A report on the Trend Analysis of the Nigeria Debt Stock between 2010 to 2021, which was produced by Action Aid Nigeria, has revealed that 89% of Nigeria’s revenue is being used for servicing debt, an approach that is not sustainable for the nation’s economy.
This was revealed during a One-Day National Dialogue on Nigeria’s Rising Debt Profile, with the theme; “The Rising Public Debt in Nigeria and the Challenges for National Development” convened by ActionAid Nigeria.
While presenting the report, the researcher, Mr. Eze Onyekpere noted that despite the increasing level of Nigeria’s debt profile, citizens have become poorer than ever with no physical infrastructure to justify the huge amounts borrowed.
Onyekpere thereafter recommended that alternative measures needed to be adopted instead of the continuous borrowing which is not sustainable.
He also advocated that, “tax holidays and waivers granted to corporate organizations in Nigeria should be cancelled”, adding that, “the cost of revenue collection of four percent for the Federal Inland Revenue Service (FIRS) and seven percent to the Nigerian Custom Service (NCS) should be removed completely and be allowed to operate like all revenue generating agencies and render operating surpluses to the consolidated revenue accounts of the Federal Government.”
He said that the actions have become imperative because it was depressing that Nigeria was using eight three percent of her revenue to service debt, a practice he believes is not sustainable.
“It is imperative to note that as at year end 2020, FGN’s retained revenue was N3.94 trillion, 73% of target. On the expenditure side, N9.97 trillion was appropriated (excluding GOEs and Project tied loans), while N10.08 trillion (representing 101%) was spent.
“Of the expenditure, N3.27 trillion was for debt service, and N3.19 trillion for Personnel cost, including Pensions. Thus, debt service was 82.99% of retained revenue,” he added.
Mr. Onyekpere called for more accountability on the part of Debt Management Office (DMO) to give a detailed report of all debt obligations and the purpose for which they are incurred in-line with their establishment Act.
“DMO should maintain a database that will be available and accessible to the public through an electronic portal,” he added.
Earlier, the ActionAid Country Director, Mrs. Ene-Obi had equally described the Nigeria’s debt situation as a time bomb because the upward trend of debt closes the fiscal space for effective delivery of public good and service especially gender response service, thus exacerbating poverty and inequality as rightly reported by the World Poverty Clock which says that Nigeria has overtaken India as the poverty capital of the world and the most vulnerable group which include women and children.
The Country Director raised concern that “if the unchecked borrowing continues, Nigeria’s efforts at dealing with its challenges of unemployment, failing social services and infrastructure deficit and rising incidences of poverty will be a mirage.”
She stressed that ActionAid is “concerned that the country is not exploring other avenues such as blocking leakages from corruption, illicit financial flows, reducing cost of governance amongst others as alternatives to unsustainable and conditional laden debt.”
She explained that it is in an effort to address this worrisome situation that ActionAid convened the National Dialogue on the rising public debt to articulate strategies of curbing the menace.
“The national dialogue is to engender an avenue to broaden the discourse on Nigeria’s public debt with the government, private sector, and civil society in other to explore possible options on debt cancellation for the country;
“Provide insights into management of the country’s debt profile, as well as provide alternative public financing proposals that are responsive to the current socio-economic realities of the country and her people,” Ene added.
Meanwhile, the Assistant Director, Central Bank of Nigeria, Dr. Tawose Joseph while speaking at the National Dialogue noted that, “debt is not a crime, what matter most is the usage and quantum of the debt.”
He however revealed that the CBN has been rolling out policies and using conventional and non-conventional approaches to ensure price stability in the market, as part of the measures to alleviate the burden of debt in Nigeria.
“We understand that there is a strong link between debt and poverty. Debt can either reduce or increase poverty but we are working to ensure that our policies address issues of poverty in Nigeria.”
He also added that “the CBN has rolled out 37 initiatives to address poverty in the country.”
Also present at the national Dialogue were representatives from the Ministry of Finance and Debt Management Office, Nigeria Labour Congress, and Civil Society Organizations.