Bayelsa, Lagos and Delta states are the most domestically indebted states in Nigeria. Also on the topmost step are Cross River, the Federal Capital Territory (FCT), Rivers, Ondo, and Akwa Ibom states.
“Seven members of the group are predictable (five oil producers, Lagos and the FCT), to which we add Ondo,’’ says FBN Capital Research, an investment and asset management company.
Data from Debt Management Office (DMO) and FBN Capital Research show that as of December 2011, Bayelsa State’s domestic debt stood at N163 billion, while that of Lagos State hit N158 billion.
Delta and Cross River states incurred N91 billion debt each, whereas the FCT’s debt profile revealed N86 billion. Rivers, Ondo and Akwa Ibom states incurred N84 billion, N48 billion and N41 billion debt, respectively.
External debt was excluded because it was guaranteed by the Federal Government. An inclusion of external debt would see Kaduna replace Akwa Ibom, but the list would otherwise remain the same, analysts say.
The total domestic debt burden of the states represented just 3.2 percent of Nigerian Gross Domestic Product (GDP).
Lagos State has thus reported GDP of N12 trillion for 2010, which would make its ratio about 2 percent. But analysts consider the threshold generous since all the states other than Lagos generate less than half of their total revenue themselves.
The DMO measures debt sustainability as total debt as a proportion of total revenues.
All the states pass the World Bank’s debt solvency test of 250 percent. At 2011, those heading the list were Cross River (139%), Bayelsa (105%), the FCT (97%), and Ebonyi (96%).
The DMO also measures liquidity as the debt service deduction by the Federal Accounts Allocation Committee as a proportion of the committee’s allocation, both on a 12-month average basis. All come below the safety threshold of 40 percent, led by Edo (36%), Abia (29%), Gombe (27%) …