Despite growing concerns over the state’s mounting debt, Enugu State Governor, Dr. Peter Mbah, has requested approval from the State House of Assembly to secure loans totaling N170 billion.Thank you for reading this post, don't forget to subscribe!
If granted, this loan would escalate the state’s total debt to over N300 billion, as reported by Naija247news.
An order paper for the House of Assembly’s session on Monday, October 9, 2023, obtained by Naija247news, reveals that Governor Mbah has formally requested the Assembly’s approval for this significant loan facility.
The loan breakdown outlined in the memo comprises N100 billion in bank guarantees, a N10 billion term loan, an additional N10 billion overdraft, and a N50 billion credit facility.
While the purpose of the loan is not explicitly stated in the memo, it is noteworthy that the combined credit facilities being sought by Governor Mbah exceed the entire budget presented by former Governor Ifeanyi Ugwuanyi for the entire 2023 fiscal year by N3.38 billion.
This move comes just four weeks after the House of Assembly approved a supplementary budget of N58 billion for the governor on September 12, 2023. Reports from September 18, 2023, suggested that Governor Mbah was considering raising N50 billion from the bond market.
It remains unclear whether the N50 billion in bonds is intended to finance the previously approved N58 billion supplementary budget or if it will be used as part of the funding for the N170 billion fresh loans being requested.
In February 2023, data from the National Bureau of Statistics (NBS) ranked Enugu State as the seventh most indebted state in the federation, with total external debts of $123.02 million (N167 billion).
However, some stakeholders in Enugu State have expressed concerns about the increasing debt profile of the state, particularly as there are limited signs of tangible development projects to justify the substantial funds received by the government since taking office in May 2023.
Despite receiving over N40 billion in federal allocations since June 2023, the government has not provided clear explanations for the allocation of these funds or demonstrated visible project outcomes.
Governor Mbah has spoken about his ambition to boost the state’s revenue from the current $4 billion (N3.8 trillion) to $30 billion (N28.5 trillion) within eight years, primarily driven by private sector growth. However, with a minimum total external debt of N300 billion, Enugu State’s debt burden may pose challenges to attracting private sector investments.