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The Debt Burden and Huge Infrastructural Gap in Nigeria: My Opinion
“And of course, what is key is what countries, such as Nigeria are doing
with those borrowed funds. Undertaking structural reforms to develop economy is
key,”- Tobias Adrian, Financial Counselor and Director, Monetary and
Capital Markets Department at the IMF. (October 17th, 2019)
At
the twilight of the 2019 General Elections, the Vice Presidential candidate of
the main opposition party PDP and a former Governor of Anambra State Dr. Peter
Obi noted that the present administration headed by President Muhammadu Buhari
has plunged Nigeria into USD80Billion public debt in three years. This
accusation generated a lot of controversy but an extensive explanation of the
public debt figures by AfricaCheck
adequately addresses the accusation. Please click here to read the full article.
More
recently, the Federal Government plans to borrow an additional NGN1.594trillion
from a combination of the domestic and foreign sources to meet up the income
shortfall needed to fund the 2020 budget the President signed into law sometime
last week and the Nigerian populace reacted to this development in a frosty and
hostile manner.
The
main reason for the disagreement is because of the appetite for public debt in
which the present administration seems to thrive in the face of skyrocketing debt
servicing budgetary allocation which currently stands at 20.37% of the total
expenditure. Since the inauguration of President Buhari on the 29th
of May, 2015, the public debt profile has continued to rise.
In
the budget defense section held on the 14th October, 2019, The
Honorable Minster for Finance and National Planning Mrs. Zainab Ahmed explained
in great details, the reason for debt sourcing in the midst of instantaneous
need for economic diversification, slow projected GDP growth rate in
sub-Saharan Africa and a less than 1% global GDP growth rate in 2020. The
Honorable Minister told the joint section of the National Assembly that the Budget
deficit will be financed mainly by borrowing NGN1.594 trillion. • Domestic
sources NGN744.99 billion • Foreign sources NGN850 billion.
In
a Punch editorial titled: ‘High cost of debt servicing’ published on the June
24th, 2019. The fiscal irresponsibility and financial
misappropriation of successive administrations that led to this need to source
for borrowing to fix critical infrastructure in the first place and the need to
immediately curb borrowing to fund the budget were discussed in extensive
details. Excerpts, ‘The Buhari government should halt this dangerous drift,
with its inclination to continue borrowing, especially from China, to complete
railway projects and other infrastructure that ought to have been mostly
executed with private funds through foreign direct investment and privatization.
The DMO has confirmed that the government will borrow USD2.7 billion from
external sources to fund the 2019 budget. The future of the country should not
be mortgaged further. This was how Nigeria slowly, but surely, fell into the
foreign debt-trap with an overhang of USD30 billion in 2005. But the country
exited it following a debt relief of USD18 billion from the Paris Club of
creditors, which paved the way for it to pay USD12 billion in 2006, climaxing
the debt forgiveness under Olusegun Obasanjo’s Presidency.’
In
the concluding part of the article, creative alternatives to public borrowing were
also given. ‘Though, the Buhari administration has justified its borrowings
with his predecessor’s failure to save when oil prices averaged USD100 per
barrel for almost five years, options exist in looking inwards, tightening
revenue leakages, and bringing more people into the tax net. Nigeria is one of
the countries where some billionaires completely evade tax payment. An insight:
6,772 billionaires with between NGN1 billion and NGN5 billion in their bank
accounts evaded tax in 2016; yet, they are still walking free.’
My
Opinion: Nigeria’s population is expected to double in the next 30 years –
400million people - making us the third most populous country in the world only
after China and India. Adding another 200million people in a period of 30 years
without providing the adequate infrastructural needs and the right atmosphere
for the future generations to flourish is a major failure in leadership and
governance.
While,
it is widely believed that Nigeria requires USD15billion worth of investments
annually for 15 years in order to adequately develop its infrastructure
nationwide, Nigeria only spends a meagre NGN5.9Billion per year on federal
infrastructure, equivalent to about 5% of the GDP.
In my opinion,
borrowing to fund critical infrastructural deficit (if it is the last resort)
is a welcomed development provided they are judiciously utilized and prudently
sourced.
God
Bless Us All.
God
Bless Nigeria.
Oluwole Olusanya is the Founder and
Chief Executive Officer (CEO) of one of the fastest growing lifestyle blogs in
the country. He is a banker, writer, blogger, public affairs analyst and a tax
consultant. He anchors Trending Topics on SHEGZSABLEZS’ Blog where he
shares his thoughts and opinions on trending issues.
He is currently studying for a Masters
Degree in Business Administration at the University of South Wales, Wales, United
Kingdom. He has diplomas in Banking and Finance, Investigative Journalism,
Creative Writing and Linguistics from Lagos State Polytechnic, Isolo, Lagos,
University of Strathclyde, Glasgow, Scotland and The Open University, Milton
Keynes, United Kingdom.
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