Nigeria recorded a Government Debt to GDP of 38% in 2022 (latest full data). For the US, the debt-to-GDP is 123%. Yet, from IMF to World bank, the consensus is that Nigeria is severely indebted while the US is just fine.
- 2003:
- Debt: $6.8 T
- GDP: $11.5 T
- 2013:
- Debt: $16.8 T
- GDP: $16.9 T
- 2023:
- Debt: $32.6 T
- GDP: $26.5 T
Why? In an Igbo novel (Uwadiegwu), BN Obodo dropped a great hint: when you borrow, go to your kinsman so that if the debt goes bad, he may lock you up but at the same time he would be expected to take care of your family since he is your kinsman! That is how debts work: pains are lesser when the debt is home.
Provided the US dollar is the currency of the debt, the US can afford more printing machines to print more US dollars but Nigeria must EARN any dollar to pay the dollar-denominated debt. So under that construct, Nigeria’s debt becomes more precarious than the United States’ because its national policy must be configured in ways that ensures that it can earn US dollars, because it needs to pay its debts.
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Magically, balance of payment and balance of trade dominate every aspect of the national strategy, adding new layers to the viability of the Naira! The implication: a vicious circle which over time cripples the economic wellbeing of the people. But it is not the US dollar fault, it is the fault of Nigeria’s national leaders who just like to borrow and borrow to consume.
In the US, Federal…
2003:
Debt: $6.8 T
GDP: $11.5 T2013:
Debt: $16.8 T
GDP: $16.9 T2023:
Debt: $32.6 T
GDP: $26.5 TYou see the problem, right?
— James Lavish (@jameslavish) July 14, 2023
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There’s also the problem of rating, which is measured by your capacity to repay, it shifts the goalposts on interest rate.
The people or institutions lending you money from overseas aren’t really interested in your development, so it’s left for you to grow some sense and learn a thing or two about prudential spending of borrowed money.
When you are poor and at the time reckless, your redemption is almost impossible. This is Nigeria’s current state.
For years we heaped the blame for our poverty on petrol subsidy, we removed subsidy, claimed to have saved quite a lot, only to introduce a more capricious way of squandering money. There’s some sort of institutionalized ineptitude that runs in the system, while the uninformed and are strategically positioned to defend and support the malfeasance.
The depressing thing is not that the conditions are bad, but rather the fact there’s no prospect of getting better, certainly not with the current mindset.