According to data from the Federation Account Allocation Committee Disbursement reports published by the National Bureau of Statistics, the Federal Government has deducted over N415bn from state government allocations to service their external loans.
From the allocations given to state governments from the Federation Account, deductions were made between 2019 and 2023.
Under a legal framework, the federation account is currently managed in a way that allows funds to be shared through three major components: statutory allocation, Value Added Tax distribution, and derivation principle.
The report analysis indicated that the sub-nationals incurred deductions of N57bn in 2019, N74bn in 2020, N86.2bn in 2021, N78bn in 2022, and N120.01bn by December 2023. Indicating a 110 per cent increase, the figure highlights the country's substantial debt in the face of decreasing revenue.
The state most affected by deductions was Lagos, with approximately N131.1bn deducted for external debt servicing, followed by Kaduna with N45.85bn deducted, and Cross River with N21.59bn deducted.
N18.25bn, N14.76bn, N10.31bn, and N10.92bn were deducted from Oyo, Rivers, Ogun, and Edo, respectively.
The states least affected were Borno (N1.55bn), Yobe (N2.1bn), and Zamfara (N2.1bn).
Notably, the total amount deducted was consistently fixed throughout the year, except for January and February. Despite the heavy debt servicing, the federal government has continued to take out loans to fund its expenditures.
According to reports, the Government borrowed a total of N4.94tn from domestic sources during the first six months of President Bola Tinubu's administration, highlighting a substantial dependence on loans.
From June 2023 to December 31, 2023, the domestic debts rose by N4.94tn from N48.3tn to N53.3tn. Although external loans saw a decrease of $664m in the six months ($43.2m in June and $42.4m in December), the figure rose by $901m when compared to $41.5m in September and $42.4m in December.
In 2023, Nigeria saw a 121 per cent increase in spending on debt obligations, with N7.8tn allocated compared to N3.52tn in the previous year.
