Northwestern states heavily rely on loans, incur high debt servicing figures in first 6 months of 2024

By Aminu Abubakar

A budget performance document of NorthWestern states has shown that three states in the region borrowed the sum of N69 billion in the first six months of the 2024 fiscal year.

This was confirmed in budget documents reviewed and carried out by SolaceBase.

Kano state borrowed the sum of N6.5 billion, Katsina borrowed N34 billion while Sokoto borrowed N28.5 billion per details on their budget performance reports.

Similarly, States like Zamfara, Jigawa and Kebbi did not borrow any money in the first six months of 2024.

However, further review shows that on the domestic front, Katsina state did not borrow any money but borrowed N34 billion from international loan sources.

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The loan obtained by Katsina is about three times its internally generated revenue with only N10.5 billion generated in the first six months of the year. Katsina state spent N8 billion on debt servicing in the first six months of the year. Meaning that about 80% of its internally generated revenue in the same period went to debt servicing.

Kano state borrowed N6.1 billion domestically and another N304 million from international sources.

Sokoto state made all of its borrowings from the international scene, borrowing the sum of N28 billion internationally.

The state only recorded N5 billion as internally generated revenue for the period under review, meaning that the loans it borrowed are over five times what it generated internally in the first six months of 2024.

There have been concerns over the reliance on loans by Northern states.

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This is because heavy reliance on loans usually leads to high figures for debt servicing by these states.

For instance, debt servicing gulped N7 billion in the first six months of 2024 for Sokoto state, this is N2 billion more than was recorded as internally generated revenue by the state in the first six months of the year, per details from the budget performance report.

These developments are despite the myriad of needs by states in terms of economic and human needs.

Experts have noted that states need to diversify their sources of revenue to curb the problem of overreliance on loans and its impact on development.