The rising debt profile of Nigeria is a source of worry despite the assurances by the Debt Management Office that all is well

By Anayo Ezugwu

AN economic expert has warned that the rising debt profile of Nigeria, which stood at N22.38 trillion as of June 30, is a dangerous trend. Austin Nweze, lecturer, Pan-Atlantic University, Lagos, and economic analyst, said the rising debt profile in an election year is not good for the nation’s economy.

In an interview with Realnews on Wednesday, Nweze expressed fear that that most of the money borrowed by this administration might be diverted to funding electioneering campaigns. According to him, the nation has not seen where these monies are going. “This government has been a freewheeler when it comes to borrowing. There is nothing wrong in borrowing but when you borrow to consume, it is dangerous. Consume in terms of paying salary and maintenance. We should borrow to build infrastructures. We have to really understand the geo-politics of borrowing. What these countries do is to make cheap loans available to you and you collect it knowing that African nations not just Nigeria are gullible. Once you offer them cheap loans they fall for it.

“The Chinese are doing it and it is giving them access to where they are not supposed to have access to, the same thing with the western nations. That is just the thing because if you understand the politics of loan you will know as a leader that there is no free money anywhere. They come with conditions you may not be able to meet,” he said.

According to Nweze, most of the money the federal government is planning to borrow to finance 2018 budget might go into debt servicing. “If you check the pattern, over the years, there is always more borrowing during election years. And they use these monies to intimidate the masses.

“First of all, they mop up the money in circulations so that people will find it really difficult to make money as it is today. Then when the election comes they will now begin to buy votes with the money. So when one person is paying N5000 and another person offers you N10,000 to vote, what will you do?

“It is a deliberate thing to impoverish the people and take advantage of the poor and there is nothing more criminal than election corruption. Election corruption in the sense that you corrupt the whole system, it is worse than financial corruption.

Nweze says “The problem is that most of the money they are borrowing now would go for debt servicing. So it keeps piling and at the end of the day, the children unborn will have between N1.5 trillion and N3 trillion debts on their neck. If they keep on going the way they are going, there will be problem in the future.”

He says “When you borrow and do not invest it, it has a way of making nonsense of the purpose for borrowing the money in the first place. What they are saying is that as long as we remain in power, we will keep borrowing to have fun and enjoy ourselves.

The attitude is that “Any other person coming in should pay the debt since it is a sovereign debt and not a personal debt, so they don’t even care or understand the implications.”

Unlike Nigeria, examples abound of nations that borrowed to build infrastructures are many. The southern part of Spain used to be a slum area but the government borrowed money to invest in infrastructure. Today, that place is an industrial estate, monies generated there is being used to service the loan.

Another country that utilise their loan is Republic Ireland. They borrowed money to build ICT city. Today, they have developed infrastructure and are doing well in ICT infrastructure. Singapore also borrowed money to build infrastructure. But in Nigeria the story is different. The people in government both past and present do not know the implication of borrowing to the per capita income of an average Nigerian. “It is a very unfortunate thing that our government is not thinking critically and strategically because they don’t know the implications of all these.”

Realnews reports that the Debr Management office, DMO, had on Tuesday, August 14, disclosed that the nation’s debt profile rose by 3.01 percent in the last six months. The DMO attributed the increase to the $2.5 billion Eurobond issued by the federal government in February.

“The Total Public Debt which encompasses the Domestic and External Debt Stock of the Federal and 36 State Governments and the Federal Capital Territory stood at N22.38 Trillion or USD73.21 billion as at June 30, 2018. This figure was a marginal increase of 3.01 per cent over the Public Debt Stock for December 2017. The increase in the Public Debt Stock over the six months period was due largely to the $2.5 billion Eurobond issued in February 2018.

“When compared to the Debt Data for March 2018, the Public Debt Stock actually decreased by 1.44 per cent from N22.71tn in March 2018 to N22.38tn in June 2018. The decrease was due to a 3.38 per cent decline in the FGN’s domestic debt stock between March and June 2018. There were however marginal increases of 0.07 per cent in the external debt stock and 2.75 per cent in the domestic debt of states,” it said.

According to DMO, a major highlight in the public debt data was the consistent decrease in the FGN’s Domestic Debt which declined from N12.59tn in December 2017 to N12.58tn in March 2017 and N12.15tn in June 2018.

– Aug. 17, 2018 @ 16:15 GMT |