Nigeria sliding into debt trap?
The rise of our national debt has continued to become a matter of great concern. Since the inception of this administration it has been reaching to both domestic and foreign creditors for loans. Of course, Nigerians can excuse the government for starting on wrong footing. Immediately after the 2015 general elections, the incoming government discovered […]
The rise of our national debt has continued to become a matter of great concern. Since the inception of this administration it has been reaching to both domestic and foreign creditors for loans. Of course, Nigerians can excuse the government for starting on wrong footing. Immediately after the 2015 general elections, the incoming government discovered that the country was broke. Added to the woes, were the crash of crude oil price in the international market and violent militants activities in the Niger-Delta that seriously affected or nearly shut the oil production output. The financial recession, which bitted hardest in the first quarter of 2015 and down to 2017 respectively, had put many states in financial distress. It took the intervention of the federal government through the financial bail out to save the situation from further deteriorating. The state governments were living from hand to mouth as they could hardly meet their financial obligation. Within a short period of time, the unpaid salaries of workers accumulated and contractors who executed projects looked aloof with their hands akimbo for not being paid.
It may interest you to know that the APC government came to power under the change mantra and was desirous to implement infrastructural development in the country. In view of the urgency it attached to socio-economic drive, it had no option than to source for loans. The government went to China, United States, and Russia etc. to obtain billions of dollars loans to fund its infrastructural development. The rising demand for loans pushed our internal and external debt profile to frightening dimension. From the relatively 10 billion dollars this government inherited in 2015, the country’s debt now stands at above 80 billion dollars and could further rise once the Senate approves Mr. President’s new loans request rejected by the last Senate.
Though the Minister of Finance, Zainab Ahmed Shamsuna, had said at various fora that Nigeria has the lowest debt profile and the Debt Management Office (DMO) allayed fears being expressed by Nigerians, the increasing rise in debt profile is worrisome. It is reported that half of the country’s budget goes to servicing or re-payment of debt. If the narrative is true, it means the country will be left with little or virtually nothing for its development. It will be recalled, that during Obasanjo regime, the country re-negotiated its loans with international creditors. This led to the country’s exist from Paris Club. Successive regimes after Obasanjo had also managed the country’s debt to minimal or acceptable level.
There is nothing wrong in collecting loan, so long it will be judiciously utilised. That is, if the loan will be wisely invested to yield an investment return. For instance, the modernisation of rail transport system is a right step in the right direction. What about an investment in oil sector in which the country has comparative revenue advantages? But collecting loans to maintain our money guzzling democracy or our over-floated bureaucracy can be considered a wrong decision. Besides, these loans attract interest rate and usually come with stringent conditions. That is why the government should always think twice before rushing for loans. With the introduction of new tax regime and other policies such as border closure, targeted at revenue drive, the government should avoid taking the country to another debt trap through unnecessary collection of loans!
Ibrahim Mustapha, Pambegua, Kaduna state