Debt-Servicing Burden: Addressing leakages in Nigeria’s public finance structure

Concerns over Nigeria’s rising debt profile have begun to hit the rock with attention given to the huge chunk of funds that now settle for debt servicing in the Country’s fiscal expenditure. The debt profile is now indeed a stiffening agent against development of capital projects in the Country. The profile of public debt in Nigeria has enormously grown under the present administration. The development has continued to attract criticisms, particularly over the poor record of the performance of the economy despite the heap of borrowings in less than six years. Records have shown that between 2015 when this government came into power and now, Nigeria’s public debt profile has skyrocketed from N12.6trillion at the close of 2015 to N32.2trillion in the latest records of the Debt Management Office as at September, 2020.

The increasing debt profile of Nigeria has most recently become a topical matter sparking turbulent concerns. This has mostly attracted reservations and emotional disturbances, particularly when consideration is given to what posterity holds for the Country in the face of rising debt stock. The acquisition of more external loans obtained by the present administration with little or no impact felt on the performance profile of the economy has further heightened the fear of the fate that awaits the Country in the nearest future. The subject of deepening situations of a falling economy despite huge loan stock is one of a paradox that leaves a sad expression on the faces of Nigerians.The conditions therefore have attracted a sympathetic narrative as the circumstances within which the Country is now enmeshed, calls for a sober reflection. President Muhammadu Buhari had on Thursday, appealed to Nigerians, particularly the elite, to be fair in their criticism of his Administration, remarking that the Federal Government had to struggle to pay debts amidst dwindling revenue. President Buhari who made the appeal when he received the Executive Secretary of the Nigeria Christian Pilgrims Commission (NCPC) Reverend Yakubu Pam, in Abuja on Thursday, said investing in road repairs and rebuilding, including revamping the rail and trying to get power going were also taking a toll on the government’s resources.

President Buhari was quoted: “Those criticising the administration should be fair in terms of reflecting on where we were before we came, where we are now and what resources are available to us and what we have done with the limited resources. We had to struggle to pay debts, investing in road repairs and rebuilding; to revamp the rail and try to get power. This is what I hope the elite, when they want to criticise, will use to compare notes.”

The time for the Federal Government to become more rational with the principles of economic frugality is no more than now. It is essential for the present administration to set the grounds for reforms to check against high profile profligacy which for years has constituted a recalcitrant force of resistance against the much desired growth and development. The share of government overheads and administrative costs remain potent forces against the necessity to appreciably drive profound and prolific capital projects essential for driving growth and development in the Federation.

While the present administration may be anxious about pulling the economy out of recession, it is instructive that such moves should be far from being founded on impulsive measures that are themselves forces of economic strains and disturbances in the long run. Beyond the economic effects of a high debt profile, it is significant for the Government to note that a nation enmeshed strategically in the web of debts with a failing economy, will have its political relevance weakened in the international realm. The psycho-social, sociological, political and economic effects of the realities of huge debts in the face of failing economy is by all means undesirable. The present administration should look into better measures of managing the cost of governance efficiently with a sense of prudence that gives the proper ambience for more ventures into capital projects.

Realities have shown the weakness of the prevailing system in engendering the desired objectives for borrowed funds. The overarching preponderance of systemic leakages with the attendant manifestations of corrupt tendencies over the desired goal of fostering capital projects which borrowed funds are properly meant for, have continued to defeat the essence of huge loans acquired over the years. It is therefore essential that the processes that forms the structural patterns of capital projects be overhauled and sanitised with vibrant modifications and reconstitution where possible, in order to sanitise the system from the tendencies of foul-play which have been frustrating the achievements of desired purposes.

Nigeria’s rising debt is a source of concern. It will spell doom for the Country if the acquisition of loans are sustained while there is in existence, systemic leakages frustrating achieving the desired objectives for borrowings. It Is therefore essential for the Presidency and the National Assembly to work harmoniously on instituting new standards to guide the execution of capital projects generally, and in particular when attention is given to those meant to be financed with borrowed funds. Continuous borrowings without addressing the prevailing leakages will continue to create circumstances with forces of frustration against desired enhancement of capital projects towards strengthening the economy. It is essential that the Presidency consider the importance of spearheading a full grip on the necessity for redirecting the course of project execution with strong monitoring and efficient system required for the reformation of the economy for growth and development.

It is disheartening that the debt profile of the Country has heaped up within a short period, without remarkable results to show for it. The need for reformation of the workings of the fiscal patterns of the Country’s public finance structure is critical at this time. The prevailing system fraught with leakage deficiencies is counterproductive to getting optimum outcome from borrowed funds meant for capital projects. The effects of systemic leakages with corrupt-driven threats subject borrowed funds to frustrations that defeat the essence of their purpose. It is therefore essential for the President Buhari-led Federal Government to escape the rot of the prevailing systemic deficiencies in Nigeria’s public finance structures and the public project execution processes to proffer sanity into the structural patterns guiding the operations.