Kano to borrow fresh N55bn in two years, amid calls for reduced loan dependency

By solacebase.com On Mar 14, 2025

CSOs, police , harassment, journalists ,Kano,, Ibrahim Waiya, Buhari Abba Rano, — Kano State Governor, Abba Kabir Yusuf

By Aminu Abubakar

A review of Kano State‘s Debt Sustainability Report by SolaceBase reveals that the state government plans to borrow N55 billion between the 2025 and 2026 fiscal years, despite growing concerns over rising debt and calls for a shift towards more sustainable revenue sources.

According to the report, the government has no plans to secure external loans in 2025. Instead, it intends to rely entirely on domestic borrowing, with a total of N30.4 billion expected to be raised from local sources that year.

In 2026, however, the borrowing strategy changed, with the government planning to raise N14 billion from domestic sources and an additional N10.8 billion from external sources. This brings the total planned borrowing for 2026 to N24.8 billion.

Rising Borrowing Trend Amid Growing Debt Burden

The N30.4 billion planned for borrowing in 2025 represents an increase compared to the N25.065 billion earmarked for 2024, suggesting a continuous reliance on debt to finance the state’s fiscal needs.

This increasing reliance on loans has sparked concerns about the state’s growing debt profile. As of September 2024, data from the Debt Management Office (DMO) indicates that Kano State’s domestic debt stood at N61.9 billion, while as of June 2024, its external debt was recorded at $123.393 million.

Rising Debt Servicing Costs

The state’s debt accumulation has also led to a sharp increase in debt servicing costs, raising concerns about the sustainability of its financial strategy.

In 2024, Kano State spent N69.8 billion on debt servicing. In 2023, debt servicing expenses stood at N9.5 billion. In 2022, the state spent N12.7 billion on servicing its debts. In 2021, N3.7 billion was spent on debt servicing.

This rising debt-servicing obligation could put further pressure on the state’s finances, limiting its ability to fund critical development projects.

Debt Burden Amid Developmental Challenges

Despite the state’s increasing reliance on loans, Kano continues to grapple with major developmental challenges, including poverty, poor access to education, and inadequate infrastructure.

An estimated 4.6 million people in Kano, aged 18 and above, live in poverty. About 35 percent of children in the state lack access to education. More than half of households, about 51 percent, do not have access to sanitary facilities. In addition, 31 percent of households lack access to clean drinking water, according to the multidimensional poverty index of the National Bureau of Statistics.

These statistics highlight the urgent need for strategic investment in human capital development and infrastructure, raising questions about whether the state’s borrowing strategy is effectively addressing these pressing issues.

Calls for Sustainable Fiscal Strategies

The rising debt levels have prompted calls from economists, policy analysts, and civil society organizations for the Kano State government to explore alternative revenue sources instead of relying heavily on borrowing.

There have also been calls for proposed measures that include expanding internally generated revenue through better tax collection and business formalization, encouraging private sector participation in infrastructure projects to ease the financial burden on the government, and ensuring that borrowed funds are used effectively to generate economic growth and reduce long-term dependency on loans.

With the state’s debt profile rising and debt servicing costs soaring, the question remains: Can Kano State balance its fiscal needs with sustainable economic growth, or will it continue down the path of mounting debt?