House Orders Comprehensive Audit of Federal, State Loans Since 1999

Juliet Akoje in Abuja

The House of Representatives has mandated its Committee on Aids, Loans, and Debt Management to carry out a comprehensive audit and oversight of all loans obtained by the federal and state governments since the inception of the current democratic dispensation and report within four weeks for further legislative action.

The resolution followed the adoption of a motion on the “Need to Ensure Public Debt Oversight on the Federal and State Governments Loans and Proper Utilization of Borrowed Funds” moved by  Hon. Lanre Okunlola at plenary yesterday.

Okunlola noted that according to recently released data by the Debt Management Office (DMO) of Nigeria as of March 31, 2024, Nigeria’s public debt profile, which includes both external and domestic debt, had grown significantly over the years.

He said that this currently stands at N121.67 trillion ($91.46 billion) with loans sourced from both domestic and international lenders by the Federal and State Governments to fund various projects and budget deficits.

He also noted that Nigeria’s debt rose by N24.33 trillion in three months from N97.34 trillion ($108.23 billion) in December 2023 to N12 1.67 trillion ($91.46 billion), according to the same report.

The lawmaker further explained that although borrowing is a vital means for financing development, unchecked debt accumulation poses serious risks to Nigeria’s fiscal stability and future economic growth.

He further recall that the 1999 constitution of the Federal Republic of Nigeria as amended, the Fiscal Responsibility Act (2007), and the Debt Management Office Establishment Act (2003) mandate the National Assembly to approve all government loans and ensure their proper utilisation.

He added that over 40 per cent of developing countries, including Nigeria, currently spend more on debt services and repayments of loans, leading to inefficiencies in government finances at the expense of funding critical sectors of the economy such as education, healthcare, infrastructure, and social policy.

Furthermore, he said that there are growing concerns regarding the lack of proper oversight and transparency in the management and utilisation of borrowed funds by both the Federal and State Governments.

He lamented that many loans from state governments are drawn from commercial banks and certified by the Federal Ministry of Finance are contracted were without full compliance with constitutional requirements for National Assembly approval.

“Additionally, there are instances where borrowed funds are not effectively utilised for their intended purposes, undermining the benefits of such loans to the citizen,” he stated.

He worried that contrary to the illusory image of an oil rich country, Nigeria is a heavily indebted country  with a huge debt portfolio.

He further stressed the need for a strong financial oversight to ensure effective use of sourced loans and an effective delivery of public services through thorough and transparent utilisation of funds.

“Debt is a cleverly managed re-conquest of Africa aimed at subjugating its growth and development and prolonging increasing debt services is not favourable for the overall wellbeing of the economy,” he argued.