CSO asks south-west states to check rising debt level, says excessive borrowing unhealthy

Brain Builders Youth Development Initiative, a civil society organisation, has has asked states in the south-west region to reduce their borrowings, especially foreign loans.

Speaking to journalists on Monday in Lagos during the public dialogue on tax and debt justice, Abideen Olasupo, global director of the organisation, said the penchant for borrowing is a dangerous and economically unhealthy practice.

The event was hosted in collaboration with CISLAC Tax Justice and Governance Platform and Christian Aid Nigeria.

The meeting was attended by officials from tax agencies, Debt Management Offices, financial experts, community leaders, religious leaders, youth groups, civil society organisations and media professionals.

Olasupo said the programme sought to address issues relating to the management of taxes and the critical imperative of debt justice within the south-west region.

A report on ‘Debt Sustainability Assessment of the Southwest States in Nigeria’ prepared by the BBYDI was also presented at the programme.

Olasupo lamented the absence of government officials, particularly commissioners for finance in the six south-west states at the programme.

“It is worrisome that whenever matters of transparent fiscal policies, accountable governance and sustainable economic development are to be discussed, government representatives are usually absent,” Olasupo said.

“Long before today, we sent out invitation letters to all the commissioners for finance across the six south-west states, but it is quite unfortunate that none of them is here today. This is bad practice that has to stop.”

Speaking on the Debt Sustainability Assessment report which analysed the financial status and budget implementation reports of each of the six states in the south-west between 2020 and 2022, Olasupo said governments in the region, especially that of Lagos, must check their borrowings.

He said rising debt levels often translate to higher debt service payments, leaving a limited budget for essential public services.

He said the data from the Debt Management Office (DMO) revealed that the overall debt profile of Lagos increased by 41.88% from N965.4 billion in 2018 to N1.4 trillion in 2022.

“Similarly, the foreign debt of Lagos State, which as of December 31, 2022, was $1.25 billion, is not only the largest in Nigeria, but continues to grow as seen with the 29.26% year-on-year growth in 2022,” Olasupo added.

The CSO’s global director said Lagos was spending a larger part of its revenue in paying back debts, while he noted that the state government should stop accumulating foreign loans,

He said the depreciating nature of the naira increases the economic risks of obtaining loans in foreign currencies.