Gbese by inheritance
You might be owing money that you didn’t borrow
Good morning, Big Brains. I don’t know if it’s the national grid or my street’s transformer, but the neps are really kicking my butt today. Speaking of the national grid, there’s a new theory that explains why it has been falling harder than a finished woman these days.
- Margaret
Word count: ~ 1,100
Reading time ~4 mins
Let’s get into today’s edition:
It’s getting harder to make Nigeria debt-free
The national grid hasn’t been falling by accident
Edo’s new governor is shaking things up
The Big Deal
It’s getting harder to make Nigeria debt-free
Congratudolences are in order for Nigerians and we have the federal to thank for it. Even if all Nigerians come together to crowdfund, we probably still won’t be able to make Nigeria debt-free.
According to the Central Bank of Nigeria (CBN), between January and September 2024, the federal government spent $3.58 billion paying off foreign debt. That’s nearly 40% more than what the country spent on debt payments during the same period last year. In May alone, Nigeria spent a whopping $854 million repaying loans, the highest amount spent on debt repayment since 2023.
If you think that is bad, you’d hate to know that the federal government is not the only one deep in debt— all the states in the country also have debts. As of June 2024, the loans taken by all 36 states and the Federal Capital Teritory (FCT) made up ₦134.3 trillion of Nigeria’s total public debt. Lagos alone owes $1.24 billion, which makes up about 27% of Nigeria’s foreign debt.
Why is this a big deal?
BudgIT, an organisation that promotes budget transparency, recently published a report showing that Nigerian states have been relying heavily on funds from the Federal Accounts Allocation Committee (FAAC) to survive. To be more specific, 32 states relied on federal funds for at least 55% of their income.
The report also shows that apart from Lagos and Ogun states, 34 states relied on transfers from the federation account to handle at least 62% of their running costs. The short version of our point is simple: Nigerian states are relying on the federal government for funds, while the federal government is relying on foreign debt for funds. This puts all of us at risk.
Last week, we broke down how Nigeria currently spends more money than it makes. BudgIT’s report gives us many reasons to believe that there’s little hope of things getting better. Nigerian states aren’t generating enough revenue on their own to support the country, and whatever money the country earns is going straight into funding these states and paying off high-interest loans. This pattern has been consistent since 2023, and we’re still stuck in the same rinse-repeat process.
This means Nigeria’s debt will keep growing, likely pushing the country and its citizens into the worst economic crisis it has witnessed in years.
It would be wrong to assume this is just “Nigeria’s debt” because we’ve all inherited the gbese. The CBN's Households Expectation Survey recently confirmed that most Nigerians anticipate a difficult 2025. They are not wrong because the federal government will likely introduce new tax reforms to increase income generation. Crowdfunding but make it cute.
The national grid hasn’t been falling by accident
The frequent national grid collapses could be a result of national greed. Forgive the terrible use of pun, but that’s what the chairman of the Economic and Financial Crimes Commission (EFCC), Ola Olukoyede, thinks. On Tuesday, November 12, he said the frequent national grid collapses can be linked to some fraudulent activities in the electricity sector, especially the use of cheap, low-quality materials.
Olukoyede didn’t spill all the tea but he gave us a hint of what the mess looks like. He said, “If you see some of the investigations we are carrying out within the power sector, you will shed tears”.
Given how mysterious he is about the whole thing, we’ll assume the investigation's findings are still inconclusive. Even though the investigation is yet to be complete, we think the EFCC chairman might actually be on to something. In 2023, the national grid collapsed only three times, while in 2022, the country experienced eight national grid blackouts. The number of grid blackouts in recent years makes 2024 look especially suspicious because this year alone, the national grid has collapsed 11 times, with multiple blackouts sometimes happening in a single week.
In June 2020, the World Bank approved a $750 million loan for a project to improve Nigeria’s electricity supply. Even though the improvement recorded since then hasn’t been impressive, the World Bank approved another $500 million loan in July 2024 to achieve the same goal. If you’re scratching your head about where all these borrowed funds are disappearing to, you’re not alone—Sule Abdulaziz, the director of the Transmission Company of Nigeria, is just as confused. In October 2024, Abdulaziz confirmed that most of Nigeria’s power sector is relying on equipment that is as old as 50 years.
If the EFCC chairman proves that there’s dirty business in Nigeria’s power sector, it’s on sight for the culprits responsible for these blackouts.
Edo’s new governor is shaking things up
There’s nothing that says “There’s a new boss in town” like what Governor Monday Okpebholo did on Wednesday, November 13. The governor who was sworn in on Tuesday, November 12, has dismissed the executives of all boards of state public service and fired every political appointee, including permanent secretaries, barely 24 hours into his inauguration into office.
In a statement from his Chief Press Secretary, the governor announced that all affected appointees need to hand over government property to the most senior public officers in their departments, effective immediately.
The governor has also indefinitely stopped all money collection in the state, particularly in motor parks and other public spaces. He’s ordered the police to arrest anyone who tries to collect state money until he says it’s okay to resume revenue collection. According to him, he’ll be reviewing the revenue collection system soon and will let everyone know what’s next.
After dropping those two major bombshells, he assigned contractors to work on some abandoned road projects in Benin, promising his citizens that the roads would be fixed as soon as possible.
Might be too soon to tell how to categorise this energy but it’s big energy alright.
The Big Picks
Customs Revenue Collection Hit N5.7tn In One Year: The Nigeria Customs Service announced that it has collected ₦5.7 trillion in revenue as of November 12, 2024.
WTO To Hold Special Meeting For Selection Of Next DG: The World Trade Organization has announced it will hold a special meeting to move forward with choosing the next Director-General.If you enjoyed this edition of the newsletter, don’t forget to subscribe and share.
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9ja, we hail thee 😅