Posted by Samuel on Wed 16th Oct, 2024 - tori.ng
The elder statesman asserted that Nigeria’s external debt is the largest amongst all sub-Saharan African nations, despite the fact that it received debt waivers from the Paris Club, London Club or from Independent Creditors.
Aare Afe Babalola, the Nigerian legal luminary and founder of Afe Babalola University in Ado-Ekiti, has asserted that Nigeria is now repaying debts with additional debt, as its revenue is insufficient to cover its obligations.
The elder statesman asserted that Nigeria’s external debt is the largest amongst all sub-Saharan African nations, despite the fact that it received debt waivers from the Paris Club, London Club or from Independent Creditors.
He added that the arrears of the debt had accumulated inexorably, putting Nigeria in the bad books of international financial communities.
He noted that Nigeria’s huge debt profile had negatively affected its economy, hence, a big reason to worry.
He explained that in 2020, debt service costs accounted for a staggaring 83 percent of revenue. By January 1, 2024, the federal government's revenue was N449. 7 billion while on debt repayment. Nigeria's debt is now 168% of it's revenue.
He urged the Nigerian government to adopt a model of approaching the lenders for total forgiveness of the debts or reduction, and in any event the waiver of the payment of the interests on the debts.
He said; "Nigeria’s external debt is the largest amongst all sub-Saharan African nations, despite the fact that it received debt waivers from the Paris Club, London Club or from Independent Creditors. The arrears of this debt have accumulated inexorably, putting Nigeria in the bad books of international financial communities. Also, Nigeria’s huge debt profile has negatively affected its economy, hence, a big reason to worry.
"In 2020, debt service costs accounted for a staggaring 83 percent of revenue. By January 1, 2024, the federal government's revenue was N449. 7 billion while on debt repayment. Nigeria's debt is now 168% of it's revenue.
"The sad reality is that Nigeria is now repaying debts with debt, since its revenue can no lonher pay its debt.
"It is therefore worrisome that Nigeria is reported to be taking more debts. In September 2024, the world bank approved a $1.57 billion loan for Nigeria to support its health and education sectors and help provide sustainable power. In June 2024, the World Bank approved $2.25 to be disbursed to Nigeria for Economic Stabilization. In the same year, Nigeria took $8.8 billion debt to be repaid with unexplored oil. This is a total of $12.62 billion in addition to already existing debt.
"The questions are: What have we done with all these loans and what are we proposing to do with these additional loans?
"Where will the Federal Government draw the line on financing the Nigerian economy with debt?
"When are we repaying the loans? Where are we going to get the money to repay the loans?
"The several trillions of Naira taken as loan has not reflected positively on the economy. Where are the projects on which we spent all these monies? Regrettably at 64 years post-independence, Nigeria still suffers from infrastructural decay, declining foreign investments, declining educational standards from infrastructural deficits, increase in the rate of poverty, unrivaled rates of inflation and an astronomical fall of the value of the Naira in international market.
"The Nigerian debt burden has retarded internal development and hindered economic growth in Nigeria. Most government funds are diverted towards debt servicing rather than essential public services. Governments have also taken to financing their debts through other debts. All these have exacerbated the poverty rate in Nigeria leading to the conclusion that Nigeria urgently needs an economic rescue.
"In view of the dire state of the economy of Nigeria, the Federal Government should: Adopt Chief Obasanjo’s laid down example by approaching the lenders for total forgiveness of the debts or reduction, and in any event the waiver of the payment of the interests on the debts.
"Set up committees to investigate and ascertain the actual amounts borrowed, the purposes for which they were borrowed, the accounts into which the monies were paid into and the projects for which the debts were utilised.
"Enquire into whether it is true or not that Nigeria’s unexplored crude oil was sold in advance. If so, what the money was spent on.
"Urgently revive national oil refineries to reduce the importation of refined oil in Nigeria. This will leave more monies in government coffers which can then be utilised in the repayment of our debts.
"Reduce the cost of governance by adopting the practice in the First Republic where law makers regarded their positions as opportunities to serve and only took sitting allowances.
"Place premium on infrastructural development and reduce recurrent expenditures on politics or governance.
"Use all recovered proceeds of corruption to service national and international debts.
"Encourage, promote and finance the development of the agricultural sector and discourage the mindset of Nigerians that politics is the only lucrative business in Nigeria.
"All imaginable economic woes have visited Nigeria. However, there is still hope for our beloved nation. A hope that needs political will to thrive," he added.