Conventional economics expects that a highly indebted economy is a growing economy or presumably a developed one, of course that could be fallacious yet not entirely. But what do we have to say if such economy is confronted with a recession and a fall in its revenue generating capacity given the disturbances in the Niger-delta in the case of Nigeria and contraction of international oil prices. Hence economies can as well borrow to finance their deficits.
According to the recent report published by DMO, Lagos, Kaduna, Edo, Cross River and Ogun are the most indebted states in the country. Lagos retains its usual spot with a huge debt stock of $1,431,474,719.70, Kaduna came second with a debt of $225,277,020.12, in the third category is Edo state, $179,519,864.02; Cross River owes $141,474,320.10; in the fifth position is Ogun state with a debt of $103,545,276.84.
A report by Economic Confidential stated that in one year of Buhari’s Administration, Lagos generates more IGR than 32 states of the federation combined. And in the first quarter of 2016, the state had an IGR of N76 billion naira.
Lagos economy is reputed to be the seventh largest economy in Africa with a GDP of $90 billion and a population of 20 million. The state is perhaps one of the very few states in the country that is able to perform its responsibilities in this period of recession without bail out funds. But this is at a cost of having 39.17 percent debt of the country’s total subnational debt stock.
The second on the list is Kaduna state which owes 6.16 percent of the subnational debt stock, Kaduna is not even among the richest states in the country, but recently the state has been working assiduously at diversifying its economy, It recorded the highest IGR in its history lately, N1.628 billion. It recently launched the $120 million Vicampro potato farm and had had agricultural agreement with Singapore, etcetera. Hence in recent times, the state has perhaps justified this huge debt stock as through its various developmental programs.
Edo is one of the richest states in the country and it owes 4.91 percent of the subnational debt, cross river has 3.87 percent while Ogun owes 2.83 percent of the subnational debt. Ogun is also one of the richest states in Nigeria, no thanks to the fact that it shares border with Lagos. The economies of these highly indebted states compared to other states is withering the storms of recession.
These huge debt are hinged on developmental projects especially in Lagos where there are lots of projects such as the Eko Atlantic city project going on, yet the implication is that, these states would continue to service huge amount of debts even in the nearest future which might have a negative effect on their economies especially if they are not properly managed.
The story is however different for another five states with the least debt stock in the country. The first with the lowest debt stock is Borno which owes, $21,891,650.88, followed by, Taraba with $23,012,357.00, Plateau is next with $29,240,504.98; Yobe owes $29,287,769.40 while Jigawa owes $32,623,702.06.
These states are the least indebted. The reason for this is probably not far fetched given the fact that two of these states are in the north east and they are directly affected by the Boko Haram insurgency, Plateau has also witnessed her own share of crisis. These states have witnessed one form of crisis or another which had destabilised their economies and truncated development given room to capital flight and reduction in IGR, so really, they seem not to have more to spend on given the unstable economic and political environment.
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