Rivers State has emerged as a focal point in Nigeria’s escalating sub-national debt crisis, with the state contributing significantly to the N417.7 billion borrowed by 10 states in the first half of 2024, despite a 40% surge in Federation Account Allocation Committee (FAAC) revenues, according to data from the Debt Management Office (DMO).
The borrowing spree, which also includes Kwara, Niger, Enugu, and six other states, has raised concerns about fiscal sustainability as Rivers grapples with inherited financial burdens and ambitious infrastructure goals.
Rivers State, a key oil-producing region, has leaned heavily on loans to fund projects and recurrent expenditures, a trend that mirrors the broader fiscal challenges faced by Nigeria’s sub-nationals.
The DMO reports that these 10 states, including Rivers, increased their domestic debt by N417.7 billion, even as FAAC allocations rose significantly due to higher oil prices and foreign exchange gains. For Rivers, this financial strategy has sparked debate over the balance between development and debt accumulation.
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Governor Siminalayi Fubara’s administration has prioritized infrastructure, including road networks and healthcare facilities, to bolster Rivers’ economic hub status. However, critics argue that the state’s borrowing, part of the N11.47 trillion total state debt as of June 2024, risks straining future budgets. “Rivers has the potential to lead Nigeria’s economic diversification, but unsustainable borrowing could jeopardize long-term growth,” said Paul Alaje, an economist.
The state’s debt servicing already consumes a significant portion of its internally generated revenue (IGR), which lags behind leaders like Lagos.
The naira’s devaluation, from N899.39/$1 in December 2023 to N1,470.19/$1 by June 2024, has exacerbated Rivers’ external debt burden, with foreign loans surging by 73.46% in naira terms. This has left less fiscal space for critical sectors like education, where Nigeria faces 18.3 million out-of-school children, a challenge acutely felt in Rivers’ rural communities.
Civil society groups in Port Harcourt are urging greater transparency in loan utilization. “Rivers’ citizens deserve clarity on how these funds are spent,” said Mercy Norbert, a local activist. Meanwhile, the state government defends its borrowing, citing inherited debts and the need for transformative projects.
As Rivers navigates this fiscal tightrope, the DMO warns that unchecked borrowing could push states toward insolvency. With FAAC allocations projected to hit N5.54 trillion in 2024, Rivers and its peers face mounting pressure to prioritize fiscal discipline over debt-fueled growth.
