• Friday, March 29, 2024
businessday logo

BusinessDay

Why should we care: Nigeria in a mess – rising debt levels

debt

(Third in the series of address delivered at Dowen College, on 7th October 2019)

We must all (whether young or old) wake up as matters have reached frightening proportions and dimensions. Our country is in a mess.

Here is a front-page report in “The Punch” newspaper of 1st October 2019 (Independence Day Special Report) headlined “Federal government plans ₦4.6 trillion borrowings, debt to hit ₦30 trillion.”

“The federal government is planning to borrow fresh N4.6 trillion within the next three years, covering 2020 to 2022, to finance its programmes, figures obtained from the Ministry of Budget and National Planning have revealed.

If the N4.6 trillion new borrowings scale through legislative scrutiny and get executed, then Nigeria’s indebtedness to local and foreign creditors would hit about N29.55 trillion by 2022, going by the country’s current debt profile of N24.95 trillion. The fresh borrowings were contained in the Medium-Term Expenditure Framework (MTEF) recently submitted to the National Assembly by President Muhammadu Buhari. The MTEF, which is currently being worked on by the committees on finance and appropriation, contains the fiscal strategy of the federal government for the next three years.

An analysis of the document shows that the federal government is planning to borrow N1.7 trillion in the 2020 fiscal period. A breakdown of the N1.7 trillion shows that the sum of N850 billion is expected to be sourced locally while the balance of N850 billion is expected to be raised from foreign creditors. In the 2021 fiscal period, the government plans to borrow N1.6 trillion which would be sourced in equal proportion of N800 billion each from domestic and foreign sources. For 2022, the government projects to raise N1.3 trillion through debt instruments to finance its operations. This is made up of foreign borrowing of N650 billion and domestic borrowing of N650 billion.

Experts said there was the need to be concerned about the nation’s debt as a huge chunk of government revenue was being spent on debt servicing. A professor of economics at the Olabisi Onabanjo University Ago-Iwoye, Ogun, Sheriffdeen Tella, told our correspondent that the country currently had a debt problem. Tella said that with the federal government spending about 20 percent of its budget size servicing the country’s debt, it was practically impossible for Nigeria not to have a debt problem. He called on the government to discontinue borrowing in order to avoid the current situation where a huge chunk of the country’s annual budget was spent on debt servicing.

Tella said, “We have a debt problem because when you have problem with debt servicing, then you have a serious debt problem. Currently, what we are still doing is debt servicing using a huge proportion of the annual budget to pay debt. That is serious because the money that you would have used for other things is now being used to pay debt. We have a serious problem with debt. We should not even accumulate further debts beyond what we currently owe.”

Also speaking, a former Director-General, Abuja Chamber of Commerce and Industry, Chijioke Ekechukwu, said the rising debt portends danger for the economy.”

It is not unlikely that, unwittingly, the teachers (and parents) of students of Dowen College may have overprotected those who are graduating. Their sheltered existence is about to come to an end. Once they venture into the larger society where the rule of the jungle has overwhelmed the rule of law, it is going to be a different ball game where there is no umpire to mitigate the survival of only the fittest.

Nevertheless, we must not underestimate the resourcefulness of students. You should draw

inspiration from the young Pakistani woman Malala Yousafzai who is now studying at the

University of Oxford. Malala defied the Taliban as a young girl in Pakistan and demanded that girls be allowed to receive an education. For her activism, she was shot in the head by a Taliban gunman in 2012, but survived and went on to receive the Nobel Peace Prize in 2014.

Equally impressive are the guts and tenacity of purpose demonstrated by Greta Thunberg of

Sweden who has carried the message of climate change and the danger it poses for the entire

world to all nooks and corners of the globe. Her performances at the United Nations and other arena have been spellbinding.

At the mere age of 15, she began protesting outside the Swedish parliament in August 2018 about the need for immediate action to combat climate change. Soon, other students engaged

in similar protests in their own communities which then led to an organized school climate

strike movement under the name “Fridays for Future”. After Thunberg addressed the 2018 United Nations Climate Change Conference, student strikes took place every week somewhere in the world. In 2019, there were at least two coordinated multi-city protests involving over one million students each.

 

BASHORUN JK RANDLE