By FELIX OLOYEDE
The Governor Godwin Obaseki administration has to continue from where his predecessor, Comrade Adams Oshiomhole stopped in improving the state of infrastructure in Edo State to justify its rising debt profile. Edo State has the third highest external debt burden in the country just behind Lagos State and Kaduna State which are first and second respectively in the debtor’s list among states.
Edo state’s external debt has been on the upswing since 2014 and stood at $214 million as at June 2017, 19.18 per cent higher than the $180 million it owed foreign creditors in 2016. It currently owed five per cent of the total state foreign debts in the country. However, the state domestic debt, which was N45.09 billion as at June 2017, has been stable in the last one year. And should the state’s 4,109,499 population share its N522. 21 billion debt total, each of them would be indebted to the tune of N127, 073.30.
The Governor Obaseki administration which took the rein of the state’s leadership in November 2016, budgeted N153.1 billion for the 2017 fiscal year. In the budget which is tagged “Budget of Consolation”, Edo State government projected total revenue of N142.6 billion of which N25 billion would be borrowed. And data obtained from Budgit, a social enterprise that scrutinizes public finance, showed that the state plans to spend N15.8 billion for debt servicing.
“Under Governor Adams Oshiomhole, Edo State invested heavily on infrastructure. The financial requirement was way beyond the income of the government, hence, the resort to local and foreign borrowing,” Mr David Adonri, Managing Director, Highcap Securities Limited, who hails from Edo State explained to BusinessHallmark in a text message.
“If the new borrowing is channel to economic activities, there will be justification since capacity to repay will be enhanced.”
The state governor will only justify its rising debt profile if it is able to put it to the right use by investing it in infrastructure, education, health, security and support for industry, said Mr. Kayode Omoregie, Faculty member, Lagos Business School, who is also an indigene of Edo State.
“The goal is to increase the income generating capacity of the state and increase the tax base and IGR capacity and efficiency in tax collection and utilization. It is also aiming at reducing government leakages, corruption and misappropriations,” the Finance expert further asserted.
Mr Crusoe Osagie, Special Assistant to Edo State Governor on Media told Business Hallmark through the phone that he had no knowledge of the state’s plan to borrow N25 billion to fund the 2017 budget. He, however, promised to clarify from the appropriate quarters. But he did respond to the three calls and a text message put across to him afterwards.
The state raked in N23.041 billion as internally generated revenue (IGR) in 2016 and plans to ramp it up to N33.8 billion in this financial year. It has gotten N13.42 billion as allocation from the Federation Account as at June 2017; it targets N47.8 billion for the year.
Dr Adi Bongo, an Economic and a faculty member of Lagos Business School noted the Governor Obaseki-led administration has followed the path of its predecessor in terms of infrastructural development in the state. He however, expressed worry about the extent to which borrowed funds would be judiciously deployed. “My concern is that research has shown that only half of borrowed fund is used for infrastructural development,” he stressed.
Mr Augustine Aghedo who works in one of the financial institutions in Benin City, Edo State capital asserted that the current administration has been working assiduously on road construction and traffic management, especially at city centres.
But the state is currently struggling with rising crime rate, especially kidnapping. Forthnight, Mr Osayomore Joseph, a notable muscian in Benin City was kidnapped. This happened just a week after the proprietor of Ogba Zoological Gardens, Mr Ehanire was kidnapped and three his police orderlies were killed.
Nigeria’s debt profile has risen over 20 per cent in the last year one, raising concern that the country may be heading towards another debt overhang after Paris Club $18 billion debt relief in 2005.
The International Monetary Fund (IMF) last week warned emerging economies over their spiking debt profile, saying it poses grave danger to their economic growth.