Moghalu urges Nigerian Government to avoid further Foreign Borrowings

Sat, Mar 24, 2018 | By publisher


Business, Featured

Prof. Kingsley Moghalu, former deputy governor, Central Bank of Nigeria and presidential aspirant, advises the federal government to slow down on foreign borrowing 

By Anayo Ezugwu

THE federal government has been advised to slow down on foreign borrowing despite the Debt Management Office, DMO, defending the rising public debt profile of Nigeria. The country’s debt stood at N21.725 trillion as at last December 31, 2017.

Professor Kingsley Moghalu, a former deputy governor, Central Bank of Nigeria, CBN, and presidential aspirant, said the government should avoid further foreign borrowing moving the country into another debt trap.

Moghalu stated this while delivering the third edition of the ‘Bullion Lecture’ organised by the Centre for Financial Journalism in Lagos, on Wednesday, March 21, with the theme: “The Secret of the Wealth of Nations.” He said the increased foreign borrowing which the government had raised in the past three years has the country back into a debt trap that will weigh down the future generations of Nigeria.

He said three years ago our foreign debt was N9 trillion, today it is N21 trillion. “When I speak to the youths I remember them in two instances. Benjamin Disraeli, former prime minister of Britain, said blessed are the youths because they are the guarantees of our future prosperity. But   John Edgar Hoover, former director, Federal Bureau of Investigation, FBI, United States of America, said blessed are the youths for they shall inherit the national debt,” he said.

According to Moghalu, there is difference between Gross Domestic Product, GDP growth, economic development and economic transformation. “In this country there is a lot of confusion, today we are in recession. Tomorrow government will tell you we are out of recession.

“And there is a lot of talk about all these. What is the condition of average man or woman in Nigeria? What is there GDP per capita? How much healthcare do they have? What is the quality of their schools? Today, we have over 30 million people either unemployed or underemployed. And we are debating the GDP growth rate. That is why we are poor,” he said.

The ex-CBN deputy governor also called for the deregulation of the downstream petroleum sector; the scrapping of the Nigerian National Petroleum Corporation, NNPC, and reform it as a partially privatised company, as well as the constitutional repeal of the Land Use Act, which according to him traps the wealth of Nigerian’s citizens in the hands of choking grip of bureaucracy.

Moghalu pointed out that the path out of poverty to prosperity in the country must pass through five preconditions which he listed to include: a worldview of a philosophical foundation for the Nigerian state; an economic vision founded on an economic philosophy that is aligned with foundational worldview; science, technology and innovation as the driver of the economy; economic complexity and vibrant institutions.

While defending the increased foreign borrowing by the government, Patience Oniha, director general, DMO, who was represented by Dele Afolabi, director, portfolio management, DMO, said the funds were being utilised for infrastructure development.

“Borrowing on its own is not a bad thing. Through borrowing, the country has been able to do a lot of things. We have to finance infrastructure. So, to say we shouldn’t borrow, I don’t agree with that. You can borrow and use it for developmental projects. “Currently, we are refinancing domestic debts with external loans. We have brought down cost of domestic borrowing and ultimately the cost of servicing these debts will reduce,” she said.

DMO has on Wednesday, March 14, said that the country’s debt profile stood at N21.725 trillion as at last December 31, 2017, representing 18.20 percent of its GDP. Out of the figure, the federal government’s domestic debt was put at N12.589 trillion, while domestic debt owed by the states and the Federal Capital Territory, FCT, was N3.348 trillion.

While external debt attributed to the federal government, states and the FCT was N5.787 trillion, making it a gross total of N21.725 trillion.

– Mar. 24, 2018 @ 5:00 GMT |

Tags: