Abia State’s existing external debt exposure, according to the Debt Management Office (DMO), stood at approximately $133.55 million(N186 billion) as at June 30, 2026. Yet, the state is pursuing additional development financing arrangements that could substantially increase its foreign debt obligations.
The question is straightforward: why is Governor Alex Otti still pursuing substantial external borrowing at a time when federal allocations to states have increased considerably and Abia’s revenue profile has improved?
The proposed financing arrangements have a combined headline value of $313.8 million, comprising the $263.8 million Abia State Integrated Infrastructure Development Project and a further $50 million Rural Access and Agricultural Marketing Project (RAAMP) facility, according to the financing figures under consideration. These arrangements deserve closer examination, particularly regarding the actual loan components, their disbursement status and the state’s future repayment obligations.
The proposed infrastructure project involves the African Development Bank (AfDB), the Islamic Development Bank (IsDB) and the Canada-Africa Development Bank Climate Fund. Its financing structure comprises $100 million from AfDB, $125 million from IsDB and $15 million from the Canada-Africa Development Bank Climate Fund, with Abia State expected to provide $23.8 million as counterpart funding. The state has commenced gradual drawdown of the AfDB loan with the flag off/mobilisation of work at Old Express Aba and Omuma road. This will bring total external/foreign loan to about $446m@1400 per dollar N624 billion.
Abians and Nigerians were again deceived last week,When the Governor, Alex Otti, acclaimed seasoned economist who understands that public debts is made up of local or domestic and external or foreign debts, during his media engagement on Friday 30/10/26 deliberately cherry picked domestic/local repayment of *90billion as achievement,which is even contentious especially as gratuities, pensions and old contractors debt are still outstanding. Abia’s external loan will be hovering around $446m (N624 billion) when the foreign loans are 100% drawn. The deceit is legendary and this symbolises all the cliams going on in Abia.
It is important to establish that these initiatives did not originate with the present administration. However, the fact that previous administrations initiated the processes does not make their implementation obligatory, particularly when the economic circumstances that informed the original decisions have changed.
The real issue is whether Governor Otti has undertaken a fresh assessment of the state’s borrowing requirements, the relevance of the proposed projects and the capacity of Abia to meet the associated repayment obligations. After all, a loan proposal is not a sacred document that must be implemented regardless of changing economic realities. Development plans should respond to prevailing circumstances, not become prisoners of decisions taken more than a decade ago.
HOW THE LOAN INITIATIVES BEGAN
The first documented engagement between the African Development Bank (AfDB) and the Abia State Government took place in 2014, during the administration of Governor Theodore Orji.
On 17th September 2014, The Federal Minister of Finance, Dr Ngozi Okonjo-Iweala, led an AfDB delegation, headed by Dr Ousmane Dore, on a preliminary visit to Abia State.
The thinking at the time was that monthly federal allocations and internally generated revenue would not be sufficient to finance critical infrastructure while meeting the state’s other statutory obligations, hence external borrowing by the state.
Among the proposed interventions were measures to address perennial flooding in Aba and rehabilitate major roads connecting important markets and commercial centres. These included Faulks Road, Osusu Road, Eziukwu Road, Ngwa Road and Port Harcourt Road.
The Ikpeazu administration subsequently pursued the initiative, ensuring that the borrowing proposal was captured in the Federal Government’s National Borrowing Plan in 2018. It also commenced the necessary engagements with development partners, particularly the World Bank and AfDB,Which cumulated to Abia state presentation of the loan request before the National Assembly Abuja and several visits to AfDB headquarters in Abidjan, Côte d’Ivoire (Ivory Coast) and subsequent approval by the board of AfDB on June 30th, 2023. AfDB had identified infrastructure deficits, flooding, waste management and sanitation as major constraints to the development of Aba and its surrounding communities.
The process was not without controversy. Between 2018 and 2023, Alex Otti, then outside government, reportedly submitted several petitions to the World Bank seeking to stop the proposed loan. He subsequently acknowledged writing the petitions, explaining that his concerns were informed by the need for transparency and accountability in the management of Abia’s resources under the previous administration.
This raises an important question: what has fundamentally changed in the transparency standards and circumstances surrounding these loans to justify proceeding with them today? Has the present administration provided the level of disclosure and accountability it demanded from its predecessors?
It is not enough to criticise borrowing arrangements when outside government and subsequently proceed with them after assuming office. The same standards of scrutiny, transparency and fiscal responsibility must apply irrespective of who occupies Government House.
Apparently, what was considered unacceptable borrowing under a previous administration may now be perfectly acceptable under a new political arrangement. Has the economic justification for these loans suddenly become stronger, or has the difference simply been that the person occupying Government House has changed? Surely, the principles of transparency and fiscal responsibility should not be subject to a change of political address.
WHY BORROW MORE WHEN REVENUE HAS INCREASED?
This is perhaps the most important question Governor Otti must answer.
