Obi loans deduction continues to dominate headlines in Anambra as the state grapples with recurring budget cuts tied to the former governor’s outstanding federal facilities. In a recent interview, State Commissioner for Finance Chukwuma Mefor clarified that the deductions are not charitable grants but repayments mandated by the federal government. The clarification comes as the 2026 fiscal year unfolds, and Anambra’s development projects face funding gaps. Background: How the Loans Were Structured When Peter Obi assumed office in 2022, his administration secured several federal-backed facilities to boost infrastructure, education, and health services. These facilities, while guaranteed by the federal government, were always intended as loans, not outright grants. The distinction matters because repayment obligations flow directly from the state’s revenue streams. Obi’s team argued that the federal guarantee meant the state could enjoy the funds without immediate fiscal strain. However, the guarantee merely assured lenders of repayment, shifting the responsibility to Anambra’s future allocations. This nuance was lost on many citizens, who assumed the projects were fully funded by the centre. Why Obi loans deduction Persists in 2026 The 2026 budget cycle shows the state’s revenue being siphoned each month to service the loan repayments. Commissioner Mefor explained that the federal treasury continues to deduct the agreed amounts from the state’s allocation before the funds reach Anambra’s coffers. This mechanism is standard for federally guaranteed loans, ensuring that the central government recovers its exposure. “The fact that some of the facilities were guaranteed by the Federal Government does not mean they were grants or funds that did not require repayment,” Mefor said, echoing the sentiment expressed in a recent Vanguard article. Consequently, the state’s own projects—ranging from road rehabilitation to school construction—are left under‑funded. Local government areas (LGAs) have reported delays in disbursement of their own internally generated revenue (IGR) because the central deductions are made before the state can allocate its own share. Legal and Constitutional Context Under the 1999 Constitution, the allocation of revenue to states is governed by the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC). When a state incurs a federally guaranteed loan, the repayment schedule is incorporated into the allocation formula. This legal framework ensures that the federal government can protect its credit rating while allowing states to access capital for development. Critics argue that the process lacks transparency. The Anambra State House of Assembly has called for a detailed audit of the loan terms, repayment schedules, and the exact amounts deducted each quarter. The demand for accountability reflects a broader trend across Nigeria, where citizens are increasingly scrutinising fiscal management. Impact on Anambra’s Development Agenda Infrastructure projects that were slated for completion in 2026 have experienced cost overruns due to the reduced cash flow. The state’s flagship road‑link project, intended to connect Awka with the Enugu‑Onitsha corridor, has seen a 15% slowdown. Similarly, the new teaching hospitals in Nnewi and Onitsha are awaiting final funding, pushing their operational dates into 2027. Education stakeholders are particularly vocal. Teachers’ unions have warned of potential salary delays if the state cannot meet its payroll obligations after the loan deductions. Meanwhile, private investors are watching closely, as fiscal uncertainty could affect future public‑private partnership (PPP) opportunities. Political Repercussions and Public Sentiment The issue has become a political flashpoint. Opposition parties in Anambra are leveraging the “Obi loans deduction” narrative to question the former governor’s financial stewardship. While Obi is no longer in office, his legacy continues to shape voter perception, especially as the 2027 gubernatorial elections approach. Public sentiment, as reflected on social media platforms like Twitter and Nairaland, oscillates between frustration over delayed services and calls for greater fiscal prudence. Many citizens demand that future administrations avoid similar loan structures without clear repayment plans. What the Federal Government Says The Ministry of Finance, through its spokesperson, reiterated that the deductions are lawful and part of the agreed terms. The ministry also highlighted that the loans have enabled critical projects that would otherwise have stalled due to lack of capital. However, the ministry stopped short of offering a timeline for when the deductions might be reduced or restructured. In a broader sense, the federal government is reviewing its loan guarantee policy to ensure that states are fully aware of the repayment obligations before signing agreements. This review is expected to be tabled in the National Assembly later in 2026. Possible Solutions and Way Forward Experts suggest several pathways to alleviate the fiscal pressure on Anambra: Renegotiation of repayment terms: Engaging the federal treasury to extend the repayment horizon could free up immediate cash for development. Transparent audit: Conducting an independent audit of the loan agreements would build public trust and clarify the exact financial burden. Alternative financing: Exploring green bonds or diaspora‑funded projects could diversify funding sources without relying on federal guarantees. Strengthening internal revenue: Boosting IGR through improved tax collection and digitalisation can reduce reliance on external loans. Implementing these measures requires political will and collaborative effort between state and federal authorities. As the 2026 budget cycle progresses, the stakes are high for Anambra’s socio‑economic growth. FAQ Why are Obi’s loans still being deducted in 2026? The loans were federally guaranteed, meaning repayment is mandatory and deducted from the state’s allocation each month. Are these deductions considered grants? No. Commissioner Mefor confirmed they are loan repayments, not gratuitous grants. Can the state renegotiate the repayment schedule? It is possible, but would require agreement from the federal treasury and possibly legislative approval. For a deeper look at the commissioner’s remarks, read the full Vanguard report here. 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