The ticking debt bomb
Public borrowing is done in public interest. When the present government took over, Nigeria’s foreign debt profile, according to the Debt Management Office stood at $10.36 billion (federal and state) as of June, 30, 2015.
The federal government alone had a domestic debt overhang of $42.6 billion but today Nigeria’s debt has ballooned to N24.9 trillion ($81.274 billion) at the end of March 2019, according to figures published by the Debt Management Office.
Nigerians are deeply concerned about the debt profile of the country, the utilization and the long term consequences of debt repayment. The diversion of fund has continued to be a norm; impunity, corruption and lack of accountability have continued to be our albatross.
In the past, we were caught in a debt net which climaxed in the payment of $12.4 billion to Paris Club of International creditors - 2005-2006 to exit from the burden. Consequently $18 billion was written off and the country freed itself from the debt yoke.
A foreign loan is like a new wife, so enchanting and gorgeous. Once hooked, though it becomes a cord around the neck of the beholder.
My grandmother described an addicted borrower as a mouse in search of food and the lender like a milker always looking for loopholes to milk. The challenge is how to wean the country off its debt drip without intensifying an economic slowdown. It’s a matter of concern for everybody.
Concerns citizens are asking?
Would the latest $30 billion dollarloan approved by our lawmakers spur economic development and improve the quality of life of its citizens?
Can we say $52 billion loan is sustainable according to the finance minster?
Can we meet our payment obligations without affecting our standard of living?
Pessimists say if we continue at this rate of borrowing, our unborn children are crawling into a treadmill to hell, while optimists say we must eke the present to see tomorrow but the average Nigerians are saying let’s be careful not to be caught in a spider’s web of debt.
The truth is the trillion pile of public debt as it is now is not an explosive threat to the economy of Nigeria if the loan is used for critical infrastructure and human capital development and, more importantly, the avalanche of other streams of revenue untapped that we can use to fill up deficit financing.
It is assumed that all structural reforms engaged by the present administration will sustainably raise growth. The policies introduced such as the new finance bill will reduce the cost of doing business, combat crime and corruption, and boost domestic industries. In any society, waning public trust is often replaced with anger. You hear of enough is enough! What civil society is demanding from the government is fidelity in return for enduring sacrifices and this administration should raise the bar in this regard.
As for the rising debt, the new debt is aimed to fund infrastructural projects that is hoped will contribute more economic growth than they absorb in repayment but the truth is much have been expended on recurrent expenditure and heaps of loans have been swallowed by cobra in the past like a recurrent infection.
Until efforts are geared towards making us a production state and extending our tentacles with respect to non-oil revenue, we will continue to use loan to finance our budget.
Olusanya Anjorin olusanyaanjorin@ gmail.com