Group Seeks Law Against Excessive Borrowing by States

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  • Group Seeks Law Against Excessive Borrowing by States

The Social Development Integrated Centre on Wednesday called on the National Assembly to come up with stringent legislation that will check excessive borrowing by state governments.

It said this in a statement issued by the Head, National Advocacy, Vivian Bellonwu-Okafor.

The group stated that a situation where some states were paying between N400m and N500m monthly to service loan obligations would not add any economic value to such states.

It called for tight monitoring of how specific funds such as the bailout and Paris refund monies were being spent.

The SDIC also called on lawmakers to institute an effective monitoring and oversight of loans and loan-designated projects.

The statement stated that agencies and bodies charged with public debt management such as the Fiscal Responsibility Commission, Debt Management Office and the Ministry of Finance should be compelled to rise to their responsibilities of enforcing the various statutory provisions on transparent and accountable management of public debts in the country.

This, it noted, would help to bring about the impact of loan benefits on the lives of Nigerians.

The statement read in part, “The attempt to justify the failure of state governments to fulfil their obligation to the workers in the states again buttresses the import of unsustainable loans and reckless borrowing by governments, especially at the sub-national level.

“State-level debts have become a considerable source of worry to well-meaning Nigerians. As it is well known today, many states in the country are insolvent and barely surviving on monthly allocations from the Federation Account Allocation Committee.

“Worse off are infrastructural conditions, including public service delivery in these states.”

The group also commended the Senate for rejecting the $350m loan request of the Kaduna State Government.

It stated that as one of the top three most indebted states in the country, approving more loans for the state would further impoverish the people of the state.

It added, “Kaduna, along with Lagos and Edo states, rank top three in the highly indebted states of the country, jointly pulling a staggering figure of $1.8bn in external debt profile alone.

“This is worrisome, for while the process of contracting these loans have been poor and non-transparent, its management have been worse.”

About the Author

Samed Olukoya
Samed Olukoya is the CEO/Founder of investorsking.com, a digital business media, with over 10 years' experience as a foreign exchange research analyst and trader. A graduate of University of East London, U.K. and a vivid financial markets analyst.

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