Enugu State Governor, Dr. Peter Mbah, is seeking approval from the State House of Assembly to secure a loan amounting to N170 billion, despite the existing debt burden. If approved, this loan would push the state’s total debt load to exceed N300 billion.
The House of Assembly’s order paper for Monday, October 9, 2023, which includes a communication from Governor Mbah, requesting approval for this loan facility.
What the memo entails
The memo outlines the loan request in the following manner, Governor Peter Mbah is seeking N100 billion in bank guarantees, N10 billion as a term loan, an additional N10 billion as an overdraft, and an N50 billion credit facility.
Although the memo does not specify the loan’s intended purpose, it is noteworthy that the credit facilities being sought by Governor Peter Mbah exceed the entire budget presented by former Governor Ifeanyi Ugwuanyi for the entire 2023 fiscal year by N3.38 billion. Furthermore, this request comes just four weeks after the House of Assembly approved a supplementary budget of N58 billion for the governor on September 12, 2023.
Multiple reports dated September 18, 2023, suggested that Governor Mbah had intentions to secure N50 billion from the bond market. Furthermore, there is uncertainty regarding whether the N50 billion in bonds was intended to support the previously approved N58 billion supplementary budget or if it will play a role in the financing of the newly sought N170 billion in loans.
NBS ranked Enugu as 7th most indebted state
According to data released by the National Bureau of Statistics (NBS) in February 2023, Enugu State was ranked as the 7th most indebted state in the country, with a total external debt of $123.02 million (equivalent to N167 billion).
In the midst of this, certain stakeholders within Enugu State express growing concerns regarding the state’s escalating debt profile. They find it particularly troubling since there is a lack of visible development projects on the ground to account for the substantial funds received by the government since assuming office on May 29, 2023. Besides the unexplained utilization of the N5 billion fuel subsidy palliative, the state government has received over N40 billion through federal allocations since June 2023.
Peter Mbah stated his vision aimed at expansion
In a published interview with This Day newspapers on September 4, 2023, Governor Mbah outlined his vision for revenue growth, emphasizing the pivotal role of private sector expansion.
Governor Mbah stated that they were deliberate because they knew that to tackle unemployment and generate wealth, there was a need for private sector investments. It is not going to come from the public sector. And for the private sector to invest, they also need the government to do certain things.
However, with a minimum total external debt reaching N300 billion, Enugu State’s current debt burden raises concerns about its attractiveness to potential private sector investments.
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