By Daniel Kanu
Nigeria’s alarming debt profile has become a pressing concern, threatening the country’s economic stability and sustainability.
The nation’s debt has grown exponentially with the total debt stock rising from ₦12.6 trillion in 2015 to over ₦77 trillion in 2023.
As of today, within 19 months of the Asiwaju Bola Tinubu presidency it has hit N142 trillion and still counting.
No doubt, Nigeria remains plagued by the current administration’s incorrigible borrowing habit.
Economy watchers say that by securitizing the debt owed the Central Bank of Nigeria, CBN, the government is allowed to borrow more money, further plunging the country into the abyss of debt.
Nigeria is among the 10 countries on the continent burdened with the highest debt of over $2.7 billion owed to the International Monetary Fund, amid its economic challenges.
When the country’s debt stock was rising steadily, with a notable increase of 0.61 per cent from June 2023 to reach N87.91 trillion by the end of the third quarter of 2023, the government was still telling Nigerians that there was no cause for alarm, saying they have not passed the borrowing threshold, but today the people are no longer deceived knowing the realities on ground, which they are feeling in their living conditions.
What is more worrisome, according to some analysts, who spoke to Sunday Sun, is that President Tinubu removed the oil subsidy to save funds for sundry financial needs in the country, including infrastructural establishment and renewal.
But while the oil subsidy is gone, the government has perhaps, mindlessly continued to borrow funds from willing global financial predators, thereby mortgaging the future of the Nigerian people.
The reality is that Nigeria’s debt profile has hit the roof since the coming to power of the Tinubu-led All Progressives Party government.
Experts who spoke with Sunday Sun submitted that tackling Nigeria’s alarming debt profile requires a multi-faceted approach that will involve fiscal discipline, economic diversification, effective debt management, private sector participation, and institutional strengthening.
They contended that by adopting these strategies, the country can reduce its debt burden, ensure economic stability, and create a sustainable future for generations to come.
In the views of some of the commentators who spoke to our correspondent, the alarming rise can be attributed to several factors, which include increased borrowing, rising debt servicing cost, dependence on oil exports, and weak fiscal policies of the government.
On rising debt servicing cost, for instance, it is projected to increase by 26.7 per cent between 2025 and 2027, putting more strain on the country’s finances.
Also, Nigeria’s economy is heavily reliant on oil exports, making it vulnerable to fluctuations in global oil prices.
There is the issue of inadequate fiscal policies and lack of fiscal discipline that have contributed to the country’s rising debt profile, according to Prof Uche Uwaleke.
For the renowned economist, there is nothing bad in borrowing, but what the loan is used for is what makes the difference..
“For a developing country like Nigeria with infrastructure gap, it may not be a balanced budget, there may be deficit budget, there may be challenging need to borrow, but what matters is what you use the money to do,” he noted.
He said that effective fiscal and monetary policies are always needed in addressing such issues.
Also, the Chief Executive Officer, Centre for Private Enterprises, Dr Muda Yusuf, said that in spite of the huge debt, it was almost impossible for the country not to borrow.
He pointed out that the loan secured by the government last year, for instance, was part of the foreign borrowing plan of the 2024 deficit budget to bridge the financing gap.
According to the economic expert: “The foreign loan is usually more concessionary, the rates are low and it’s tied to specific projects.”
He, however, noted that the Federal Government could reduce the need to borrow by raising its oil and gas output.
“Addressing the challenge of oil theft in the Niger Delta region is crucial in attaining the international oil quota,” Yusuf advised.
Former Commissioner for Finance in Abia State, former World Bank consultant and Director General, Agribusiness, Michael Okpara University of Agriculture, Umudike, Associate Prof Phillips Nto said that a country like Nigeria that is unproductive would be deep in taking loans for survival, thereby wallowing in debt profile.
He said that Nigeria must up its oil production, eliminate corruption and use its loans for production rather than consumption.
Nto noted that the alarming trend demands a comprehensive approach to tackle the debt burden and ensure the economic future of the country.
