The ONE Campaign has called on President Bola Tinubu to urgently implement fiscal reforms to tackle Nigeria’s rising debt and unlock resources for important sectors that will benefit millions of poor and vulnerable Nigerians.
This is on the back of the report published by ONE Campaign on Monday 26 June titled, “Fiscal Reform in Nigeria: Navigating Nigeria’s Debt Burden Whilst Protecting Social Spending,” which revealed Nigeria’s complex financial hurdles.
According to the report, Nigeria’s debt stocks have grown nearly three times faster than its revenue between 2014 and 2021 (20% vs 7%), while debt service consumed 91 percent of government revenues in 2021, up from 29 percent in 2014.
Similarly, the fiscal deficit increased sevenfold between 2014 and 2021, from N881 billion to N6.44 trillion.
“As Nigeria grapples with rising debt and dwindling revenue, vulnerable citizens are disproportionately impacted due to a lack of government support in crucial areas that affect their well-being,” Stanley Achonu, Nigeria Country Director at ONE Campaign, said while responding to the report.
According to the report, excessive borrowing over the past decade has resulted in a threefold surge in the country’s public debt stock. Consequently, Nigeria faced a worrisome debt service-to-revenue ratio of 91 percent as of 2021, marking a significant increase from 29 percent in 2014.
With projected external debt service reaching approximately $4 billion by 2025, up from $3 billion in 2023 and $2.5 billion in 2024, the country may encounter further challenges in debt repayment, the report indicated.
Nigeria’s economy also suffers from insufficient revenue generation due to its heavy dependence on oil exports and failure to diversify, exposing the country to fluctuations in global oil prices and disruptions in local oil production.
The government’s inability to enhance revenue generation has adversely affected investments in crucial sectors that could drive economic growth and yield positive outcomes, impeding progress in reducing extreme poverty and multidimensional poverty among its population.
Failure to act quickly could push 23 million additional Nigerians into poverty and leave 80 million working-age citizens without a full-time job by 2030.
Achonu said further that the challenges are not insurmountable, but only if the leaders are willing to act quickly before it is too late.
“Tackling these issues requires the government to take decisive actions that will ensure fiscal discipline and sustainable debt management and free up funds to invest in critical areas such as social protection, healthcare, agriculture, and education, among others,” he said.
The anti-poverty organization recommends that the President Tinubu-led administration increase debt sustainability by committing to use concessional sources for all debt, and refinancing where possible to reduce the amount of service paid.
It also urged the government to increase debt transparency, particularly for terms agreed on collateralized debt, domestic subnational debt, and State Owned Enterprise (SOE) debt, among others.