KADUNA STATE AND DEBT ACCOUNTABILITY

 YUSUF ISHAKU GOJE argues for the review of the Fiscal Responsibility Law to enforce fiscal discipline

Kaduna State’s debt profile and its implications for development was the topic of discussion on the Value for Money radio program on Invicta FM 98.9, sponsored by Paradigm Leadership Support Initiative (PLSI) in partnership with CALPED and Macarthur Foundation, where I am a weekly guest analyst. I was able to share my thoughts on the debt position of the State from the perspective of the past, present and future.

It is common knowledge that the State is currently ranked the second most indebted state in Nigeria, after Lagos, in terms of foreign borrowing. Also, according to data from Debt Management Office (DMO), it is only second to Cross River as the highest indebted State to China, given through China’s Exim Bank. 

The State remains exposed due to the exchange rate volatility. A quick reference, without incurring any additional external debt, Kaduna’s external debt of $567.49m as of December 2020 rose by ₦42.06 billion from ₦173.59 billion (at ₦305.9 per $1) to ₦215.65 billion (at ₦380 per $1).

Available data shows that as at 31st December, 2023, the total public debt of the State was N460.89 billion, up from N307.49 billion in 2021; N284.39 billion in 2020, N248.10 billion in 2019, N156.50 billion in 2017, and N123.07 billion in 2016. Between 2016 and 2023, our total public debt increased by 274.6%.

Using the 2020 population projection of 9.48 million, which is on the State’s website, each resident of the State will need to pay N48,646. Disturbingly, the 2025-2027 Medium Term Expenditure Framework (MTEF) shows that the State is still proposing to borrow another N229.61 billion.

The total public debt service last year stood at N67.46 billion, rising from N5.82 billion in 2019, N5.29 billion in 2017, and N4.46 billion in 2016. That is from 2016 to 2023, our debt service astronomically grew by 1,410.3%.

Disturbingly, the State has surpassed the total debt service to total revenue, likewise, domestic debt service to IGR, as well as will require N70.87 billion to service its debt in 2025, N80.76 billion in 2026, and N90.00 billion in 2027 – this is according to the MTEF, 2025-2027.

A look at the loan trend shows that from 2021 to 2024, a total of N292.91 billion was budgeted to be collected as loan. Interestingly, the 2024 budgeted loan of N150.06 billion is 51.3% of this amount. In the same period, N148.82 billion was received, which is 50.8% of the budgeted loan borrowing.

Already, actual loan borrowing in 2024 half-year (N36.10bn) is 80% of what was borrowed in 2023 full-year (N45,15bn), 63% higher than what was borrowed in 2022 full-year (N22,06bn), and 79% of what was borrowed in 2021 full-year (N45,49bn).

Indeed, there is a popular consensus that debt is not bad in itself; rather its utilization is usually the crux of the matter. In Kaduna State, the most notable loan funded developmental projects being implemented via loan are the Urban renewal projects, Rural transformation projects, AGILE projects, NG-CARES, 300-bed space hospital among others. The questions beginning for answers are what is the quality of work being done and is there value for money?

To effectively manage our debt as a State, we need to ensure full constitution of the Debt Management Committee, review and amend the Debt Management Law, 2015, to transform it into a semi-autonomous agency, assess and review the State Public Debt Policy to align with current realities, strengthen the technical capacity of the State Debt Management Department, and lastly, review and amend the Fiscal Responsibility Law, 2016, to enforce fiscal discipline and limit borrowing to provision of infrastructure.

Goje is a civil society member and OGP enthusiast, greatnessygoje@gmail.com