Lagos, Ogun, Oyo, Three Others Burdened With N4.4 Trillion Debts

Daud Olatunji & Enoch Oyedibu

The Debt Management Office (DMO) recently released a comprehensive report highlighting the staggering debt burden of the six Southwest states in Nigeria. 

According to a document obtained, Ogun, Oyo, Osun, Lagos, Ekiti, and Ondo states  collectively owe a whopping N4.4 trillion. 

Breaking down the numbers provided by the DMO, the debt is categorized into domestic and external components. 

PLATFORM TIMES reports that Domestic debt across the states amounts to N1.8 trillion, while external debt stands at a staggering N2.6 trillion, equivalent to N1.7 billion dollars. 

Notably, the depreciation of the naira against the dollar has significantly contributed to the escalation of the debt burden, with the exchange rate hitting N1500  per dollar in 2024, up from approximately 700-715 naira in 2023.

A closer examination reveals that the external debts of these states are sourced from a diverse array of international lenders, underscoring the global nature of the financial entanglements.

 Lenders include prominent institutions such as China Exim Bank, Japan International Cooperation Agency (JICA), India, KFW Development Bank in Germany, Islamic Development Bank (IsDB) in Saudi Arabia, and Agence Française de Développement (AFD) in France. 

While some states have bilateral loans, Ekiti State stands out for its reliance on multilateral loans, aligning its financial strategies with those of its regional counterparts.

The breakdown of debts by state provides further insight into the individual challenges faced by each jurisdiction:

Ogun state owes  $168.8 million in external debt and N253.2 billion in domestic debt.

Ondo State,  despite a relatively lower external debt of $80.2 million, the State’s domestic debt of N1.5 billion  adds to its financial strain, highlighting the need for prudent economic policies.

Osun  State’s debt profile reflects a similar pattern, with $87.2 million in external debt and N130.8 billion  in domestic debt, underscoring the need for sustainable debt management practices.

 Oyo State’s debt burden, comprising $63.8 million in external debt and N159.9 billion in domestic debt, underscores the complexities of balancing fiscal responsibilities with developmental aspirations.

Ekiti State’s external debt of $121 million and domestic debt of N110 billion underscore the challenges faced by smaller states in navigating the complexities of international borrowing.

As Lagos State remains the economic powerhouse of the region, the state  stands out with a staggering 1.2 billion dollars in external debt and over N1 trillion  in domestic debt.

 With a total debt nearing N2.8 trillion, Lagos shoulders a significant portion of the Southwest’s debt burden, necessitating robust fiscal strategies to ensure sustainable economic growth.

PLATFORM TIMES reports that the  implications of these debt revelations extend beyond mere financial concerns, encompassing socio-economic ramifications that could shape the region’s future trajectory. 

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