Nigeria’s public debt stock, which has risen unprecedentedly in the past six years, has remained a concern for every Nigerian, especially as its end appears not to be in sight.
On Thursday, former governor of Anambra State, Mr. Peter Obi shared his view on the rocketing debt profile that is threatening Nigeria’s economic future. In a Twitter thread, Mr. Obi decried Nigeria’s borrowing sentiment, saying the country is borrowing for consumption.
While he didn’t condemn borrowing by the government, he said how the borrowed funds are used has become a cause for concern.
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“Our past and continued mismanagement of borrowed funds and borrowing for consumption are the major contributors to the monumental economic challenges confronting Nigeria today.
“Today, we are spending 90% of our revenue servicing debts because, ironically, our borrowed funds were mismanaged and have not been properly invested,” he said.
Mr. Obi added that the level of development in Nigeria does not in any way commiserate the amount of money it has borrowed so far. He said that visionary leadership is needed to ensure that borrowed funds are strictly invested to stimulate economic growth.
“If the funds borrowed were invested in critical areas of development, education, health and poverty alleviation, Nigeria would have developed far beyond what it is today.
“There is nothing wrong with borrowing. But what we need to do is to put a law in place that if we must borrow, it must strictly be for investment in areas of growth.
“Many countries have built robust economies with borrowed funds. We can do the same if only we enthrone visionary and committed leadership,” he said.
Nigeria’s public debt stock is expected to hit N50.22tn by 2023, with domestic debt at N28.75tn and external debt at N21.47tn. Last year, Chairman of President Buhari’s Economic Advisory Council (EAC), Dr. Doyin Salami, said that Nigeria’s debt service-to-revenue ratio, which is at 98%, has made the country’s debt unmaintainable.
Though there is a recent rise in oil prices, putting extra cash into the government’s purse as Brent Crude nears $100 per barrel, about $40 more above Nigeria’s $60 oil benchmark for 2022 budget, Nigeria is nearing the threshold of the stipulated borrowing limit. The rule is that Nigeria should not borrow more than 40% of its GDP. But now at 36.9%, and 3.2% to go, Nigeria’s economy could be facing its most challenging future.