It indicates that the Leaders are out of touch with reality and lack the competence to manage our nation’s finances effectively.

“Unfortunately, this deliberate act of fiscal recklessness is being undertaken by elected representatives of the people, thereby betraying one of the cardinal pillars of democracy. Leaders are elected to responsibly manage public resources in an organized way.

“I respectfully appeal and in fact, demand that this situation be reversed immediately in preference for a more responsible and transparent approach to budgeting.

“We must prioritize the needs of the Nigerian people, not the selfish interests of a few.

“This is a call to action for all Leaders to desist from actions that will further drive the country into economic chaos.

“Neither the National Assembly nor the executive has any excuse to promote or condone such unconscionable behaviour.

“We seek and insist on a nation governed by leaders who are frugal and responsible in their handling of public resources.

“This is the only way we can build a great nation.”

Headline

Police Arrest Female Prison Officer Filmed Having Sex With Inmate In UK Cell

Published

1 day ago

June 29, 2024

Editor

Police have arrested a woman after footage emerged of a female prison officer having sex with an inmate in an HMP Wandsworth jail cell.

The suspect was taken into custody yesterday on suspicion of misconduct in public office.

The video shows a prison officer engaging in sexual acts with an unidentified prisoner at the Category A jail in south-west London. The woman is seen wearing her uniform during the explicit encounter.

The footage, believed to be recent, depicts the officer first performing a sex act on the prisoner before having intercourse with him.

The incident was reportedly filmed by the inmate’s cellmate using a mobile phone. The cell’s interior is visible in the video, showing a TV and piles of clothes on a bunk bed.

Ian Acheson, a former prison governor, commented on the security implications of the incident: “If this footage is authentic, and I’ve been assured it is, the problems confronting a likely new Labour administration go far beyond overcrowding.”

The case has raised serious concerns about security protocols and staff conduct within the prison system.