The former Provost, Abia State College of Education, Technical, Arochukwu (ASCETA), said that Nigeria must implement effective debt management strategies which would also help to reduce interest rates.
Nto said: “A country like ours that is unproductive will always experience a rising debt profile.
“What do you expect when the only major source of funding the nation’s budget is export of crude oil?
“The estimated budgetary target of about two million barrels per day is also not met due to oil theft and corruption-induced lack of transparency in the sector.
“In a situation of this nature, the national government must source both domestic and external debt to offset the alarming budgetary deficit.
“Also, previous loans are not ploughed into viable sectors that can stimulate the economy.
“When this is the case, such loans cannot pay for themselves.
“There is nothing wrong with the government borrowing, but there’s everything wrong with how the loan is used.
“When you borrow for consumption, there is a likelihood of continuous borrowing to sustain consumption, but if you borrow for production, the economy will be activated .
“Developed countries like America , China, Russia, etc, borrow to build and develop infrastructure, which is a major stimulant and catalyst for economic growth.
“They utilise the loans to drive economy to prosperity, but Nigeria borrows to fund consumption.
“The solution to the rising debt profile of the country is simple. There is an urgent need for diversification of the economy.
“Agriculture was our mainstay. We have enormous agricultural potential like the land, good climates, enough water for irrigation, enough manpower and also a large market size.
“There is a need for adequate policies and programmes that support agriculture.
“In the early pre-and post-independent era, that is before the discovery of oil in Oloibiri, Nigerian economy was 100 per cent funded by agriculture.
“Can you imagine that currently, the ship will bring imported goods to Nigeria and navigate back empty to their destination?
“During the agricultural era, rail lines were constructed to move agricultural goods to the seaport for export.
“Then, ship used to come to Nigeria empty and load agricultural raw materials to Europe or Asia or America. The solution is purely going back to agriculture.”
Speaking, the former President, Chartered Institute of Bankers of Nigeria, Mr Okechukwu Unegbu, suggested that the government should be more innovative in order not to further raise the country’s public debt stock.
According to him, “the government should explore more private equity financing to fix key infrastructure, so as not to borrow for every capital project.
“Countries in other climes utilise this model in addressing many developmental projects without approaching international developmental partners.”
He added that the three tiers of government should cut down their ostentatious lifestyle.
“This will free funds for more developmental purposes so that the need to source foreign loans may reduce.
“Most foreign loans earmarked for developing countries come with a blueprint, which is not the best for us as an emerging economy,” he said.
The President, Chartered Institute of Taxation of Nigeria, Chief Samuel Agbelaye, also said that Nigerians should not despair over loans obtained by the Federal Government, but with a caveat.
Agbelaye said that there was nothing wrong with obtaining loans if they would be used judiciously for developmental projects.
“Despite the rising debt, the country is yet a going concern and the indices and outlook of the economy are not as bad as people claim, but the government must be cautious in its management of both fiscal and monetary policies.
“The loans are not to be used for overhead, but for developmental purposes that will add value to the economy,” he said.
He said that Nigerians should not be too perturbed about the country’s public debt stock, or proposal to incur more loans.
“They should rather be concerned about the ways the government plans to increase its cash flow to meet the projected revenue
For the CEO, CFG Advisory, Adetilewa Adebajo, the government should critically re-examine some of its policies both fiscal and monetary.
He suggested lowering the cash reserve requirements, while expressing worry on the scale of high interest rates in nation’s financial institutions.
For him, the government must adopt a culture of fiscal discipline, which involves reducing budget deficits by increasing revenue and decreasing unnecessary expenditures.
Also he wants the government to prioritize essential expenditures, such as infrastructure development, education, and healthcare, while eliminating wasteful spending.
Additionally, Adebajo said: “Nigeria must diversify its economy to reduce its dependence on oil exports. The country’s over-reliance on oil has made it vulnerable to fluctuations in global oil prices.
“By promoting non-oil sectors, such as agriculture, manufacturing, and services, Nigeria can increase its revenue base and reduce its exposure to oil price shocks,” he said.