The Debt Management Office (DMO) has called on state governments to strictly comply with the Fiscal Responsibility Act and other relevant laws when contracting loans, cautioning that borrowing outside established frameworks could threaten fiscal sustainability at the sub-national level.

The call was made by DMO Director-General, Ms. Patience Oniha, during a workshop in Abuja on Tuesday, which was designed for officials from the 36 states and the Federal Capital Territory. The workshop focused on borrowing guidelines and forms part of the DMO’s ongoing capacity-building program to strengthen debt management practices among sub-national governments.

Oniha emphasized that the training familiarizes state officials with the legal and procedural requirements for accessing domestic and external loans. “Compliance with the Fiscal Responsibility Act is not optional. It sets clear conditions for borrowing by all tiers of government,” she said.

She noted that the initiative was prompted by past delays in the borrowing process due to poor understanding of legal requirements. “Previously, states faced delays because the process had to pass through the Minister of Finance and the DMO, and there wasn’t clarity or understanding. This workshop series was introduced to close those knowledge gaps,” Oniha explained.

The current workshop was an expanded edition of a program first held five years ago in Lagos, allowing states to send multiple officials—sometimes up to eight—to ensure wider institutional understanding of borrowing regulations.

Oniha outlined the primary legal instruments guiding borrowing: the Constitution of the Federal Republic of Nigeria, the Fiscal Responsibility Act, and the Debt Management Office Act. She stressed that adherence to these laws is mandatory, including for loans from development finance institutions such as the World Bank.

“The goal is to equip states with the knowledge and skills needed to navigate the borrowing process efficiently, ensuring that funds are raised for development purposes and deployed responsibly,” Oniha said. She added that understanding these processes is critical to avoid delays in accessing financing for key development projects.

Through these capacity-building efforts, the DMO aims to promote transparency, legal compliance, and sustainable debt outcomes at the state level, while ensuring that borrowed funds contribute to economic development and improved welfare for citizens.