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Ministry of Finance should be cautioned on unilateral loan approvals

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The recent move by the federal ministry of finance to contrive loans for some state governors from some multilateral bodies including the Islamic Development Bank without recourse to due process and in a brazen display of insensitivity to the precarious economic condition of these states is a worrisome move that should be strongly discouraged.

Image: Minister of Finance, Kemi Adeosun

With Nigeria’s debt currently standing at a staggering $65.4 billion and state governments shouldering a significant chunk of this amount, many state governments have gone bankrupt as a result of borrowing with a large number out rightly unable to meet their statutory obligations to its citizens as payment of wages and salaries to its workers as well as provision of infrastructure.  

It is a public knowledge that the federal government had to wade in to bail out states from the strangulating clutches of debts they owed to numerous financial bodies both within and outside of the country.  Even with the bail out by the federal government, many states are still in dire financial states.

For the Federal Ministry of Finance that should ostensibly know better to be goading states along the path of wanton borrowings when all the indices that govern this clearly indicate danger is callous and disappointing. 

According to the head, Social Action, Abuja, Mrs Vivian Bellonwu – Okafor, “what one expects of the ministry of finance to be doing at this point and in times like these is to deploy its expertise in economic management to help these governments structure its economy into self-sustenance and viability and not going cap-in-hand to foreign governments and financial institutions begging for money.

“There are many resources in these states that when properly harnessed and put forward, the world will come bowing at the feet of these states. This is what I expected the ministry to be doing.

Sub-national debts have become a genuine source of worry in the country given its high volume and impact on citizens in these states. 

Furthermore glaring evidence has shown that the heavy borrowings by these governments have yielded little or nothing to the states and its citizens but have simply dissipated into private pockets.

 While we applaud the just stance of the Deputy Chairman of the Senate Committee on Foreign and Local Loans, Senator Shehu Sani in cautioning some northern state governors against acquiring loans unduly, we once again charge the National Assembly to strongly defend and protect citizens from the excesses of some public officials and maintain strong oversight on loan acquisitions by governments in the country. 

This has become further imperative given the worrying trend of the present administration to toe the path of indebtedness even as it seeks to borrow heavily to finance its budget deficit; this is inspite of the fact that debt servicing has gulped a staggering share of the nation’s budget and have practically wiped away capital allocation of the nation’s budget, thus effectively impeding the country’s growth and development.

Vivian Bellonwu

Head, Social Action Abuja


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