At the recent 140th meeting of the National Economic Council chaired by Vice President Kashim Shettima, startling revelations surfaced regarding the indebtedness of Nigeria’s 36 states and the Federal Capital Territory (FCT) to the federal government. According to a presentation by the Office of the Accountant General of the Federation, these entities collectively owe an outstanding liability of N1.72 trillion in budget support facilities.
This disclosure underscores the financial strain faced by sub-national governments across Nigeria and raises concerns about fiscal sustainability. The debt burden, evenly distributed among the FCT and each of the 36 states, has been attributed to previous interventions aimed at aiding states in meeting their financial obligations. Notably, in 2021, the Muhammadu Buhari administration approved a N656 billion Bridge Financing Facility to assist states in addressing their financial challenges.
However, despite these efforts, the federal government has halted the provision of budget support loans since July 2023, citing increased revenues within the federation as a contributing factor. This cessation underscores the need for states to adopt prudent financial management practices and explore alternative revenue sources to mitigate their dependence on federal assistance.
In addition to the revelation of the states’ indebtedness, the National Economic Council also discussed updates on various economic matters. Governor Hope Uzodimma of Imo State presented an abridged report on crude oil theft prevention and control, highlighting the committee’s efforts to address this critical issue. Vice President Shettima stressed the importance of robust deliberations on economic challenges and urged states yet to submit their reports to expedite action.
Furthermore, Governor Abdulrahman Abdulrazaq of Kwara State provided an update on the ad-hoc committee on Economic Affairs, emphasizing the committee’s objective of developing a roadmap to address economic issues at both the national and sub-national levels. The Special Agro-Industrial Processing Zones program was also discussed, with progress reported on the establishment of phase 1 and disbursement for states.
As Nigeria navigates economic uncertainties, the revelation of states’ significant debt underscores the urgent need for fiscal discipline and proactive measures to address financial challenges at all levels of government. The National Economic Council’s deliberations serve as a critical platform for shaping policies and initiatives aimed at fostering economic stability and growth across the nation.
