Nigeria Needs Debt Restructuring to Revamp Economy, Says Adebajo

Emma Okonji and Nosa Alekhuogie

The Chief Executive Officer of CFG Advisory, Mr. Tilewa Adebajo has called on the Nigerian government to stop borrowing and focus more on debt restructuring in order to revamp the economy.

Adebajo who spoke yesterday on the Morning Show of ARISE NEWS Channels, the broadcast arm of THISDAY Newspapers, said the official total debt profile of Nigeria is alarming.

Comparing America’s Debt-to-GDP Ratio, which is over 101 per cent, to Nigeria’s Debt-to-GDP Ratio, which is 40 per cent, Adebajo said American government spends a single digit of 8 per cent to service her debts, while Nigerian government spends double digits of 96 per cent to service her debts.

According to him, no nation will continue to finance a deficit economy except such nation wants to go bankrupt.

“Nigeria therefore cannot continue to service debt, but should rather restructure her debt financing in order to grow the economy, before economies of the world force us to restructure our debt financing. Nigeria therefore needs internal debt restructuring as a matter of urgency,” Adebajo said.  

He advised the in-coming government on how best to restructure Nigeria’s internal debt profile.

He said the government must first reduce the current double unit interest rates to a single digit interest rate, in order to grow the economy much faster. He said the current bank’s lending rate of 30 per cent remained high and a disincentive to business growth.

“Nigeria must tame inflation in order to drop interest rate to a single digit. Nigeria must unlock the different financial restrictions and create an enabling environment for businesses to thrive,” Adebajo further said.    

Addressing the issue of economic stagnation, Adebajo said Nigeria should begin to focus on social infrastructure, healthcare and education.

According to him, Nigeria has no functional refineries across the county, even though Nigeria is one of the largest producers of oil in the world.

“If only Nigeria can put its social and economic infrastructure in place, Nigeria can become a $1 trillion economy and compete with other economies. It is not rocket science to achieve it because the country has technology savvy organisations and individuals that can help the country achieve it. There are several institutions that the government needs to refocus and make them economically viable.

“Currently, our Foreign Direct Investment (FDI) is less than N1 trillion. What is saving Nigerian government is the inflow of start-up capital from around the world because most global Venture Capitalists (VCs), still believe in Nigeria and African startups and have continued to invest in startups in Nigeria and other African countries, and that is the reason Nigeria still remains the largest economy in Africa,” Adebajo said.

He advised that institutions like the Nigeria National Petroleum Corporation (NNPC), and the Nigerian Liquefied Natural Gas (NLNG), should be restructured to boost oil production in the country and to raise sustainable money from oil and gas production for the country.