President Muhammadu Buhari

On the surface of things, experts have never outrightly discouraged borrowing, whether by individuals, corporate entities or nations.
This is because there is a sense in which borrowing could boost growth and development in countries without a need to unnecessarily increase taxes. Many nations have at one point or another borrowed to fund critical components or sectors to jumpstart their economies. However, financial experts have almost sounded a note of caution to every borrower saying, ‘borrow responsibly’.
As it stands today, Nigeria requires huge funding to jumpstart, improve and grow its economy, create employment and alleviate poverty. The situation about unemployment in particular is so sorry with both internal and international organisations fearing that it would hit the very troubling35 percent mark in no distant future. The government is also expected to grow it’s overall capacity to manage the economy in GDP terms, at least if not to double digits, but by an average of 7 per cent given the stark challenges before it.
However, it appears the current leadership lacks in character to nudge the nation forward in terms of even the three critical elements it had promised to tackle, not to talk of the even broader remit of sustaining overall national development.
Those promises include Security, tackling the scourge of corruption and growing the economy, and it’s performance records are embarrassingly at about the lowest for any administration since Independence in 1960.
For example, Nigeria’s current debt stock as released by the Debt Management Office stood at N25.7trillion (US$83.8billion) in June 2019. The same agency noted that the nation had exponentially increased its debt by N754.56billion, representing 3.2 per cent rise in three months from N24.9 trillion in March to June 2019.
Nigeria’s total debt stock constitutes both external and domestic debts. According to the latest DMO report, the country’s total external debt rose to N8.32 trillion ($27.1 billion), representing about 32.38% of the total debt stock, while the domestic debt constitutes 67.68%.
The same agency revealed that Nigeria paid a total of $252.2 million or N77 billion to service the country’s external debt between April and June 2019, while N189.8 billion was paid to service domestic debt. The implication of this is that Nigeria paid a total sum of N267.1 billion to service the country’s debt stock in just three months.
The breakdown shows that for the external debt position, the World Bank’s debt servicing gulped almost $100 million within the period.
On the domestic side, interest paid on FG’s green bond was estimated at N718.5 billion with the period. Similarly, others which gulped debt servicing in the domestic fronts include FG bonds (N128.9 billion), Treasury bonds (N6.25 billion) and FG Sukuk (7.84 billion).
This high level of debt exposure has raised serious concerns among many who think that the lives of future generations of Nigerians is being mortgaged. Stronger voices, even that of former President Olusegun Obasanjo have cautioned that the nation’s debt was becoming unsustainable and that Nigeria was drifting back to where she was in 2004 when was neck deep in debt. Despite the hardship which pervaded the country to the extent that she was becoming not credit worthy. The Obasanjo era had therefore, secured a debt relief for Nigeria of $18billion from the Paris club and reduced the nation’s debt by $30bn.
Despite this, President Buhari’s government has almost concluded plans to borrow about $29.6bn, on the advertised premise that it wants to deploy it to create massive infrastructure. The argument is that the country still has room to borrow, what with the 29 per cent debt to GDP ratio. The government may seem right on the surface of things here when compared with developed economies whose debt to GDP ratio currently stand above 100 per cent. But experts and other critics know that the officials of government should consider that the country presently uses a collosal 60 per cent of its revenues to service debt, leaving it with only 40 per cent for everything else.
It was observed that the Federal Government spent N2.09 trillion in 2018 on servicing public debts from N1.63 trillion in 2017. The government borrowed a total of N1.74 trillion in 2018, which created additional deficit yet its eyes is still on borrowing more.
The economy watchdog, BudGIT had for example reckoned that although the government recorded revenue of N3.86 trillion, the Federal Government spent N5.86 trillion on recurrent expenditure, meaning that N2 trillion was borrowed to fund recurrent expenses.
Also looking at the 2020 Budget which is now put at N10.33 trillion, it shows that debt servicing would gulp N2.5 trillion.Yet the sum of N1.7 trillion will be borrowed to finance the 2020 budget at the same.time! Again, the advertised debt service projection of N2.46 trillion is more than the capital budget of N2.14 trillion!
This Newspaper joins the majority of Nigerians to say no to another round of borrowing when the government has indeed failed to judiciously and efficiently use even the resources being continually borrowed to impact upon and achieve any meaningful and sustainable development till date.