Views expressed in this article are entirely that of the author ! 
With an alarming internal and external debt profile of approximately N183 Billion, it is
baffling to see the Enugu State government attempt to borrow an additional N170
Billion.
In effect, this administration seeks to open its loan portfolio with a 182.79% increase
above the N93 Billion domestic debt accumulated over the eight years period of the
Ifeanyi Ugwanyi administration.
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It is also interesting to note that the loan amount
exceeds the 2023 total budget presented in December 2022.
This will take our State above the stipulated borrowing limit by the Debt Management
Office by 226% and will place Enugu State as the 4th most indebted State in the
country.
In the past year, I have spoken extensively about the poor fiscal conditions of the
state and the need for drastic cost cutting measures and strategic prioritisation to pull
us out of the economic morass that the previous government had plunged us into.
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The Ugwanyi administration closed with a domestic debt of N93,197,207,627.52 and
an external debt of $120,667,083.51. The prospects of further increasing our debt
profile is not in the best interest of our economy.
At present, Enugu State’s debt per capita ratio, which represents how much debt the
government owes on behalf of each citizen, stands at N23,907.
This additional N170
Billion will double and triple our debt per capita ratio over the next year. This means
that the government will be owing an estimated N67,500 on behalf of each citizen,
which is a far cry from the zero per cent poverty headcount index promised by this
administration. To put this in perspective, the state spent N3,506.84 per capita on
education and N1,559.1 per capita on health in 2022.
Enugu is currently the 10th
poorest state in Nigeria, and the second poorest in the Southeast with a poverty rate
of 58.13% behind Ebonyi State.
The stagnant economic situation in the past decade begs the question of what the
previous debts incurred were spent on. Roads, hospitals, and schools are in
deplorable states.
Teachers’ salaries and pensions remained unpaid for several
months in spite of the huge sums quoted through the years.
While I am not against borrowing for development purposes, it should be consistent
with the Open Governance Partnership requirements for transparency and
accountability, in accordance with the provisions of the Debt Management Office for
fiscal responsibility, and with the citizens clearly apprised of the purposes of these
facilities.
This recent development raises several concerns.
According to the provisions of Debt Management Office, for Domestic Capital Market
borrowing, States and FCT are to ensure that their total amount of loans outstanding
at any particular time, including the proposed loan shall not exceed fifty (50) percent
of the actual Total Revenue for the preceding year. (Investment and Security Act,
2007, Part XV, 223 (1b) quoted in the provisions of the DMO).
With Enugu’s reported actual total revenue for 2022 being N128 Billion, the
acquisition of a domestic debt of 170 Billion which takes our total debt profile up to
approximately N354 Billion will exceed the stipulated limit by 226%. (I must make a
side note about the herculean task of downloading the quarterly performance reports
from which the total revenue for 2022 was extracted, as it is unavailable anywhere
else)
The Act also provides that “The DMO shall conduct a Debt Sustainability Analysis to
ascertain that the Monthly Debt Service deduction of the State or FCT, including the
servicing of the proposed bank loan being contemplated, does not exceed 40% of
the Total Monthly Revenue (FAAC and IGR) of the State or FCT for the preceding 12
months, and make recommendation to the Minister as appropriate.”
First, the government is in breach of the law and intentionally jeopardising the
economic health of the state and ultimately, the welfare of the people. With respect
to the stated percentage allowed for debt servicing, what is the viability of
maintaining a monthly debt service deduction below 40% of our revenue when the
State’s total liabilities are consolidated? If it technically falls below the threshold, how
will this reflect on the economy in real terms? It is unfortunate that the figures and
terms of our indebtedness are not readily available for public evaluation.
The government must shun the practice of opacity in managing the state’s accounts and
embrace transparency.
Secondly, the financial institutions offering these facilities will also be acting in breach
of the law and liable to sanctions as provided. Have Fidelity Bank and Globus Bank
calculated the costs?
All banks and financial institutions shall request and obtain proof of compliance with
the provisions of this Part before lending to any Government in the Federation.
Lending by banks and financial institutions in contravention of this Part shall be
unlawful. (Fiscal Responsibility Act, 2007, Section 45)
Thirdly, may I ask how the ENSG proposes to circumvent the provisions of the FRA
and the DMO to get approval for these loans?
Moreover, the speed of approval by the Enugu House of Assembly is noteworthy.
A loan request of this magnitude should be rigorously vetted and analysed before a
decision is made. It is imperative that the legislative arm provides a buffer to avoid
executive excesses.
I must also question the proposed use of a portion of the loan for salary payments.
Beyond the breach of the provision in the FRA that the government at all tiers shall
only borrow for capital expenditure and human development, it is a sad reality that
we have joined the league of States who borrow to service recurrent expenditure.
With regards to the proposed “infrastructural developments”, they must be clearly
outlined and published along with the cost-benefit analysis detailing the economic
and social benefits (FRA, 2007, 44). What specific projects will be executed and in
what ways will these attract investments as promised by the government?
These further buttress the reason our accounts must be made public. This will give
citizens the tools to hold the government accountable, and give them the confidence
to support the government.
It is the business of every citizen to know how much we have and how much we
owe. Again, I encourage the state to take a cue from the action of the Central Bank
of Nigeria, which took a bold step to publish its audited accounts, giving Nigerians a
clear sense of our commitments to both internal and external parties.
Another key area of concern is the repayment plan as stated in the letter of request
signed by the Secretary to the State Government, Professor Chidiebere Onyia. The
government stated that “The loan will be repaid via Irrevocable Standing Payment
Order (ISPO) on consolidated Enugu State IGR accounts, which would be domiciled
in Fidelity Bank and domiciliation of JAAC/FAAC/Infrastructure Support.”
This is a blatant encroachment on the fiscal autonomy of the Local Government
which was one of the major challenges to development under the previous
administration. It is undemocratic and will not be prudent of this present
administration to adopt the behaviour of its predecessors.
Additionally, the sustainability of these debts and the proposed repayment plans are
questionable considering our current revenue and liabilities. What is the plan to
astronomically grow the IGR without placing a heavier tax burden on the already
depleted pockets of citizens?
Finally, and most importantly, is the question of transparency and accountability. We
need to see a detailed plan for expenditure, and provide stringent measures for
monitoring and evaluation of the proposed projects
On September 4, 2023, I noted that no further discussion had been raised
concerning the 2023 budget after the previous administration’s presentation in
December 2022.
Neither had the federal allocations to the State been made public,
even though an estimated sum of N21 Billion had been disbursed to the State’s
coffers from the Federal Allocations Accounts Committee (FAAC) at the time.
This situation remains the same today and we also have no knowledge of our
Internally Generated Revenue since the new government was sworn-in in May.
While the House of Assembly reportedly approved a N58 Billion supplementary
budget, the document is not available for the public to review, nor has any clear plan
been communicated for which these humongous borrowings are being effected.
We must elevate the place of accountability in our governance. Every sitting
government in Enugu State must commit to providing information and ensure
transparency in managing the state’s account.
Appropriate mechanisms must also
be emplaced in place to track the deployment of these resources.
Enugu State faces the heightened risk of economic meltdown if fiscal responsibility,
transparency, and accountability are not prioritised.
As a citizen of this state, I demand that the government respond to these concerns
and reevaluate the management of the State’s accounts.
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