A coalition of non-governmental organisations interested in transparency and accountability in governance has expressed worry over the constant recourse to borrowing and the rising external and domestic debt profile of Rivers State.
The NGOs which spoke under the aegis of the Niger Delta Citizens and Budget Platform had previously advised the State Government against tying a significant percentage of its programmes and projects to funds expected to be derived through borrowing either as bonds, grants, domestic or external loans.
The National Coordinator of NDCBP, Mr. Ken Henshaw, said in a statement issued in Port Harcourt on Monday that the recent approval granted by the State House of Assembly for $280m concessionary loan to be taken from the World Bank and the Africa Development Bank for the purpose of providing water and sanitation in the state would only drive the state deeper into debt.
Henshaw cautioned that should the state government get the loan, it would be indebted to the tune of $322m and would only be next to Lagos State as the most indebted state in Nigeria.
He said, “Since 2008, Rivers State has experienced a steady rise in the amount it owes external creditors. In 2008, Rivers State owed $32.3m, which increased to $33.7m in 2009.
“By 2010, it rose to $35.5m and decreased to $33.8m in 2011, only to rise again to $36.6m in 2012 and $42.6m as at the end of 2013.
“The current external debt figure places Rivers State in the 20th position on the external debtor list. If the Rivers State government proceeds to borrow the $280m approved by the House of Assembly, the external debt profile of the state will increase to $322m, making it the second most indebted state in Nigeria behind Lagos State.
“This is without the addition of a significantly large domestic debt amount, which stood at N81.4bn and represented 5.2 percent of the total domestic debt of 36 states as at the end of 2012.”
Henshaw explained that the cost of servicing the debts remained its major concern, observing that the burden of debt servicing was already taking its toll on finances of the state.
He recalled that the state recorded a 2,500 percent increase in debt servicing or repayment between 2010 and 2011 and added that the amount of money set aside by the Rivers State Government for the repayment of debts had increased from N250m to N6.250bn.
The NDCBP national coordinator said the trend reduced government capacity to pursue infrastructural development, saying, “Of equal concern is the fact that the government has decided to initiate a new water project even after the governor proclaimed in his 2014 budget speech to the state House of Assembly, that his government will not embark on any new project, but will rather concentrate on completing all on-going projects across the state.
“The NDCBP recommends that the more prudent approach to development will be for the government to grow its internally-generated revenue base through lucrative investments, a more efficient taxation system, a drastic cut-down on wasteful expenditures and the blocking of all avenues for leakages,” Henshaw added.