Does Abia still require substantial additional external borrowing, particularly after the significant increase in federal allocations to state governments following the removal of the fuel subsidy?
As confirmed from the Abia state financial report published by the state Accountant General and hosted on Abia state official website(Abiastate.gov.ng) Abia state has earned total revenue of N1.8 trillion from May 2023 to October 2026.
The state’s revenue profile has changed considerably from what obtained when these borrowing initiatives were originally conceived.
Abia’s 2025 Fourth Quarter Budget Implementation Report shows that the state received approximately ₦315.84 billion from FAAC during the year, against a revised projection of approximately ₦268.65 billion. This represents an excess of about ₦47.19 billion over the revised FAAC target.
The state also recorded approximately ₦66.86 billion in internally generated revenue, bringing its combined FAAC and IGR receipts to approximately ₦382.70 billion for 2025.
These figures demonstrate the significant resources now available to the state. However, they also reveal that internally generated revenue fell substantially short of the revised target of approximately ₦120.63 billion. This makes it even more important for the government to explain its revenue strategy, expenditure priorities and borrowing requirements.
One would ordinarily expect that a substantial improvement in revenue would give a government greater room to manoeuvre, reduce its dependence on borrowing and strengthen its capacity to finance priority investments. But in Abia, are we witnessing a situation where increased revenue is accompanied by an increased appetite for borrowing? If revenue has improved so significantly, what exactly has happened to the fiscal breathing space that should ordinarily accompany such an improvement? Is the state earning more only to borrow more?
The improvement in federal allocations should not be ignored. Neither should it be treated as an automatic justification for increased expenditure and borrowing.
Governor Chukwuma Soludo of Anambra State has offered an instructive example of the need to scrutinise external financing arrangements. In March 2025, he explained his administration’s decision to withdraw from a World Bank loan arrangement (NG-CARES), describing the terms as unfavourable to the state. His position reinforces the principle that development financing should be assessed against its economic benefits, repayment conditions and long-term implications for the borrowing state.
Why should Abia be different?
Why should the state continue with borrowing arrangements conceived under a substantially different revenue environment without first demonstrating that the facilities remain necessary?
The government must explain the specific development gaps that cannot be addressed through improved revenue mobilisation, better expenditure prioritisation and more efficient management of existing resources.
A government should not confuse access to credit with the necessity of borrowing. The mere availability of a loan facility does not constitute an achievement, nor does the announcement of a financing arrangement automatically translate into development. What matters is whether the borrowing is necessary, whether the projects remain relevant and whether the economic and social returns justify the financial obligations being imposed on the state.u
THE NEED TO REVIEW THE ORIGINAL LOAN PURPOSE: FROM BASIC INFRASTRUCTURE TO INDUSTRIAL TRANSFORMATION
The origins of the AfDB intervention are particularly instructive.
The development initiative can be traced to early engagements around 2012, when the infrastructure and environmental challenges confronting Aba’s leather and shoe-producing markets attracted attention from development partners. The concerns included poor road infrastructure, inadequate waste management and sanitation, all of which were identified as significant constraints to industrial development.
These concerns provided an important justification for the proposed intervention.
However, more than a decade has passed since those challenges were identified. Considerable developments have taken place in Aba, including investments in road infrastructure and other public facilities. Although substantial challenges remain, we must acknowledge that the development environment today is not exactly what it was in 2012.
Some of the roads originally identified for rehabilitation, including Faulks Road, Osusu Road, Ngwa Road and Port Harcourt Road, have received considerable attention under successive administrations.
This raises a fundamental question: should the present administration continue to implement the original project design without undertaking a comprehensive reassessment of the state’s current development needs?
Are we still borrowing to solve yesterday’s problems when today’s development challenges are staring us in the face? Must Abia continue to follow a project map drawn more than a decade ago, even when the economic landscape has changed? Development planning cannot be a photocopying exercise in which yesterday’s priorities are reproduced indefinitely, regardless of changing circumstances.
I believe the government should have engaged the development partners to review the original project objectives and consider redirecting a substantial proportion of the financing towards the development and modernisation of Aba’s industrial clusters.
Rather than concentrate primarily on infrastructure interventions conceived more than a decade ago, why not prioritise modern industrial facilities, shared production infrastructure, improved waste management systems, sanitation facilities, technology adoption, industrial parks and agro-industrial linkages?
Aba is one of the most important centres of indigenous manufacturing and entrepreneurship in Nigeria. Its leather, footwear, garment and other manufacturing enterprises require more than access roads. They need modern production facilities, improved technology, reliable shared infrastructure, effective waste management and access to wider domestic and international markets.
What is the point of spending hundreds of millions of dollars on infrastructure without sufficiently addressing the productive capacity of the businesses that are expected to benefit from it? We cannot continue to pave roads to industrial clusters while leaving the industries themselves struggling with obsolete production methods, inadequate facilities, poor technology and weak market access. Roads are important, but roads alone do not manufacture shoes, process leather or create globally competitive enterprises.
