The Federal Government has deducted over N415bn from state government allocations to service their external loans.
This was according to data from the Federation Account Allocation Committee, FAAC Disbursement reports published by the National Bureau of Statistics.
The deductions were made between 2019 and 2023 from the allocations given to state governments from the Federation Account.
The federation account is currently being managed under a legal framework that allows funds to be shared under three major components: statutory allocation, Value Added Tax distribution and derivation principle.
An analysis of the report showed that the deductions incurred by the sub-nationals were N57bn in 2019, N74bn in 2020, before increasing to N86.2bn in 2021, N78bn in 2022 and N120.01bn as of December 2023. The figure indicated an increase of 110 per cent, signalling the country’s huge debt amidst dwindling revenue.
The most hit state by the deductions was Lagos, with about N131.1bn deducted for external debt servicing.
It was followed by Kaduna with N45.85bn deducted, and Cross River with N21.59bn deducted.
Despite this heavy debt servicing, the federal government has not restrained from obtaining loans to service its expenditures.
The Government borrowed a total sum of N4.94tn from domestic sources in the first six months of the administration of President Bola Tinubu, indicating significant dependence on loans.
Also, Nigeria spent a sum of N7.8tn to service its debt obligations in 2023, a 121 per cent increase compared to N3.52tn incurred in the previous year.
Under external debt, increased borrowing was observed from the African Development Bank and the Exim Bank of China, with a total loan of $541.5m.
The increased debt is, however, contradictory to promises made by the Tinubu administration to reduce borrowing and focus more on increasing revenues
