Kaduna groans as monthly debt repayment rises to N7bn

From Sola Ojo, Abuja

Kaduna State Government has said it is spending not less than N7 billion monthly to service its debt, ruling out additional borrowing for now.

Commissioner for Finance, Ibrahim Tanko Muhammed, disclosed this yesterday while responding to questions on Kaduna’s debt profile and the government’s plans to finance development.

Tanko said the state had reached a critical level in its borrowing, warning that contracting new loans would put further pressure on its finances.

“As of now, we can say we are filled to the brim in terms of level of borrowing. In Nigeria today, Kaduna State is about the second most indebted state,” he said.

According to him, the huge monthly debt repayment obligation was a major reason the administration of Governor Uba Sani was reluctant to take on additional loans.

“And the burden that we have in terms of monthly repayments is too huge for us to say we want to increase borrowing.

“The little that remains, Governor Uba Sani is doing his best to see that he doubles his effort to do what he can be able to do with the remaining and try to source for other sources outside there, either through the internally generated revenue or through getting certain grants,” the commissioner said.

Tanko, former banker, said borrowing was only sustainable when a government had sufficient capacity to repay its obligations.

“You see, actually, the idea of borrowing is when you have the capacity to repay. And we have major sources of funding, either through the federal allocation or internally generated revenue,” he said.

The commissioner, however, alleged that the previous administration incurred huge debts without corresponding investments capable of generating sufficient revenue to service the loans.

He recalled a situation in which Kaduna was expected to receive about N6 billion in allocation but had about N8.2 billion deducted for loan repayments, forcing the state to source additional funds to meet its obligations.

Tanko described the situation as financially unsustainable, questioning the rationale for maintaining a heavy debt burden where, according to him, the borrowed funds were not invested in revenue-generating projects.

He also questioned the economic viability of some projects inherited by the present administration, citing the Shoprite facility as an example.

According to him, the state had expected such investments to generate revenue and stimulate economic activity but had not received the anticipated returns.

“Where is Shoprite now? There. And we are not going to get the rent. The business we expect people to do there, they are not doing,” he said.

Tanko argued that borrowing without creating productive and revenue-generating assets amounted to increasing liabilities without improving the state’s capacity to repay them.

He said the Sani administration was determined to protect the state’s fiscal sustainability and would not borrow simply to finance recurrent expenditure or unproductive projects.

“We don’t have any intention of borrowing,” he said.

The commissioner, however, said the government could consider borrowing for strategic sectors such as healthcare and agriculture, where such investments could directly improve citizens’ welfare and create productive capacity.

“We want to borrow for health, we want to borrow for agriculture, to do something for the health of the people.”

Tanko said any future borrowing would be tied to clearly defined projects capable of delivering measurable economic and social benefits.

He added that maintaining Kaduna’s financial viability remained a priority, stressing that the government would continue to exercise caution before taking on additional liabilities.

The administration of former governor, Nasir El-Rufai, had defended its borrowing and infrastructure programme, maintaining that the loans were used to finance critical infrastructure and development projects across the state.