Reps probe Nigeria’s public borrowing since 1999

The House of Representatives has decided to conduct a thorough audit of loans taken out by both federal and state governments since Nigeria returned to democratic governance in 1999.

Over the past 25 years, the country has experienced democratic rule under five presidents: Olusegun Obasanjo, Umaru Yar’Adua, Goodluck Jonathan, Muhammadu Buhari, and the current president, Bola Tinubu.

During this time, billions of dollars have been borrowed to support developmental initiatives, while the governments of the 36 states have also amassed both foreign and domestic debts.

This decision to investigate public loans came after the adoption of a motion put forward by Mr. Lanre Okunola, the representative for Surulere II Federal Constituency in Lagos State. His motion emphasized the need for effective oversight of public debt related to loans from federal and state governments, as well as ensuring that all borrowed funds are used appropriately.

Referencing data from the Debt Management Office of Nigeria, Okunola stated, “As of March 31, 2024, Nigeria’s public debt, which includes both external and domestic obligations, has significantly increased to N121.67 trillion ($91.46 billion). This debt has been accumulated through loans from both domestic and international sources to finance various projects and budget shortfalls.”

He noted that the same report indicated that “the national debt rose by N24.33 trillion in just three months, from N97.34 trillion ($108.23 billion) in December 2023 to N121.67 trillion ($91.46 billion).” While acknowledging that borrowing is essential for development financing, he cautioned that unchecked debt accumulation poses significant risks to Nigeria’s fiscal stability and economic future.

Okunola pointed out that the 1999 Constitution, the Fiscal Responsibility Act of 2007, and the Debt Management Office Establishment Act of 2003 grant the National Assembly the authority to approve all government loans and ensure their proper use.

He argued that “over 40 percent of developing nations, including Nigeria, allocate more resources to servicing debt and repaying loans, which leads to financial inefficiencies and detracts from funding critical sectors such as education, healthcare, infrastructure, and social policies.”

Okunola added, “Many loans taken by state governments from commercial banks and approved by the Federal Ministry of Finance are contracted without full adherence to constitutional requirements for National Assembly approval. Furthermore, there are cases where borrowed funds are not used effectively for their designated purposes, which diminishes the intended benefits for citizens.”

After members expressed their support for the motion, the House directed its Committee on Aids, Loans, and Debt Management to conduct a comprehensive audit and oversight of all loans secured by both federal and state governments since the current democratic era began. They are expected to report back within a month for further legislative action.