Daud Olatunji
Ogun State has been ranked the third most indebted state in Nigeria after Lagos and Rivers with a debt burden of N430.52 billion as of December 31, 2023, according to a recent report by BudgIT, a civic tech organization focused on fiscal transparency.
PLATFORM TIMES reports that there was a rise of 230.62% in debt over the past six years from its 2018 debt level of N130.22 billion.
PLATFORM TIMES further reports that the state’s substantial financial obligations have put it behind only Lagos and Rivers in the national debt rankings.
According to the data obtained from BudgIT, Ogun’s debt portfolio includes a foreign debt component of $168.83 million, constituting 35.27% of its total debt.
Despite the increase in foreign borrowing, this share remains within the recommended foreign debt threshold of 50%.
It was gathered that the State’s financial ratios indicate fiscal management within certain recommended limits.
The data stated that in 2023, the state maintained a debt-to-revenue ratio of 162.34% and a debt service-to-revenue ratio of 16.82%, both of which were within BudgIT’s recommended thresholds.
The personnel cost-to-revenue ratio also stood at 37.19%, signaling effective control over wage bills. Despite this, BudgIT’s debt sustainability assessment ranks Ogun as 29th among Nigerian states, reflecting concerns over its rising debt levels.
The state being the sixth least recipient of allocations from the Federation Account Allocation Committee (FAAC), nevertheless recorded the sixth-highest state expenditure nationwide in 2023, trailing only behind more endowed states like Delta, Akwa Ibom, Rivers, Bayelsa, and Lagos.
The data showed that the state’s expenditure grew by 20.07% from N295.39 billion in 2022 to N354.68 billion in 2023, resulting in a fiscal deficit of N89.48 billion.
Ogun’s capital expenditure for 2023, at N115.66 billion, showed only a minor increase of 1.74% from the previous year, while personnel costs rose by 14.32% to N98.62 billion.
The state’s Internally Generated Revenue (IGR), which saw an increase, was adequate to cover 148.06% of personnel costs but fell short of covering all operating expenses, meeting only 67.77%.
The state’s FAAC allocation increased by 21.77% to N84.72 billion in 2023.
However, its dependence on FAAC for overall revenue dropped slightly, from 32.125% in 2022 to 31.95% in 2023, making it the second least dependent on federal allocations, behind Lagos.
Ogun’s revenue sources showed significant growth in areas outside FAAC.
Revenues from fees increased by 13.19%, moving from N56.85 billion in 2022 to N64.35 billion in 2023. Income from sales rose by 27.03%, while investment income surged by an impressive 112.19%.
These gains reflect a conscious effort by the state to broaden its revenue streams to sustain fiscal operations.
Beyond its internally generated revenue, Ogun received several forms of financial support and grants in 2023.
The state was allocated N21 billion for infrastructure development and N2 billion in palliative support to address economic challenges affecting its citizens.
Additional funds included N8.14 billion from the Subsidy Reinvestment and Empowerment Programme (SURE-P) and N3.32 billion from various grants, subventions, and donations.
Ogun State’s proactive measures in boosting IGR and curtailing dependency on FAAC earned it an 8th position in BudgIT’s fiscal performance assessment.
However, its debt profile raises sustainability concerns, with ongoing increases in foreign and domestic debt impacting its long-term fiscal outlook.
While BudgIT’s rankings suggest Ogun has shown commendable fiscal resilience, the steep debt growth raises questions about its capacity to manage rising costs without compromising essential public services.
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