ON BEN AKABUEZE’S ALARM

The incoming administration has its job well cut out

For years, managers of our economy have been harping on the ratio of Nigeria’s debts to the Gross Domestic 3URGXFW *'3 1RZ WKDW WKH ÀJXUHV can no longer add up as the debts keep mounting amid dwindling revenues, GLUHFWRU JHQHUDO RI WKH EXGJHW RIÀFH RI WKH federation, Ben Akabueze has sounded the alarm. “Once a country’s debt service ratio exceeds 30 per cent, that country is in trouble, and we are pushing towards 100 per cent and that tells you how much trouble we are in,” said Akabueze who laid bare the economic challenges that the next administration would have to grapple with. “While the size of the federal government budget for 2023 created some excitement, the aggregate budgets of all governments in the country amount to about N30 trillion. That is less than 15 per cent in terms of ratio to GDP.”

There could not have been a more apt way to put the situation in which Nigeria is today. (PHUJLQJ IDFWV VXJJHVW WKDW WKH QDWLRQ·V ÀQDQFHV and the economy are already in dire straits. Yet, there are no easy options ahead. While there is nothing wrong for a country to face temporary economic setback so long as the managers are FDSDEOH DQG LQGHHG DEOH WR À[ LW ZKDW LV WUDJLF is that we continue to live in denial with public RIÀFLDOV VWLOO ZDOORZLQJ LQ SURÁLJDF\

2Q WKH GHEW SUREOHP ZH UHDIÀUP WKDW LW LV true every nation borrows. But borrowing must be done with a well-thought-out investment LQLWLDWLYH FRQFHLYHG WR \LHOG PD[LPXP EHQHÀWV That has not been the case in the past eight years under President Muhammadu Buhari. As we have always highlighted on this page, debt in comparison to GDP is only sustainable when the revenue generation is high. In the case of Nigeria, ZKLOH WKH GHEW SURÀOH LV ULVLQJ DQG ZLWK LW RXU population, government revenue continues to dwindle, with no conscious effort to cut down expenditure on the recurrent side either by the federal government or the 36 states.

To compound the challenge, transparency and accountability in ministries, departments,

DQG DJHQFLHV 0'$V DUH DW WKH QDGLU DV RIÀFLDO corruption is still high. The annual audit report IURP WKH 2IÀFH RI WKH $XGLWRU *HQHUDO IRU WKH Federation is very instructive in that regard. The number of government agencies that fail to subject themselves to audit scrutiny under the present administration continues to increase.

Faced with a declining national economy worsened by the Covid-19 pandemic and subsequent low oil prices, many of the states across the country are withering. Their battered ÀQDQFLDO VWDWH KDV EHHQ ZRUVHQHG E\ WKH KXJH DPRXQW RI PRQH\ XVHG WR VHUYLFH XQMXVWLÀDEOH debts accumulated over the years. States like Kogi, Adamawa, Plateau, Benue, Taraba, and Osun are suffocating under debts and inability to live up to their responsibilities. Many others are also in a À[ RYHU PRXQWLQJ VDODULHV and pensions. Since most of them perilously depend on handouts from Abuja, their inability to pay salaries is becoming a national security challenge. Given the foregoing, the nation is at a crossroads. Even at the best of times, by focusing only on payment of salaries to workers in the public sector that is largely unproductive at the expense of much needed social infrastructure like power, schools, hospitals and reliable institutions, poverty is being reinforced across the country. A nation that spends more than it generates to sustain civil servants and SXEOLF RIÀFLDOV LV VXUHO\ RQ D MRXUQH\ WR SHUGLWLRQ This catastrophe is enhanced by the absence of creativity in governance.

The states have the latitude to create their own revenue survival kits through taxes, sensible investments, and prudent management. They have the power to slash their recurrent expenditure and drastically right-size their workforce and spend less on frivolities. Sadly, this is not happening. Authorities at all levels must therefore move quickly to steer the ship of state out of this rather dangerous trajectory. But more importantly, we hope the incoming administration of Bola Ahmed Tinubu understands the enormity of the challenges ahead. There will be no honeymoon period!

A nation that spends more than it generates to sustain civil servants and public officials is surely on a journey to perdition. This catastrophe is enhanced by the absence of creativity in governance