CSO Urges Lagos, Other South-west States to Halt Rising Debt Levels

Yinka Kolawole in Osogbo

A Civil Society Organisation (CSO), Brain Builders Youth Development Initiative, has advised Lagos State and states within the South-west region, to reduce their appetite for borrowings, especially foreign loans, saying such practice was dangerous and economically unhealthy.

The Global Director of the group, Abideen Olasupo, gave the advice  during the South-west press briefing, desk review validation meeting, convened in collaboration with other groups.

He said the meeting sought to address issues relating to the management of taxes and the critical imperative of debt justice within the South-west region.

A report on: ‘Debt Sustainability Assessment of the Southwest States in Nigeria’ prepared by the BBYDI was also presented at the programme.

Olasupo lamented the absence of government officials, particularly commissioners for finance in the six South-west states at the programme.

“it is worrisome that whenever matters of transparent fiscal policies, accountable governance and sustainable economic development are to be discussed, government representatives are usually absent.

“Long before today, we sent out invitation letters to all the commissioners for finance across the six south-west states, but it is quite unfortunate that none of them is here today. This is bad practice that has to stop,” he added.

Speaking on the debt sustainability assessment report which analysed the financial status and budget implementation reports of each of the six states in the South-West between 2020 and 2022, Olasupo said governments in the region, especially that of Lagos, must check their borrowings.

He stressed that rising debt levels often translate to higher debt service payments, leaving a limited budget for essential public services.

Olasupo, who said Lagos was spending a larger part of its revenue in paying back debts, emphasised that the state government should stop accumulating foreign loans.

He noted that the depreciating nature of the naira increases the economic risks of obtaining loans in foreign currencies.

“Owing to Nigeria’s volatile foreign exchange rate regime, the Lagos state government needs to check its appetite for accumulating dollar, pound, and euro-denominated debt as this can cause a huge strain on the state’s resources whenever the naira depreciates against the dollar,” he added.

It said: “Ondo state is the only state with low risk on debt to revenue ratio. The other five southwest states stand on the medium risk cadre on the same indicator.

“The debt service to revenue ratio of Ekiti, Ogun, Ondo and Oyo, seem to be sustainable as they are well below the DMO recommended threshold of 50 per cent.”