According to the Debt Management Office (DMO), the statutory body responsible for coordinating the debt management for Nigeria and all its sub national entities, the external debt profile of Kogi State as at 31 December 2020, stood at US$30,157,822.27 (thirty million one hundred and fifty-seven thousand eight hundred and twenty-two dollars twenty seven cents). By the Central Bank of Nigeria (CBN) rate of N380/$1, this translates to N 11,459,972,462.6 (Eleven Billion four hundred and fifty-nine million nine hundred and seven-two thousand four hundred and sixty-two Naira Sixty Kobo).
At the same, the domestic debt stood at N68,092,548,068.84 (Sixty-eight Billion Ninety-two Million five hundred and forty-eight thousand Sixty-eight Naira eighty-four Kobo).
This mean that the State is one of the least indebted states in the Nation.
The Gross domestic Product of the State is put at US$4,642,000,000 (Four Billion Six hundred and forty-two million Dollars), thus the debt to GDP ratio of the State is very sound.
OBSERVATIONS
However, a cursory look at the data from the Debt Management Office showed the following observations
1. The External debt of the state has been flat (no significant external borrowings since January 2016
2. The total Domestic debt as at December 2015 stood at N42,034,626,226.84 (Forty-two billion thirty-four million six hundred and twenty-six thousand two hundred and twenty-six naira eighty-four kobo)
3. By 31st December 2016, the debt had risen by over 69% to N71,381,258,449.39 (Seventy-one Billion three hundred and eighty-one million two hundred and fifty-eight thousand four hundred and forty-nine Naira thirty-nine Kobo)
4. As at 31st December 2017, the domestic debt had jumped to N102, 359,193,069.66 (one hundred and two Billion three hundred and fifty- nine million one hundred and ninety-three thousand six-nine naira six-six kobo). An increase of almost N31b
5. By 30th June 2018, the debt saw another rise of over N11B to N114,332,341,233.39
6. This figure dropped to N84,922,376,449.78 by 31st December 2018
7. The year 2019 saw a spike in domestic borrowings resulting in N47,542,285,710.34 added to the debt which stood at N 132,464,662,160.12 (one hundred and thirty-two Billion four hundred and sixty-four million six hundred and sixty-two thousand one hundred and sixty naira twelve kobo)
8. This was the highest single year borrowings for the state
9. Data showed that in 2020, there began a series of reduction in the domestic debt which climaxed in June 2020 with single largest reduction between March and June 2020 by N55,602,708,599.62
Figure 1: 2016-2020 borrowings by Kogi Stte Government
SOME DISTURBING ISSUES
1. Records from approved State Budgets especilly information from the Governor’s Budget Speeches on the performances of the Busgets from 2016-2020, has consistently shown that the ACTUAL REVENUE has always been above the ACTUAL EXPENDITURE, thus giving a surplus Budget.
This calls into question the need for borrowings
2. Its surprising that in the very first 2 years of this administration (2016-2017), there was an almost N60B rise in the Domestic debts. This is despite the fact that there should have been a SURPLUS in Budgets. What where the borrowings for and from whom were these borrowings from?
3. Was there Public Hearings by the Kogi State House of Assembly to provide information to the citizens on the need for these borrowings
4. 2019 (an election year), witnessed the highest borrowings in this administration. This is strange as the tradition had always been for Banks not to give loans until after elections. The borrowings are almost two-third of the state total REVENUE.
5. Repayment of borrowings in 2020 was extra ordinary with the March-June 2020 representing the largest single repayment period in the history of this administration. A whooping N64Billion was paid back in 2020 alone. Thats more than what all the Ministries Departments and Agencies spent on CAPITAL in the last 2 previous years
6. These domestic borrowing are huge despite the near absence of infrastructure in the state
RECOMMENDATIONS
• There is need for the Ministry of Finance Budget and Planning to urgently provide clarifications on these issues
• There is limited transparency in the debt management of the State. There must be a consistent effort by the Government to provide platforms for discussions about the State Debt profile
• The House of Assembly Committee on Public Accounts must live up to its Constitutional obligations of effective oversight to ensure that Kogi State citizens get value for money
• There must be a document from the Ministry of Finance budget and Planning staing the borrowing and what the funds where used for and the status of the projects
• With no roads, water, light and food insecurity, it is urgent for the government to show what these funds where used for and why the state should be making repayments for funds not used for them
CONCLUSION
Kogi State Government has recently been proactive in making public Financial management information public and there is need for this to continue especially in the area of domestic debt management.
Citizens must know why borrowings are taken on their behald, what projects these funds will be used for and what payment conditions are attached to them
Thank you
___________________
HAMZA ALIYU
EXECUTIVE DIRECTOR