Others at that time were particularly not happy that the debt profile of the country would soon rise to $60 billion from less than the $20 billion it was before the present government came to power in 2015. While they noted that the components of the $60 billion debt profile include $23 billion external debt and $20 billion local debts, these concerned Nigerians observed with dissatisfaction that another $12 billion was already being processed for presentation to the National Assembly to finance Port Harcourt to Maiduguri rail lines.
Still, on the 2019 budget borrowing proposal, it noted that “Nigeria is gradually turning to a chartered borrowing nation under this government, all in the name of funding infrastructure. “This must be stopped because the future of the country and in particular, the lives of generations yet unborn are being put in danger.” Even with the high level of indebtedness of the country, “the government in power is planning to further devalue the Naira to about N500 to one U.S. dollar.” They concluded.
Similarly in February 2022, Economic experts going by media reports urged the Federal Government to seek a debt moratorium and reduce the cost of governance to reduce funds expended on debt servicing, as it stands as the best available option. This, according to them, will enable the government to suspend payment for now and re-strategise – particularly, the government cannot continue to service its rising debt profile at the expense of meeting the competing needs of the people, a similar expert warning was recently handed by Economic analysts that the Federal Government’s soaring borrowings could eventually suffocate the country if not mitigated.
Indeed, from the above torrents of explanation/concern expressed by these experts, this piece clearly agrees that ‘Nigeria’s debt stock has finally become an issue that calls for more drastic approach to support the fiscal and monetary authorities to tow the nation’s economy out of the doldrums. Qualifying the above said account as a bad commentary is the awareness that despite these prophecy of foreknowledge which deals with what is certain to come, and prophesy of denunciation, which on its part, tells what is to come if the present situation is not changed; both acting as information and warning respectively, the President Muhammadu Buhari led Federal Government has become even more entrenched in borrowing, ignoring these warning signals.
In 2020, one of the reputable national newspapers in Nigeria in its editorial comment among other observations noted that Nigeria would be facing another round of fiscal headwinds this year with the mix of $83 billion debt; rising recurrent expenditure; increased cost of debt servicing; sustained fall in revenue; and about $22 billion debt plan waiting for legislative approval. It may be worse if the anticipated shocks from the global economy, like Brexit, the United States-China trade war and interest rate policy of the Federal Reserve Bank go awry.
The nation’s debt stock, currently at $83 billion, comes with huge debt service provision in excess of N2.1 trillion in 2019, but set to rise in 2020. This challenge stems from the country’s revenue crisis, which has remained unyielding in the last five years, while the borrowings have persisted, an indication that the economy has been primed for recurring tough outcomes, the report concluded.
The situation says something else. Another news report within the same time frame indicated that the federal government made a total of N3.25 trillion in 2020, and out of which it spent a total of N2.34 trillion on debt servicing within the year. This means, the report underlined, that 72 per cent of the government’s revenue was spent on debt servicing. It also puts the government’s debt servicing to revenue ratio at 72 per cent.
It was in the news that PricewaterhouseCoopers, a multinational professional services network of firms, operating as partnerships under the PwC brand, in a report entitled; ‘Nigeria Economic Alert: Assessing the 2021 FGN Budget.’, warned that the increasing cost of servicing debt will continue to weigh on the federal government’s revenue profile. It said, “Actual debt servicing cost in 2020 stood at N3.27 trillion and represented about 10 per cent over the budgeted amount of N2.95 trillion. This puts the debt-to-revenue ratio at approximately 83 per cent, nearly double the 46 per cent that was budgeted.
This implies that about N83 out of every N100 the federal government earned was used to settle interest payments for outstanding domestic and foreign debts within the reference period. In 2021, the FG plans to spend N3.32 trillion to service its outstanding debt. This is slightly higher than the N2.95 trillion budgeted in 2020.”
Today, such fears raised cannot be described as unfounded just as this author doesn’t need to be an economist to know that as a nation, we have become a high-risk borrower. Looking at the above facts, this piece holds the opinion that the present debt profile presently crushing the country may not have occurred by accident.
And, even as the nation goes on borrowing spree and speeds on ‘borrowing lane’, and at a time the World Bank indicates that “almost half of the poor people in Sub-Saharan Africa live in just five countries: and they are in this order, namely; Nigeria, the Democratic Republic of Congo, Tanzania, Ethiopia and Madagascar, the situation becomes more painful when one remembers that no one, not even the Federal Government can truly explain the objective of these loans and whether they were utilised in the masses’ best interest.
It would have been understandable if these loans were taken to build standard rail system in the country that will assist the poor village farmers in Benue/Kano and other remote villages situated in the landlocked parts of the country, move their produce to the food disadvantaged cities in the south in ways that will help the poor farmers earn more money, contribute to lower food prices in Lagos and other cities through the impact on the operation of the market, increase the welfare of household both in Kano, Benue, Lagos and others while improving food security in the country, reduce stress/pressure daily mounted on Nigerian roads by articulated/haulage of vehicles and drastically reduce road accidents on our major highways.
Again, it would have been pardonable if the loan were deployed to revitalising the nation’s electricity sector, to re-introduce a sustainable power roadmap that will erase epileptic power challenge in the country and in its place restore the health and vitality of the nation’s socioeconomic life while improving small and medium scale business in the country.
Concluded.
Utomi is the Programme Coordinator (Media and Politics), Advocacy for Social and Economic Justice (SEJA), Lagos. He could be reached via;jeromeutomi@yahoo.com or 08032725374.
What about the nation’s refineries? The present administration, as part of its campaign promise in 2015, agreed to ensure a better deal for Nigerians. Specifically, it promised to take measures that will strengthen corporate governance in the Nigerian National Petroleum Corporation, NNPC, as well as in the oil and gas sector as a whole. This is because of the belief that weak structures made it possible for endemic corruption in the management of both the downstream and upstream sectors of the oil and gas industry. But eight years after such demand was made and Jonathan gone, the three government-owned refineries in the country have not been able to function at full capacity as promised by the present administration.
Today, if there is anything Nigerians wish that the FG should accomplish quickly, it is getting the refineries to function optimally as well as make the NNPC more accountable to the people. What happened under president Jonathan has become a child’s play when compared with the present happenings in Nigeria’s oil/gas and electricity sectors.
What the above tells us as a country is that more work needs to be done and more reforms to be made. It also reminds us that as a nation, we are poor not because of our geographical location or due to absence of mineral/natural resources but because our leaders fail to take decisions that engineer prosperity.
*Concluded.
Utomi is the Programme Coordinator (Media and Politics), Advocacy for Social and Economic Justice (SEJA), Lagos. He could be reached via;jeromeutomi@yahoo.com or 08032725374.
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