NIGERIA’S DEBT BURDEN IS CRUSHING

·         One’s sincere worry over Nigeria’s ever escalating debt has been exacerbated by the recent request by the federal government for a fresh $1.5bn loan from the World Bank. So far, Nigeria has secured a total of $1.95bn in loans from the World Bank in the first four months of President Bola Tinubu’s administration. The first loan was the $750m approved on June 9, 2023 to boost Nigeria’s power sector. The second was $500m meant to help the country’s drive for women’s empowerment and was approved on June 22, 2023. The third was a $700m loan to enhance adolescent girls’ learning and empowerment, and was approved on September 21, 2023.

·          As a reminder, the country’s external debt stock, specifically what it owes non-residents stood at US$41.69 billion in 2022. The country’s public debt stock – what the government owes in total – was about US$100 billion in 2022. Out of these humongous sums, multilateral lenders accounted for almost half of this frightening figure. Eurobonds accounted for about 38% of Nigeria’s external debt. Exim Bank of China accounted for US$4.3 billion, or 86% of the huge $5 billion in bilateral debt.

·         Perhaps, now you would understand why I wrote an article titled: ‘Nigeria’s Free Fall into China’s Debt Trap’  in July 2019. Before then there were related opinion essays such as, ‘Nigeria’s Debilitating Debt Profile’ in 2012 and the other with the quaint question: ‘Who Will Pay these Huge Debts?’ in March 2018. Other Nigerians

·          were also worried about the ever increasing debts-both local and foreign. A political economist, Prof Pat Utomi has cautioned against fresh borrowings by Nigeria. Stressing that the country needed a thorough review of the current loans and how they had been utilized to ensure economic growth, he called for a 50 per cent cut in the cost of governance. This has been one’s plea to the powers that be for over a decade.

·         The situation is so dire that the Socio-Economic Rights and Accountability Project (SERAP) sent an open letter to the erstwhile President Muhammadu Buhari to instruct the Director-General and Board of the National Pension Commission [NPC] to stop the state governors’ borrowing right in their tracks. Yet, government revenue as a percentage of GDP declined from 13.5% in 2010-2014 to just 6.9% in 2020. The averages for sub-Saharan Africa and the world in 2015-2020 were 20.1% and 24.2%, respectively.

·         As at then the 36 state governors were working towards withdrawing the huge sum of N17 trillion from the Pension Fund. And they claimed that it was meant for infrastructural development!

·         Some two years later, in December 2022, the World Bank noted that states’ debts would rise above 200 per cent of the revenue generated in 2022 and 2023. Furthermore, it warned that there was an increase in debt servicing expenditures of states. That revelation came through the Nigeria Development Update.

·         Furthermore, the World Bank on February 13, 2023 reported that 30 state governors who were going to leave office on May 29, 2023, or seeking re-election had increased their states’ debts to N4.8 trillion!

·         So, what is the way out of the problem? Let us give a listening ear to the counsel from Prof. Pat Utomi, which he offered on a television program in September 2021. “What this country needs is demographic dividends, we need to tap into this huge youth bulge by appropriately investing in our young people ….Unless we see these things in this context, the obsession with power will just make us poorer, more miserable, create more insecurity and I think this is the real starting point purpose and not power.’’

·          Ayo Oyoze Baje, Lagos

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