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Make no mistake about why leaders from around the world gather at the United Nations General Assembly(UNGA) in New York every September to debate and pass resolutions on the biggest issues facing the world. Besides being the primary forum of member states to address global issues, speaking at the UN General Assembly lends a leader’s message a sense of global legitimacy and inclusive nature that allow leaders to gain international support, shape global conversation and symbolically set international standards. That’s why, what a President or his representative says or canvasses at that august assembly, attracts maximum attention in minimum time.
When a leader of his nation mounts that world stage, the substance of what he says, and the style of delivery are analysed in the context that makes meaning. A great speech with a packed global audience as it’s always expected at UNGA, must not only capture eternal truths, it must address contemporary challenges that confront the world and the people. Such issues must also suit the mood of the moment. It must not shy away or afraid to pinpoint with splendid language, what’s wrong, and the way forward. Did President Bola Tinubu’s address, represented by vice president Kashim Shettima, at the 80th Session of the UNGA, meet the criteria of a great speech? Did it capture the true position of the agenda it set out to address? Top of the issues President Tinubu laid bare before the august assembly, included an urgent need to restructure the UN Security Council, and debt relief for developing countries like Nigeria. First, President Tinubu’s decision to push for a new World Order, especially the renewed call for a Permanent Seat for Nigeria on the all-powerful Security Council, is a carefully considered, well-reasoned proposition.
The call is timely. Membership of the UN Security Council must reflect today’s world, not the post-World War II. It will make the global organisation more relevant than it’s at present. Currently, only the United States, Russia, China, France and the United Kingdom, have permanent seats on the Security Council. That gives them the veto power to unilaterally control decisions on key global issues. That needs to change, and urgently too. Nigeria deserves it. The tempers of the time makes it even more crucial. For me, a call for debt relief for an economy like Nigeria’s looks pretty like a huge joke.
A counterargument to that makes any proposal for debt relief unacceptable. International financial institutions will not be disposed to that. In other words, what Tinubu proposes, international financial lenders will dispose. It’s not that debt relief is a bad idea, but profligate nations don’t deserve debt relief. Nigeria is a case in point. President Tinubu’s argument for debt relief may make sense for other struggling developing economies, but it’s a delicate, dangerous gambit that carries no sensed urgencies.The wasteful, reckless lifestyle of Nigeria’s political leadership amid unacceptable level of poverty in the land, makes any request for debt relief laughable and unmerited.
A debt relief to Nigeria at this time will amount to rewarding over-borrowing and fiscal recklessness that have become second nature of the present administration. It will cost Nigeria’s lenders too much money. By the end of today(Tuesday), the World Bank is expected to give its final approval to the federal government’s loan request of $750 million. This makes it a total of $2.2bn so far received from the World Bank since January. The government is also pursuing a fresh $1.75bn, with approval expected before the end of 2025. And you ask, where has all this money gone to?
Nigeria, under the present political class, is too corrupt to deserve debt relief. Perhaps more importantly, Nigeria does not fit into the typical profile of Highly Indebted Poor Countries(HIPCs) who owe the majority of their debt to multilateral institutions like the World Bank Group, the International Monetary Fund(IMF), and the African Development Bank. The argument by government policymakers that Nigeria deserves debt relief due to unsustainable debt levels and their negative impact on economic progress, citing a high Debt-to-GDP ratio, doesn’t tell the whole story. The high level debt exposure is driven largely by fiscal recklessness, bad governance and leadership.
Debt relief typically takes three forms: debt management, consolidation and settlement. In the last ten years, there have been little or no evidence of tangible resource management and policy implementation that have improved the welfare of the people. No substantial economic growth. This is why Nigeria’s current public debt has reached unsustainable levels. It has exceeded the Fiscal Responsibility Act threshold. If the present administration is not lacking in public trust, debt relief would help alleviate the present burden of debt servicing that would have allowed the government to allocate more funds to critical areas that will improve the living standards of Nigerians. It’s all about generate revenue and squander. Spendthrifts don’t deserve a lifeline that debt relief entails. It may be recalled that Nigeria received debt ‘forgiveness’ from the Paris Club of creditors in 2005 during the presidency of Olusegun Obasanjo. This involved the cancellation of $18 billion of Nigeria’s debt and a final settlement payment of $12bn for the remaining debt. This ultimately reduced Nigeria’s total external debt by approximately $30bn. The agreement with the Paris Club was a culmination of sustained negotiations and was completed in April 2006 when Nigeria made its final payment. Between then and now, unending, unexplained fiscal recklessness has resulted in the accumulation of debt profile of over N149trn. This amount is expected to reach a record high of N180trn by year-end, according to experts.
That could put Nigeria’s future at risk. That’s what happens when the government borrows mainly for consumption rather than production. Statistics show that Nigerian economy has been worse off since the All Progressives Congress(APC) came to power in 2015. For example, under the administration of Muhammadu Buhari, the economy went in a free-fall. Recession set in a year later in 2016. From being the largest economy in Africa, with a GDP of $510bn in 2014, Nigerian economy became one of the most sluggish in the world. By 2023 when Buhari left office, Nigeria’s GDP declined to $187.76bn, fourth in Africa after South Africa, Egypt, and Algeria. The economy has gone further down the slope since Tinubu took over in May 2023. Borrowing spree has been the ‘new normal’. The naira is rated one of the worst currencies globally. Asking for debt relief is a window into how things are not adding up despite government’s recent claim that it has exceeded its 2025 revenue target.
Recently, the IMF disclosed what makes debt relief and debt cancellation, untenable. It said , “total cancellation of debt in the absence of full funding by bilateral donors would do serious damage by fundamentally changing its role as an anchor for the international financial system based on the revolving character of its resources”. It also stated that debt cancellation will not only eliminate its Partial Risk Guarantee lending, but also impair the Fund’s financial integrity. The point here is that, IMF’s gold reserves are a fundamental strength in its financial position, giving it increased credibility and the capacity to assist its broader membership in crisis situations. In real terms, international lenders don’t see debt relief or debt cancellation as good options in their own best interest.
Almost in the same vein, using debt settlement options to reduce debt comes with several risks. They include late payments on a country’s credit score report and ability to get loans in future, potential charge-offs, tax implications on foreign balances, possible scams, and the overall risk of settlement offers not working. In point of fact, International lenders don’t trust any developing countries because of likelihood of default. African countries that have recently defaulted in their international debts obligations include Zambia(2020), Ghana(2022), and Ethiopia(2023). The defaults have often triggered IMF stabilisation programme, with countries seeking negotiation debt restructurings to alleviate their burdens.
Taken as a whole, Nigeria does not need debt relief if it can sustain non-oil sector growth. International financial institutions will not take a gamble to grant debt relief to developing economies, no matter the plea as Tinubu tried to convince them on sovereign debt relief and access to trade opportunities. It’s not unkind to say that Nigeria and other developing countries lack transparency and accountability in their debt records. Besides, there’s this moral risk of encouraging future, irresponsible borrowing. Debt relief, if not carefully scrutinized, might undermine the principle of honouring loan contracts. There is need for sustainable reforms before debt relief can be considered. Nigeria is not there yet. Therefore, international financial institutions need to manage the sustainability of the debt relief process to ensure its effectiveness. To get their request for debt relief granted, developing countries, including Nigeria, must demonstrate strong debt management and the commitment to growth and development. Again, the Tinubu government hasn’t passed that confidence test yet.
