It is no gainsaying or loose talk to posit that the Nigerian government is finally heading towards the landmines where it will take stern amount of luck, experienced navigations by hardcore business and economic expertise; backed up by the steering of a purposeful and discipline leadership or administration to fully help it overcome the gigantic problems it is creating for itself with its reckless and mindless approach to borrowing and debt serving.
The Nigerian government under the leadership of President Muhammadu Buhari have developed a rather distasteful and un-approving flair for running to various international bodies, countries to borrow loans which it always claim would be used to execute certain infrastructural projects in the country. However with the approach the Federal government is employing towards securing these loans which are fast becoming too frequent and common, eyebrows have been raised over this new found hobby of the Federal government to always resorting to the option of loans from international bodies.
While it is not a bad thing for the Federal government of Nigeria or any country in the world to resort to loan collection in order to execute its projects, questions needs to be asked regarding the accountability and transparency of the Nigerian government when it comes to the use of these borrowed funds to execute the various projects which they were borrowed for.
I stated in the opening paragraph of this article that the obviously alarming rate at which the federal government of Nigeria is borrowing will see it head for a debt trap and this is because all major key debt performance measuring indices have fallen below the minimum global standards.
What the aforementioned implies is that in the wake of these recent loans, Nigeria may not be able to successfully meet its debt servicing obligation as expected of it by its creditors.
It must be noted that the Nigerian debt profile by the end of the month of June 2020 had gone up to reach N31trillion. In a more interesting comparison, this accumulated debt figure is three times bigger than the Nigerian revised N10.8 trillion. We must also have it at the back of our palm that this rising debt figures is not revenue, but a liability. A liability which the Federal government is obligated to pay back in the midst of these harsh realities which has not spared the nation’s economy outlook.
With no end in sight, the Nigerian debt profile has continued to rise drastically as the federal government holds no recourse to borrowing while on the other hand the economy has continue to fall down on the slippery slope which it has been set on as a result of the unwise economic policies and reforms of the President Muhammadu led administration in Nigeria.
The Nigerian economy has continued to go South as a result of several factors some internal others global. A prominent factor is the recent outbreak of coronavirus pandemic, one which took the world by surprise. What started in the town of Wuhan China went on to spread to other nations of the world. The effect was devastating as business outfits and enterprises were shut down for months, while offices were locked; with the Nigerian border closed, it was impossible to conduct international business. Adding to this, many of the nation’s oil ships were left stranded on the high sea. The result of this saw to a decline in the crude oil price which greatly impacted the nation’s economy as oil serves as the major economy mainstream of Nigeria not too talk about oil alone, other sectors of the nation’s economy was also grossly affected.
While the nation was recovering from the ravaging effect of the Covid-19 pandemic, it had to deal with the recent ENDSAR protest which saw to the shutdown of its economy in several major states of the federation, adding to this; the wanton destruction of both public and private properties had resounding negative toil on its economic outlook as many business ventures and enterprise were destroyed, others looted. The Lagos state in the aftermath of the protest made an estimate of over a billion to restore the damages done in various part of the state which was as a result of the protest.
In the midst of all tis, while it is understandable that developmental activities must carry on, it is also wise that we employ reason when it comes to debt accumulation because the economy we have at the moment and in the years to come does not support or cannot carry a heavy debt profile.
To do so will be to put the coming generation into an unpalatable situation which is totally unfair. Considering the fact and bold claim that the heavy debt profile accumulated by the President Muhammadu Buhari led administration is not reflected by any of the various projects which it claims the money borrowed were for.
We must remember the prediction of the World Bank that if adequate measures are not put in place by the Nigerian government and its economic team, the country stands the risk of being plagued by the biggest recession which has ever happened to the country within the past two decades in the history of the nation.
As a result of this, this is not the time to embark on a reckless debt accumulation, but a time to grow and nurture the ailing Nigerian economy. The federal government under the leadership of President Muhammadu Buhari led administration has already resorted to a system of heavy taxation to complement its internally generated revenue, one which has been described as a back breaking policy which will do little or no good for the growth and development of the nation and also we must remember that this heavy taxation rule is negatively affecting the survival of both small and medium scale enterprise in Nigeria. They are already faced with mirage of business challenges ranging from lack of capital to un-favorable business environment. Unstable powers supply a major problem which they have to battle. The bedrock position of this argument is that no nation can grow by heavily taxing its people. It will only continue to increase the gap between the rich and the poor in the country. One which is not good for national survival and the outlook of the nation’s standard of living.
This growth pattern is indeed a worrisome one for the country especially when we consider the future of the nation’s youth who are in a dire need of a major national intervention and essential boost in economic growth which can only be achieved through important fiscal intervention to revive the dwindling educational sector, ailing health sector, infrastructure among many other sectors.
The coming years will see the Nigerian Government use the much needed funds which it’s supposed to use to facilitate the aforementioned to service the debt profile.
Further implication if this rising and critical debt situation is that it might lead to a situation whereby the country will not be able to pay it’s debts and also where it will not be able to fulfill its primary duty towards the Nigerian populace which will quite be disastrous if it happens.
The failure of the federal government to come up with a valid economic recovery and growth plan is another worrisome factor which raises eyebrows from the populace.
The recently presented national budget for the year 2021 offers no clear cut explanation to the federal government intends doing to revamp the nation’s dwindling economy.
The heavy cost of running the Government is another factor which it must consider, the use of national funds for frivolous activities, the continual embezzlement of national funds without any valid prosecution of those involved mitigate against the growth and financial development of the nation.
The recent scandal within the NCDC is another case of embezzlement which is gradually being swept under the carpet.
The federal government of Nigeria must go back to the drawing board and find a way to reduce its drive for borrowing and instead use the available national resources for good and judicious use. And when the need arises for it to borrow which cannot be avoided, they must ensure that these funds are accounted for.
By Marcus Amudipe