Some financial experts, on Tuesday, called for domestication of debt law in states, saying it would help in managing their finances and boost their economy.
They stated this in separate interviews in Ibadan.
A Financial Consultant with L. A. Konsult, Mrs Lolade Adesola, said that domestication of debt law in states was very crucial and critical to their economic buoyancy.
“Indeed, it is not only debt law that should be domesticated; there are so many laws that only operate at the federal level which need to be domesticated in states.
“These include laws on child labour, domestic violence, rape and minimum wage, among others.
“However, debt law is particularly important, as it will help governors to know how to managing their state finances better.
“Many of them are so reckless to the extent that they accumulate debts which they will not be able to pay back.
“Unfortunately, some banks are lending them money without observing due diligence.
“At the end of the day, most of the states have no money to meet their recurrent expenditures, talk less of capital ones,” she said.
Adesola added that domestication of the law would help guide the governors on borrowings and issuance of bonds through the stock market.
Another financial expert, Mr Sola Famakinwa, said that the effects of debt portfolio on economic growth could not be over-emphasised.
“The fact is that domestic debts, external debt servicing, inflation rate and foreign direct investments, all have negative relationship with growth variables.
“Increase in the domestic debts by government translates into decrease in production of goods and services, especially in situations where such debts are used for recurrent expenditure.
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“External debt servicing denotes capital flight from the country, while inflation rate means that the cost of goods and services will reduce people’s purchasing power, with implications on global competitiveness of Nigerian products.
“External debts come with the obligation of debt servicing, which translates into reduction in funds meant for development purpose,” he said.
Famakinwa, however, argued that if external debts were put into productive use, the returns would far outweigh the cost.
