Not less than eight states failed to attract any foreign investments (FDI) but piled up N194.09bn debt between 2019 and 2022.
Data from the Capital Importation reports of the National Bureau of Statistics revealed that Bayelsa, Gombe, Ebonyi, Jigawa, Kebbi, Taraba, Yobe and Zamfara did not attract any foreign investments to their states.
However, data from the Subnational Debt reports of the Debt Management Office showed that these states had a combined debt of N710.38bn in 2019.
By 2022, the combined debt of these eight states had risen to N904.47bn, showing a difference of N194.09bn.
The debt included domestic and external debts as recorded by the DMO under the reviewed period.
In 2019, while the eight states acquired a total domestic debt of N564.69bn, they had an external debt of $316.35m (N145.69bn using the exchange rate of the Central Bank of Nigeria, which was N460.53 per dollar as of April 19, 2023).
By 2022, these states’ domestic debt had risen significantly to N758.39bn while the external debt increased slightly to $317.21m (N146.08bn).
This shows that the states borrowed more from local creditors than international ones.
Further breakdown showed that the top domestic debtors in 2019 were Bayelsa (N147.93bn), Gombe (N84.01bn), and Taraba (N82.32bn).
By 2022, Bayelsa (N146.37bn) and Gombe (N139.32bn) remained top domestic debtors, while Zamfara (N122.2bn) unseated Taraba (N87.96bn).
For external debts, Ebonyi ($65.2m), Bayelsa ($59.55m) and Kebbi ($44.03m) took the lead in 2019.
By 2022, Bayelsa ($60.39m) overtook Ebonyi ($58.57m), while Taraba ($46.47m) overtook Kebbi ($40.93m).
In its December 2022 edition of the Nigeria Development Update, the World Bank noted that states’ debts would rise above 200 per cent of the revenue generated in 2022 and 2023.
The report read, “Debt levels for an average state are estimated to increase from 154.6 per cent of revenues in 2021 to above 200 per cent of revenues in both 2022 and 2023.”
According to the Washington-based bank, the increase in debts will be due to low allocation from the Federation Account, which will likely weaken the fiscal condition of the states.
The global lender had earlier said that Nigerian states would likely lose N18.8bn in oil and gas revenues in 2022, as worsening revenue collection at the federation level increases budgetary pressures for the states.
According to the bank, the declining revenue from the federation level has put many states in a precarious fiscal position.
The World Bank also said foreign direct investment in Nigeria remained low because of limited forex availability, security concerns, and other structural challenges.
It said, “Net foreign direct investment and foreign portfolio investment flows into the Nigerian economy remain low, totalling only about 1 per cent of GDP.
“Net FDI inflows are negative, reflecting net withdrawals of equity by foreign investors. FDI and FPI flow into Nigeria do not compare favourably with similar economies of the world, reflecting difficulties with FX availability, security concerns, and other structural challenges in recent years.
“Low growth and slow structural transformation have contributed to this outcome — the pace of structural transformation of the domestic economy of the 2000s has not been sustained over a sufficiently long period.”