The objective should be to transform Aba’s industrial clusters into more productive, competitive and export-oriented enterprises.
Development financing must respond to contemporary development realities. It should not become an exercise in implementing project components simply because they were conceived several years ago.
If the original loan objectives no longer adequately reflect the state’s development priorities, the government should have the courage to renegotiate, restructure or redirect the financing, subject to the agreement of the development partners and the applicable loan conditions.
In other words, Abia should not be borrowing against tomorrow to finance yesterday’s priorities when today’s development challenges demand a different approach.
“LEARNING FROM THE DEBT EXPERIENCES OF OTHER STATES
Abia must also consider the experiences of other Nigerian states that have accumulated substantial external debt obligations.
Kaduna State, under former Governor Nasir El-Rufai, borrowed approximately $350 million to finance an ambitious infrastructure development programme. At the time, particularly before the removal of the fuel subsidy, the state faced periods of relatively low federal allocations. However, subsequent exchange-rate adjustments significantly increased the Naira cost of servicing its external obligations.
Osun State, under former Governor Rauf Aregbesola, and several other states have similarly experienced the fiscal implications of external borrowing.
The lesson is not that external borrowing is inherently undesirable. Foreign development financing can be useful when it supports economically viable infrastructure, productive investments and projects capable of generating substantial social and economic returns.
However, external borrowing exposes states to foreign exchange risks. A loan denominated in dollars or another foreign currency becomes more expensive to service in Naira terms whenever the domestic currency depreciates.
When the Naira depreciates, does the dollar-denominated loan become more sympathetic to the state’s financial circumstances? Unfortunately, international creditors do not accept explanations about the difficulties of the Nigerian economy as substitutes for contractual repayments. The debt remains payable, whether the Naira is strong or weak, and whether the government that contracted it is still in office or not. The consequences, however, are ultimately borne by the people.
This is a risk Abia cannot afford to ignore.
The state must consider not just the immediate availability of development financing but also the long-term implications for future budgets, debt servicing and the resources available for essential public services.
The experience of other states should serve as a warning against treating external borrowing as a convenient substitute for sound fiscal management. A government may enjoy the immediate political benefits of announcing ambitious projects financed through foreign loans, but the repayment obligations will remain long after the political excitement surrounding those announcements has faded.
CONCLUSION: GOVERNOR OTTI MUST EXPLAIN THE NEED FOR ADDITIONAL BORROWING
Abia State must urgently reconsider its proposed additional external borrowing commitments.
The circumstances that informed the original borrowing proposals have changed considerably. Federal allocations have increased following the removal of the fuel subsidy, the state’s revenue profile has improved, and some of the infrastructure projects originally identified have received substantial attention.
More importantly, the development priorities of Aba and its industrial clusters have evolved.
Governor Otti must explain why the state should continue with the original borrowing plans without a comprehensive review of their necessity, economic viability and relevance to present development priorities.
Has the government undertaken a fresh debt sustainability analysis? Has it conducted a comprehensive assessment of the remaining infrastructure gaps? What proportion of the proposed financing is still required for projects whose original objectives have been substantially addressed? What are the repayment implications under different exchange-rate scenarios? And why has the government not demonstrated that alternative financing through improved revenue management and expenditure prioritisation would be inadequate?
These are legitimate questions that deserve clear and transparent answers.
Government should not confuse the availability of loans with the necessity of borrowing. A credit facility is not a development achievement merely because it has been negotiated, just as a borrowed dollar is not evidence of economic progress simply because it has entered the state’s accounts. What matters is the economic value created, the opportunities generated and the public benefits delivered. Otherwise, we risk borrowing against tomorrow to finance yesterday’s priorities, leaving future administrations and generations to pay for decisions they had no opportunity to question.
I am not opposed to responsible borrowing or development financing. What I oppose is borrowing without demonstrated necessity, adequate transparency and a compelling economic justification.
If external financing remains necessary, the government should negotiate a review of the original project components and redirect available resources towards investments that can stimulate industrial production, create employment, improve productivity and expand the state’s economic base.
Abia must not borrow simply because previous administrations initiated a borrowing process. Neither should it expose future generations to foreign exchange and debt-service risks without demonstrating the economic value of the proposed investments.
Abia’s future cannot be built on an endless cycle of borrowing, repayment and further borrowing. The people deserve a government that understands the difference between having access to credit and having a compelling reason to use it. They deserve to know why, despite improved revenue, additional external borrowing remains necessary and why development priorities conceived more than a decade ago are still being pursued without a comprehensive reassessment.
The present administration has a responsibility to show that every naira spent and every dollar borrowed delivers measurable benefits to the people.
Governor Otti must answer a simple question: in an era of increased revenue, why should Abia continue to accumulate external debt to finance development priorities that ought to have been reassessed in the light of today’s economic realities?
Obinna Oriaku (Ekwedike)
Commissioner of Finance Abia state 2015 to 2019 .
