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 percent as of the first quarter of 2021.
However, based on Nigeria debt profile which is estimated at over $80bn (with external debt accounting for about $30bn) from DMO’s first quarter 2021 report, this is about 20 percent of Taiwo Akerele, which appears to be very low at the moment when examined from the standpoint of debt sustainability framework (DSF) perspective.
The key issue for Nigeria is revenue mobilization 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 percent in terms of input into the national revenue flows while there appear to be some leakages in institutional capacity. Nigeria’s tax to GDP ratio is actually one of the lowest in Africa standing at less than 10 percent 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 our limited revenue capacity (from available records Nigeria spends close to 70 percent of its revenue to service its national debts).
It is this strain on our debt service that appears to make our 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.
Architect/ Political ScientistThe problem is not borrowing money. The challenge is that we are not investing the money we are borrowing well.If the money we borrowed is being invested, we will not be in this mess today. The government is not even concerned with happenings in the country.
The leadership is more interested in trying to pay back their sponsors not bothering what her citizens pass through. Nigeria is already a failed state because of insolvency. The government is finding it difficult to even pay salaries now. The cost of living is high just as prices of foodstuff have hit the rooftop. So, you can see that we are not moving forward. Instead, we are heading backward every day.
Innocent Onyega
Pastor
The summary of the Nigerian story is that the All Progressives Congress government has succeeded in shutting down the Nigeria project. Nigeria is not just going bankrupt, the country is broke. Former President Goodluck Jonathan left $36bn in the nation’s foreign reserves.
President Muhammadu Buhari allegedly borrowed $30bn from the United States alone not adding that of China and other countries. This is the reason why we are suffering in this country.
A cursory look shows that there are no jobs for graduates and every day they are borrowing money for what I don’t know. The truth is that APC and Buhari governments have borrowed the life and the future of this country to China and other countries.
Harlem Kaikyenge
Construction/Engineer
The whole situation about the country’s debt profile is glaring. I think as a sovereign nation, we should know how to handle our affairs. If we are borrowing money and we are not putting the money into projects that will benefit the nation; projects that will help boost the economy, then something is wrong.
We should borrow to work on significant things. If we don’t use the borrowed sum well, at payback time, we, as a nation, will face the consequences. Perhaps, it may result in the borrower nations coming to take charge of our economy. And in that respect, we shall lose our sovereignty. In the interim, it seems that we are highly indebted to China. The Asian country is the lifeline of this government and the nation as a whole.
Francis Anzakwu Mark
Clinical Psychologist / Mental Health Specialist
Borrowing itself is not a bad idea but the purpose for which it is being put to use is the problem.
If money is borrowed to meet recurrent expenditure than capital expenditure, that will not be good for the economy. The way we are borrowing is pushing us towards insolvency.
It is true that there is nothing really wrong with borrowing provided it is channeled for productive use.
But my concern is that we are not borrowing to finance infrastructure that can have multiple effects such as boosting economic activities, creating employment opportunities, and enhancing the Gross Domestic Product.
Rather, we are borrowing to finance consumption and mounting expenditure. This is putting severe stress on our external reserves and the value of our currency.
The option for survival is to invest in infrastructure, create market, friendly policies that will enhance investment in the upstream, encourage export to earn forex, and address insecurity with a negative impact on the country’s risk.
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Innocent Onyega
Pastor
The summary of the Nigerian story is that the All Progressives Congress government has succeeded in shutting down the Nigeria project. Nigeria is not just going bankrupt, the country is broke. Former President Goodluck Jonathan left $36bn in the nation’s foreign reserves.
President Muhammadu Buhari allegedly borrowed $30bn from the United States alone not adding that of China and other countries. This is the reason why we are suffering in this country.
A cursory look shows that there are no jobs for graduates and every day they are borrowing money for what I don’t know. The truth is that APC and Buhari governments have borrowed the life and the future of this country to China and other countries.
By Elijah Keturah
Birma Kasimu
Banker
Well, this requires a lot of data analysis before anyone can give details of Nigeria’s debt profile and some of these data are not available.
So, all we know is Nigeria’s debt to service ratio is high, which means the amount we can use to service loans is going higher. This will definitely lead to insolvency. But I am sure the government is aware of this. They know the state of this nation and they know they have to do something about it quickly before its gets out of hand.
Taiwo Akerele,
Executive Director, Policy House and convener of Borrow Right Africa Programme
