Issues surrounding Nigeria’s debt profile have become cogent recently carrying the weighty concerns of national interest. The subject recently assumed the status of weighty considerations with the perusing parameters of hindsight over the mounting profile of debts within the space of the last six years viz-a-viz the prognosis of threats by the instruments of foresight. Critical Nigerians have come to think of what the future presents before the Country if the rising debt narratives keep building up. Beyond economic impacts, threats of political deficiencies which the trend would portend in the future have been noted to be of debilitating impacts on the Country’s political status in the international realm. Some have gone to the hard line of claiming the Country might be sold cheaply for servitude in the nearest future, should the trend be sustained irrationally.
It is glaring that the enlargement of Nigeria’s budget from N4.5trillion in 2015 to over N10.8trillion in 2021 and the proposed N16.39trillion 2022 budget, has come with the elaborate resort to borrowing to cater for the deficits. While the National Bureau of Statistics pegs Nigeria’s debt as at March 2021, to N33.1trillion ($87.24 billion), it is glaring that fresh borrowings not captured in the report have taken course between the said period and now. In July, the Senate had approved a total of $6.18billion (N2.3 trillion) External Loan request by President Muhammadu Buhari to fund the 2021 budget deficit. The approval had generated harsh reactions over the fear of the strains debt servicing would pose to the Country’s economy. The heightening of the concern took toll when in August it was disclosed that about 91 per cent of the Country’s revenue went into debt servicing in the first half (H1) of 2021. Recently in September, it was also disclosed that in five years the Country has spent no less than $1.79bn on servicing debts owed to the World Bank and the Exim Bank of China.
Following the combined approval of N16.39 trillion for the 2022 Appropriation Bill by the Federal Executive Council (FEC), and the Senate, the Federal Government barely two weeks now (Wednesday, October 07) had declared its intention to borrow additional N16.3trillion to finance the proposed 2022 budget deficits. The development, despite recent outcry greeting the increasing turn to borrowing, implies the Federal Government would be in for series of loan acquisitions in 2022.
Reactions over the rising debt profile have continued to evoke responses from the Government to justify why borrowing was inevitable for the President Buhari-led government. The Minister of Finance, Budget and National Planning, Zainab Ahmed last Friday in her justification discourse during an interview session with Bloomberg TV, again blamed Nigeria’s high debt service to revenue ratio on the Country’s large expenditure base. Mentioning that a large proportion of Nigeria’s budget goes into payroll, she was quoted: “Our debt service to overall revenue is high because we have a very large expenditure base. We have a large proportion of our budget dedicated to payroll, and Mr President had decided from the beginning of his administration that we were not going to disengage staff. So, you have to pay salaries, you have to pay pensions. And also, we have to fund the other arms of government, which are the judiciary and the legislature.”
As strains in the economy continue to reflect the undesirables of the burdens of debts, the need to incorporate pragmatic strategies to blend situations with prevailing realities has become necessary. The call for the need of cutting the cost of governance in the Country has recently become reverberating. Although the disposition of the Government to same has not shown any appreciable signal towards such, it remains rational that the call is justifiable with the perusal of the systemic lacunas which have been the occasioning ground for the culture of imprudence in governance. The need to breach the gaps for a strategic reorientation of the governance system is non negotiable. As Nigerian NewsDirect submitted recently, “Borrowings will only begin to take course of positivity in the Country, when the orientation of administration and the definitions of governance in the Country are redirected with overhauling measures. The continuous resort to borrowings without the corrective interventions will only result to mounting of debt profile which remains a beach of threat to the Country’s posterity.” It is thus, pertinent that the Government bring into bear the reality of the prevailing situation, while giving emphasis to prognostic parameters of impact assessment of the burdens of debts with the peculiarities of the Nigerian economy. Hence, while borrowing has its benefit, poor administration of same could form the basis for economic woes. While the prevailing situation may seem fairly manageable to the Government, it has become important for the Government not to be so loose till situations become intolerable before giving priority to the significance of posterity and the parameters of prognosis for foresight on what threats lie ahead with accumulation of debt shrouded with poor management syndrome forming incongruous circles against purposeful end.