Back to the debt burden

Let us begin with the quaint question: How did you feel, as a concerned Nigerian, with the piece of recent news that Nigeria’s external debt to China, the International Monetary Fund (IMF) and the World Bank escalated by N30 trillion from June 2023 to June 2024? Alarmed, were you not? Of course, you should because no matter on what concessionary terms these loans were negotiated with the multinational institutions, the repayment by this generation or others to come is not going to be a tea party. Not at all! That is one’s source of serious concern.

“We are borrowing more money today at higher interest rate while leaving the heavy burden for our children and grandchildren to bear”-Alhaji Lamido Sanusi (former Central Bank Governor, January 2013)

Though the reason given for the exponential rise in the debt profile under the first year of the President Ahmed Tinubu-led administration is due to the naira devaluation by over 47percent, leading of course, to the foreign debts becoming more expensive experts on the economy still question the huge gap between dilapidated infrastructure, fragile healthcare delivery, the drastic dip in the quality of education and annual budget deficits and the humongous sums borrowed in only one year. In fact, foreign debt as at June 2024 stood at N63.07 trn compared to N33.25 trn in 2023. That amounts to an astronomical rise of N29.84 trn. And external debt alone was 46.96% in June 2024.

In specific terms, a large portion of these debts is owed to multinational lenders such as the IMF and the World Bank as well as the African Development Bank, AfDB. While the World Bank alone holds $16.32 billion of these debts China remains Nigeria’s largest bilateral creditor with loan of $5.07 billion. So, this scandalous scenario of huge debts raises some fundamental, burning questions.

For instance, how do we explain the situation that has both the IMF and World Bank, which supported the sudden removal of fuel subsidy by the president, which has left millions of helpless citizens stewing in avoidable misery keep lending Nigeria more loans? Given an inclement production environment that has led to the mass exodus of over 50 multinational companies in over eight years of the All Progressives Congress APC-led administration, there

is a scary wave of joblessness. One of the spin-off effects is the rise of terrorism, metamorphosing into banditry, kidnapping and other security – related challenges. There has to be pragmatic measures put in place to rein in the monster of the borrowing spree.

Though Mister President has been praised for prioritising the debt management it stands logic on its head if we keep spending huge sums of the income on settling debts at the expense of infrastructural development and human capacity development. There has to be accountability, probity and transparency with regards to money accruing to the public purse through the Value Added Tax, VAT the hike in electricity tariff, in addition to the increase in fuel prices.

Read also: A nation in debt: Nigeria’s fiscal recklessness continues

That perhaps, explains why “analysts suggest that the rising debt level could continue to strain Nigeria’s financial resources unless more sustainable reforms are introduced”. That is according to the Nigerian Bulletin media organisation. But such reforms should include a drastic reduction in the current abnormally high costs of running government and its apparatchiks. It is therefore, time for the Revenue Mobilisation, Allocation and Fiscal Commission, RMAFC to scale down the huge salaries and emoluments of public office holders. This is not the time to tax the poor to satisfy the greed of the rich. As Margaret Thatcher, the former British Prime Minister rightly warned, no nation gets rich by taxing the people beyond their capacity. Even rubber bands have their elastic limits. Now is also the time for the president to muster the political will to restructure the country’s political leadership spectrum. The federal government should devolve the enormous powers at the bloated centre to the states by handing off the issues of education, agriculture, healthcare delivery, transportation to the states, as it was during the First Republic.

Furthermore, let the states, or geo-political zones control their God-blessed resources and pay an agreed percentage of their income as tax to the federal government which should concentrate on running the military forces, international relations and protecting our territorial waters. Doing so will reduce the unnecessary financial weight on the shoulders of the federal government and therefore, the need to keep borrowing from the multinational organisations.

While borrowing may not be considered a bad idea in business management, especially when the need arises to address imbalance in cash flow, for business expansion, higher level of production, employment, to stabilise income and employment, however, making it habitual in the midst of available resources could lead to distortions. That is according to Martin Azuwike, Nigerian Editor of the London-based ‘News Africa’ magazine. As he rightly emphasized, in the course of the Guild of Public Affairs Analysts of Nigeria, GPAAN expressing its opinions on the topical issue, borrowing must not be for consumption but for investment and production. And now is the right time for managers of Nigeria’s economy to stimulate it by investing in productive activities such as infrastructural development, agriculture and of course, providing the enabling and sustainable environment for businesses to thrive.

It has therefore, become important as this point to call on our lawmakers-at both the state and federal levels-to develop inquisitive mind and probe into the frequent request for loans by the executive. Worse still is that by some state governors at the tail end of their tenure. They should learn to set a benchmark and stop assenting to every manner of loan by the executive. Rather, they should set in motion and pass relevant laws for a critical appraisal of how the previous loans were expended and identify areas of fraud, if any. Now is therefore, also the right time to save our children and generations yet to come from the overbearing burden of the payment of loans, they and even their predecessors never benefitted from.