LCCI: We Are Deeply Worried By Rise in Nigeria’s Public Debt

•Laments country accumulated additional N31.21trn debt in 10 years

•Says both capital and interest payments on borrowed sums expose the country’s fiscal vulnerabilities

Dike Onwuamaeze

The Lagos Chamber of Commerce and Industry (LCCI) has expressed concern over the exponential increase in Nigeria’s public debt from N10.04 trillion to N46.25 trillion between 2013 and 2022.

The LCCI recalled that the recent data released by the Debt Management Office (DMO), showed that Nigeria’s public debt increased by N6.69 trillion or 22.7 per cent to N46.25 trillion as at the end of 2022, up from N39.56 trillion at end-2021.

The chamber expressed its concern in a statement titled: “LCCI Statement on Nigeria’s Rising Public Debt,” signed by its Director General, Dr. Chinyere Almona.

It stated: “The LCCI notes that between 2013 and 2022 public debt rose by 360.47 percent, from N10.04 trillion in 2013. As a result, we are deeply worried by this development in the face of insignificant revenue growth, large presence of decaying infrastructure and the unsustainable burden of oil subsidy overhang.

“Although, a decline in debt service appears positive but the ratio of debt service to government revenue at about 90 percent remains alarming and unsustainable.”

The LCCI, however, recommended that government should shift its focus to equity financing either by divestment or shedding of its equity holdings in state-owned enterprises, real estate, and infrastructure to reduce its debt commitments and improve its fiscal situation.

It noted that, “both capital and interest payments on borrowed sums expose the country’s fiscal vulnerabilities. Also, the government should, as a matter of urgency, emphasise strategies on revenue growth while blocking leakages.

“Importantly, the government may want to consider the need to deregulate the downstream subsector of the oil industry to block a major drain on revenue.

“Finally and most importantly, following the commendable launching of the restructured Ministry of Finance Incorporated (MOFI) as the arrow head of Nigeria’s efforts to optimise national assets by President Muhammadu Buhari on February 1, 2023, the LCCI wishes to urge that copious references should henceforth be made to the growth in the stock of financial assets that Nigeria owns in corporate equities, real estate and infrastructure spaces and the returns Nigeria is generating on them, each time Government of Nigeria is providing updates on the growth in the stock of the financial liabilities that Nigeria owes and the costs it is incurring on them, to provide local and global observers a balanced picture of our financial evolution.”

It argued that this would motivate national asset managers, led by MOFI, “to grow our assets and the returns on them as well as motivate our national liability managers, led by DMO, to minimise our liabilities and the costs we incur on them, with equal vigor.”

The LCCI pointed out that, “issuance of joint reports by MOFI and DMO could be most ideal going forward. One-sided updates on liabilities with no updates on assets when such updates were adequately available could well be blamed for some of the downgrades of Nigeria’s debt issuance risk profile and outlook. “The rating outcomes would have been more favourable had updates on assets been provided side-by-side with updates about liabilities.”