How much debt has Ekiti state government accumulated since Governor Fayose assumed office in October 2014?

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The Claim

In December 2017, various newspapers reported allegations and rebuttals over Ekiti state’s debt. On December 17, The Daily Post published a news report which claimed that “total bank loans incurred by the Fayose administration is N51,084,689,977.21”.

 

On December 18, Vanguard Newspaper published a response from Ekiti state, in which Special Assistant to the State Governor on Public Communications and New Media, Lere Olayinka, claimed that “Ekiti State Government was indebted to the tune of N86, 013,689,097 as at October 16, 2014, that Governor Fayose took over”.   In the same publication, Governor Fayose was reported to have said that “the only fresh loan taken by his government was the N10 billion grant from the Excess Crude Account, which was released to all States for capital projects, N2.8 billion requested from Wema Bank to pay State Universal Basic Education Board (SUBEB) counterpart fund out of which N1 billion has been accessed and N600 million for MDGs counterpart fund, which has been repaid”.

 

The state governor, via his twitter handle, later said that “The APC people are claiming that I borrowed N56bn, why not ask the DMO and other agencies of the FG publish details of the N56bn that they said I borrowed? I only got N10bn GRANT from ECA and the grant was given to all States. I did not take any loan”.  Another twitter user then pointed out the significant increase in the state’s debt stock as reported by the Debt Management Office.

 

We will therefore factcheck these claims regarding Ekiti State’s government’s debt:

  • How much was Ekiti state’s debt stock when the governor took office in October 2014?
  • How much is Ekiti State’s current debt stock?
  • How much more debt has Ekiti state government accumulated since Governor Fayose assumed office in October 2014?

 

How much was Ekiti state’s debt stock when the governor took office in October 2014?

No information was found on the DMO or National Bureau of Statistics’ website as at October 16, 2014 when Governor Fayose was sworn into office; however, the state’s total debt stock as at December 2014 stood at N38.26bn as shown below:

 

 

 

 

 

Source: National Bureau of Statistics (http://www.nigerianstat.gov.ng/); Debt Management Office (https://www.dmo.gov.ng/)

 

How much is Ekiti State’s current debt stock position?

As at June 2017, the state’s debt stock stood at N105.62bn (N105,623,863,795.67bn) as shown in the table below:

 

 

 

 

Source: National Bureau of Statistics

It is important to state that the state government’s debt stock used in this comparison is only made up of debt instruments that require fixed payments to the holder, usually with interest. This includes Bonds and borrowings from banks but does not include other liabilities or accrued amounts such as salaries owed to public servants or amounts owed to contractors.

 

How much more debt stock has Ekiti state government accumulated since Governor Fayose assumed office in October 2014?

Between assuming office in October 2014 and June 2017, Ekiti state’s External debt stock has grown by $20.80million while the state’s Domestic Debt stock has grown by N54.59billion.

Total additional debt stock accumulated during Governor Fayose’s tenure between December 2014 and June 2017 therefore amounts to N67.36bn, as shown in the table below:

Source: National Bureau of Statistics (http://www.nigerianstat.gov.ng/); Debt Management Office (https://www.dmo.gov.ng/)

 

What if the increase is not new principal but accumulated interest?

Assuming the increase in the state’s loan stock during Governor’s Fayose’s tenure is not due to new loans (according to the governor’s claim that he did not take any loan other than the N4.4bn mentioned above), but due to accumulated interest, this would mean that interest was accumulated at the rate of 55.82% and 49.10% per annum in 2015 and 2016 respectively, as shown below:

We consider this assumption unreasonable, especially as the governor mentioned here that the state’s bank loans were at an average interest rate of 14.83%.

Furthermore, in the budget presentation documents for 2017, Ekiti state government disclosed an amount of ACTUAL Internal Loan Bond of N13.48billion, taken in 2016 alone.

 

We therefore take the increase of N54.59billion in Domestic Debt stock and $20.80million increase in External Debt stock as new drawdowns from existing loans or fresh loans taken by the state government.

Thus, 30.93% of the state’s current External debt stock and 64.18% of its Domestic Debt stock were accumulated between December 2014 and June 2017.

In other words, the state’s External debt stock grew by 44.79% while its Domestic debt stock grew by 179.21% from December 2014 to June 2017.

 

Conclusion

The state’s total debt stock when the governor took office in October 2014 was N38.26bn.

The total debt stock as at June 2017 has now increased to N105.62bn.

Therefore, the state’s debt stock has increased by N54.59bn in Domestic Debt stock and $20.80million in External Debt stock, representing the total amount of debt stock accumulated since Governor Fayose assumed office in October 2014.


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