Lagos: 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.
According to News Agency of Nigeria, Oniha emphasized the importance for sub-national governments to recognize that Nigeria operates as a single economy, where the actions of one level of government can impact another. She stressed the need for the prudent utilization of borrowed funds, highlighting the importance of managing debt sustainably. Oniha explained, “The other part of the story is using the money well and making sure that you can manage your debt in a sustainable manner.”
Oniha noted that borrowing is not exclusive to the Federal Government, as sub-national entities also engage in it, and must adhere to various borrowing laws. She urged state governments to prevent debt distress, recalling Nigeria’s past experiences with debt crises. “Everything necessary must be done to avoid a repeat,” she added.
Furthermore, Oniha advised state governments to explore Public-Private Partnership (PPP) options for infrastructure financing to ease funding burdens. She explained that PPPs can attract private sector investment and expertise, reducing the financial burden on the government, accelerating project delivery, and often resulting in better quality outcomes. She also advocated for optimizing tax revenues to improve fiscal health and lessen financial pressure on government funds.
Oniha asserted that efficient tax collection boosts government revenue without increasing tax rates, allowing more funds for public investments in critical areas like health, education, and infrastructure. Improved compliance and administration of taxes reduce leakages and corruption, making the tax system fairer and more predictable.
The Lagos State Commissioner for Finance, Mr. Abayomi Oluyomi, echoed Oniha’s sentiments, emphasizing the urgent need for sub-national entities to adopt responsible debt management. He pointed out that governments are responsible for societal needs, and fiscal and monetary policies should aim to create comfort for the people.
Oluyomi highlighted that borrowing is essential for sustainable development and economic resilience, with well-researched debt management policies forming the foundation for such borrowing. He also noted that Lagos state is committed to sustainable debt management but faces challenges due to the volatility of the Naira exchange rate, which has significantly increased the state’s debt burden.
The News Agency of Nigeria reported that the workshop was organized to provide states with legal frameworks for borrowings, aiming to enlighten them on effective debt management strategies.
