By Ben Ogbemudia
Executive Director of Policy House and convener of Borrow Right Africa Program Mr. Taiwo Akerele has thrown his weight behind President Muhammadu Buhari’s administration’s penchant for unremitting borrowing voyage.

Mr. Akere ‘said, “Nigeria is not technically solvent”.

“From available data from development finance institutions such as IMF and the world bank, most countries in West Africa have a debt to GDP profile above 50% as at first quarter 2021, however, based on Nigeria debt profile which is estimated at over USD$80bn (with external debt accounting for about $30bn) from DMO’s 1st quarter 2021 report, this is about 20% of GDP which appears to be very low at the moment when examined from the standpoint of debt sustainability framework (DSF).

“The key issue for Nigeria is revenue mobilization and reduction in the cost of governance across all tiers and branches and NOT debt per se.

“As a percentage of the size of the economy, our revenue mobilization capacity appears weak, the informal sector is operating at less than 25% in terms of input into the national revenue flows while there appears to be some leakage in institutional capacity. Nigeria’s tax to GDP ratio is actually one of the lowest in Africa standing at less than 10% from IMF reports, this can be improved upon with every sense of urgency.

“Based on the above, there is a strain on debt service which drains your limited revenue capacity (from available records Nigeria spend close to 70% of its revenue to service its national debts) It is this strain on your debt service that appears to make your present profile seems unsustainable and creates an atmosphere of insolvency, which is far from it.

“In summary, we need to ‘progressively’ deploy our economic management tools such as our fiscal policy (taxation and spending) and monetary policy such as inflation and quantitative easing measures (money in circulation) to redirect purchasing power, control inflation, and strengthen taxation such that government is able to manage its debt profile while ensuring economic growth simultaneously.
This is achievable, Akerele said.

However, Osa Director, a journalist, and lawyer based in Lagos viewed Mr. Akerele’s position as untenable and too patronizing of APC’s unstructured borrowing gambit.

“There is nothing fundamentally wrong with borrowings in the running of national economies if the right things are done. A nation can borrow for production processes when it has the capacity to defray its debt with sufficient revenue streams.

Akerele seeks funds for education of out of school children

“However, Nigeria appears to be heading in the opposite direction with what one can safely describe as reckless borrowings. With a renter economy and weak institutional framework that is laced with leakages, the country can be described as over-borrowing presently.

“The rate at which the present government is borrowing locally, and especially external loans is a cause for genuine worry. Future generations of Nigerians will be overburdened with debts.
“That is unfair,” Osa said.