A Nation’s Unending Debt Crises

<strong>A Nation’s Unending Debt Crises</strong>

There are many things happening in the country, such that it appears there is one issue or the other for each day. A few days ago, Director-General of the Debt Management Office ,DMO, Mrs. Patience Oniha startled not a few Nigerians when she confirmed that our total debt profile as of March, 2022 stood at N41.

60 trillion. That very crushing detail may have been substantially eroded in the last five months not captured in the period she was reviewing.

The nation’s DMO represented by its seemingly calculated Oniha said at the ongoing engagement on the 2023 – 2025 Medium Term Expenditure Framework, MTEF, and Fiscal Policy Paper held by the House of Representatives Committee on Finance gave the staggering figure of the nation’s indebtedness. She attributed Nigeria’s high debt profile to shortfall in revenues and the deficit in the annual budget as approved by the

National Assembly. These, according to her, increased the debt stock of the country.

It is alarming that we have continued to rely on a huge stock of borrowings to sustain even basic needs which if well-structured can be handled without recourse to reliance on avoidable debts.

Our insatiable thirst for borrowing is far from the reasons many pseudo economists try to rationalise. Some point at the dwindling revenue from oil when indeed other nations are reaping bountifully now from the same commodity which though sometimes answers to the vicissitudes in the international market, our doom is enhanced by a combination of factors, including diminishing returns from oil sales as a result low output, occasioned by theft of the product and related production vagaries.   

The relationship between crude oil and astronomical debt service dates to the 70s when the fall in oil prices had a devastating effect on government expenses, thereby causing the government to have recourse to borrowing for payments and project financing.

This amount continues to rise even as more external loans are being approved and obtained by the Federal Government. A major undermining factor for a country’s economic growth is its huge debt stock and as such, Nigeria’s humongous debt ratio is directly linked to the decades of misrule and financial imprudence of its military and political leaders.

With incessant foreign debts being accumulated by successive governments, Nigeria became caught up in a crippling foreign debt crisis which, till date, compromised its economic progress and political stability in spite of the paradox of being an oil exporting country.

Political rascality, bad governance, abuse of office and power, criminal corruption, mismanagement and waste, misplaced priorities, fiscal indiscipline, weak control, monitoring and evaluation mechanisms, and a community that was openly tolerant of corruption and other underhand and extra-legal methods of primitive accumulation were once identified by ex-President Olusegun Obasanjo as the bane of our national rejuvenation.

Not too long ago, part of the Abacha loot, amounting to US$4.6 billion was repatriated to Nigeria and notwithstanding, this has not had much positive impact on reducing Nigeria’s internal and external debt profile.

Out of the repatriated Abacha loot, the Federal Government recovered US$322 million from Switzerland in 2017 and US$308 million from Jersey Island, United Kingdom in February 2020, with the condition that the funds will be utilised for three major projects in Nigeria, namely:

The same year, in March 2020, the Nigerian Senate approved a US$22.7 billion loan request and later in May, another US$5.513 billion loan request was sent by the President. Interestingly, the Director-General of the Debts Management Office reportedly noted that year that the Coronavirus pandemic might incapacitate Nigeria from servicing its debts appropriately. This is, however, coming in the wake of over N25 billion internal and external donations which the country had received in its fight against the pandemic.

Regardless, Nigeria’s debt profile under President Muhammadu Buhari rose from N12.1 trillion in 2015 to over a whooping N46 trillion presently.  I believe the Abacha loot can be adequately managed to sustain the deficit in the budget, rather than further plunging the nation into deeper mires of internal and external indebtedness.

Agreed that the payroll of Nigerian workers as stated at a time by the Minister of Finance takes a chunk of revenue but the real cause of Nigeria’s unresolved debt crisis may not be unconnected to the fact that crude oil revenue, foreign loans and recovered loots are not being fully utilised for recurrent expenditure and development purposes, but for selfish agenda.

It is salutary that another tranche of the ubiquitous Abacha loot is coming from the United Kingdom. It could just be a tip of the huge resources needed to plug the incessant borrowings but it could actually plug part of the national financial obligations.

We must look inwards to supplement dwindling revenue from oil.

It is imprudent for some Nigerians led by no other than the very head of the nation’s ruling party, All Progressives Congress, APC, Dr. Abdulahi Adamu to canvass the position that “Nigeria can borrow till eternity” so long as it meets its domestic challenges.

In a situation where over 60% of our revenue is planned for debt servicing, what steers us frontally is perpetual deficit and long-term depression, capable of robbing off on our growth and development.

We must look inwards to revamp our revenue outside oil. Agriculture, mining and other non-oil exports point the inevitable direction to national revamp. 

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