The Debt Management Office (DMO) on Tuesday urged sub-national entities in Nigeria to ensure effective debt management practices to ensure sustainable economic development.
By Kadiri Abdulrahman
The Debt Management Office (DMO) on Tuesday urged sub-national entities in Nigeria to ensure effective debt management practices to ensure sustainable economic development.
The Director-General of the DMO, Patience Oniha, gave the advice at a World Bank assisted workshop on “Borrowing Guidelines for Top Policy Makers ” in Lagos.
Oniha said the workshop was informed by the need for sub-national governments to understand that the country operated one economy, with actions of one level of government affecting the other.
She called for prudent utilisation of borrowed funds
“The other part of the story is using the money well and making sure that you can manage your debt in a sustainable manner.
“The reason why we want to work with the sub-nationals as to how to borrow is that it is not the Federal Government alone that borrows. There are various laws on borrowing and these have to be adhered to,” she said.
She urged state governments to avoid debt distress, adding that Nigeria had gone through debt crisis in the past.
“Everything necessary must be done to avoid a repeat,” she said.
Oniha urged state governments to explore Public-Private Partnership (PPP) options for infrastructure financing, as a means of reducing their funding burdens.
“PPPs can help improve Nigeria’s economy by attracting private sector investment and expertise to develop infrastructure and deliver public services.
“This reduces the financial burden on government, accelerates project delivery, and often results in higher quality outcomes. PPPs can also create jobs, stimulate local businesses and foster innovation,” she said.
She also called for more concerted efforts towards optimising tax revenues as a means of boosting their fiscal health, thereby reducing pressure.
According to her, efficient tax collection increases government revenue without raising tax rates, ensuring that more funds are available for public investment in health, education and infrastructure.
“Improved compliance and administration reduce leakages and corruption, making the tax system fairer and more predictable.
“Together, PPPs and efficient tax collection boost economic growth, enhance public services, and support sustainable development.
“So, revenues are absolutely important. It is important to keep surviving. You must raise revenues. Those borrowings must generate something that generate these revenues,” she said.
The Lagos State Commissioner for Finance, Mr Abayomi Oluyomi, said that there was an urgent need for sub-national entities to adopt responsible debt management.
Oluyemi said, “Governments are put in place to cater for need of society, and fiscal and monetary policies should be aimed at creating comfort for the people.
“Government is about the welfare and security of the people. There is a social contract between the government and the people.
“To achieve this, revenue is never enough. Borrowing is a cornerstone of sustainable development and economic resilience. Well researched debt management policies are the foundation for borrowing,” he said.
The commissioner said that Lagos state government was committed to sustainable debt management.
He, however, said that volatility of the Naira exchange rate had significantly increased the state’s debt burden, resulting to a high debt rate.
The News Agency of Nigeria (NAN) reports that the workshop was organised to enlighten the states with legal frameworks for borrowings. (NAN)(www.nannews.ng)