Governor Uba Sani: The Burden Of Debt, Time To Justify The Campaign Rhetoric

By Yusuf Ishaku Goje

NEWSDAILYNIGERIA: With the current depreciation of naira to the dollar, one can but imagine the current total debt profile of Kaduna State – as a result of huge external borrowing. However, if we are to go by the confident justifications made before the elections by Governor Uba Sani, then we are expected not have much to worry about. In summary, his argument then was – if Dubai can use loans to develop why not Kaduna State. We hope the reality of being on the seat has not changed the perspective behind the campaign rhetoric.

Lest we forget, the Governor in March 2020, then as a Senator, was quoted in Vanguard newspaper to have stated that the nation and the people of the State should hold him responsible if then Governor Nasir El-Rufai and Kaduna State Government fail to utilize a loan totaling about $350 million from the World Bank. “I even insist that I, Senator Uba Sani, be held liable if the Governor fails or disappoints. But of course I know Mallam Nasir El Rufai will never fail the people of Kaduna State” he confidently emphasized.

Likewise, during an interactive event in September, 2023, organized by the Southern Kaduna Christian Leaders Association in Kafanchan, the Governor said there was nothing wrong in collecting loans. He justified his statement by citing Dubai, where he reminded the gathering that the rail and road system were built with loans. Similarly, in the same month during a one-day Agenda-Setting Dialogue with Governorship Candidates, he reiterated the same justification. He further stated. the reason creditors gave the loan was because the State had passed the accountability test and even asked us to thank his predecessor.

Now that he is the Governor, it is imperative that he inform us on the true status of the State’s debt. The Debt Sustainability Analysis (DSA) and Debt Management Strategy (DMS) Report published in November, 2023, by the State Ministry of Finance, showed that our debt stock figure had risen to N302.1 billion as at the end of 2022, which implies a 103.57% increase from N148.3 billion in 2018. The breakdown showed the debt stock was made up of external debt of N218.8 billion, which was 72.43%; while the domestic debt was N83.2 billion representing 27.57%.

Interestingly, there seems to be conflicting data between the report and the debt position in the same period – as captured in the 2024-2026 Medium Term Expenditure Framework (MTEF). The MTEF showed that our total public debt was N348.8 billion. Disturbingly, it also showed that we have gone above the sustainability threshold for total external debt/gross FAAC (300.08% above the 150% threshold) and total public debt/total recurrent revenue (210.74% above the 150% threshold).

Nonetheless, the report attributed the increasing value of the external debt stock to the consistent devaluation of the naira. If such was the case in 2022, when the average exchange rate was N423 naira to a dollar, imagine what it is when compared to 2024, at about N1,500. Even though the loans were collected at lower rates, it will be doubtful if the borrowers will accept debt service at the rate it was collected.

The Debt Management Office (DMO) sub-national external debt stock shows that Kaduna is still second to Lagos. The State, according to its report, has a total Multilateral/Bilateral debt of $569.3 million as at June 30, 2023. If one casually converts this with the rate of N1,578 (as at 1st March, 2024) to a dollar, it amounts to about N898.4 billion. One can only imagine what the external debt when converted will be as of December, 2023. Equally, as at 2022 according to the DMO, the State has a domestic debt of N86.5 billion, also imagine the interest being paid to Banks.

Fast forward to 2024, the approved budget shows that the State will be using N25.4 billion to service its debt. Furthermore, the government is seeking to borrow externally another N150 billion, made up of N144 billion Multilateral and N5.7 billion Bilateral loans. The total external loan is 33% of the total budget, if collected it will further increase our debt burden by the end of the year. As the Governor rightly alluded, in his defense of loans collected by his predecessor, it is a necessity for development. However, what the Governor did not dwell much on was the capacity to pay back and service it.

Agreed that even the almighty United States of America is hugely indebted with about $33.4 trillion. What they have working for them are institutions to ensure value for money in utilization and capacity to pay/service the debt. One of the ways we can assess capacity to pay/service our debt is to compare the growth rate between our borrowing and total revenue over the past five to six years.

Thankfully, the campaigns have now ended and action not rhetoric will be the yardstick to measure the performance of the Governor. We await to see how the Governor will shoulder the debt burden and at the same time deliver the social contract (SUSTAIN blueprint) he entered with the residents of the State.

Goje is an active citizen, civil society actor and OGP enthusiast.