Lack of funds: DMO stops states from borrowing

The old practice where States had easy access to borrowing from
either foreign or local borrowing windows has now been halted.

The new Director –General of the Debt Management Office (DMO),
Ms. Patience Oniha made this disclosure yesterday in Abuja when the
Edo State Governor, Mr. Godwin Obaseki visited to congratulate her
on her recent appointment as the new Director General of the
DMO.

Oniha said the decision was taken because there was no longer
huge allocation to states at the end of monthly Federation Accounts
Allocation Committee (FAAC) meetings “from where borrowed funds
could be deducted, hence continuous exposure to new lines of
borrowings may no longer be sustainable.”

As a result, the component units of the Nigerian Federation have
been advised to henceforth imbibe frugality and a new strategic way
of fiscal plans and implementation

Oniha lamented that it was unfortunate that oil mineral
resources has continued to be the dominant contributor to the
Federation Account.

She however advising that States should “deploy new strategic
thinking on how to address the financing of their already bloated
debt stocks as well as how to generate funds to execute their plans
aside from borrowings.”

According to Oniha, “previously, we could rely on funds from
FAAC and in addition to that we could borrow both at the Federal
and at the State levels because there wasn’t a challenge. But I
think the times have changed. Revenues are under severe pressures,
we are still dependent on oil revenues, non-oil revenues are
picking up, but that is still a journey.”

She noted that what this “means now, and in future, is that we
need to do things so much differently, we must be more strategic in
the management of public finance so the language I always use in my
previous work where I was at the Efficiency Unit is that it’s no
longer business as usual.”

Oniha warned that “we can’t collect money from FAAC, borrow,
continue and wait until the next month. So at various levels, we
need to be more strategic and more creative in the things that we
do.”

At the Federal level Oniha said the federal government has
“initiated several measures to increase non-oil revenue and control
cost.”

The DMO boss stated that “the law recognizes the States for
being responsible for fiscal laws relating to the States, but we
decided to partner with them in the belief that Nigeria is one
project, hence we should not be looking at the center, we should be
looking at the various tiers of governments.”

As a result of the federal government’s big brother role, Oniha
said the “what we did in that regards was to work with the various
tiers of the states to have enabling laws , create their own debt
managements and then help them work with them through training and
other activities to create their own domestic debt data.”

Regarding the states’ compliance to generating debt data, the
DMO boss said “we have major challenges. At the DMO, we have done a
lot with the states in terms of assisting in developing their debt
data, passing debt laws leading to the establishment of Debt
bureaux and so on. As we speak, we have a good understanding of the
debt portfolios at the sub- national levels.”

The old practice where States had easy access to borrowing from
either foreign or local borrowing windows has now been
halted.

The new Director –General of the Debt Management Office (DMO),
Ms. Patience Oniha made this disclosure yesterday in Abuja when the
Edo State Governor, Mr. Godwin Obaseki visited to congratulate her
on her recent appointment as the new Director General of the
DMO.

Oniha said the decision was taken because there was no longer
huge allocation to states at the end of monthly Federation Accounts
Allocation Committee (FAAC) meetings “from where borrowed funds
could be deducted, hence continuous exposure to new lines of
borrowings may no longer be sustainable.”

As a result, the component units of the Nigerian Federation have
been advised to henceforth imbibe frugality and a new strategic way
of fiscal plans and implementation

Oniha lamented that it was unfortunate that oil mineral
resources has continued to be the dominant contributor to the
Federation Account.

She however advising that States should “deploy new strategic
thinking on how to address the financing of their already bloated
debt stocks as well as how to generate funds to execute their plans
aside from borrowings.”

According to Oniha, “previously, we could rely on funds from
FAAC and in addition to that we could borrow both at the Federal
and at the State levels because there wasn’t a challenge. But I
think the times have changed. Revenues are under severe pressures,
we are still dependent on oil revenues, non-oil revenues are
picking up, but that is still a journey.”

She noted that what this “means now, and in future, is that we
need to do things so much differently, we must be more strategic in
the management of public finance so the language I always use in my
previous work where I was at the Efficiency Unit is that it’s no
longer business as usual.”

Oniha warned that “we can’t collect money from FAAC, borrow,
continue and wait until the next month. So at various levels, we
need to be more strategic and more creative in the things that we
do.”

At the Federal level Oniha said the federal government has
“initiated several measures to increase non-oil revenue and control
cost.”

The DMO boss stated that “the law recognizes the States for
being responsible for fiscal laws relating to the States, but we
decided to partner with them in the belief that Nigeria is one
project, hence we should not be looking at the center, we should be
looking at the various tiers of governments.”

As a result of the federal government’s big brother role, Oniha
said the “what we did in that regards was to work with the various
tiers of the states to have enabling laws , create their own debt
managements and then help them work with them through training and
other activities to create their own domestic debt data.”

Regarding the states’ compliance to generating debt data, the
DMO boss said “we have major challenges. At the DMO, we have done a
lot with the states in terms of assisting in developing their debt
data, passing debt laws leading to the establishment of Debt
bureaux and so on. As we speak, we have a good understanding of the
debt portfolios at the sub- national levels.”