The Nigerian Government has been charged to manage the country’s debt burden and reduce its overreliance on unsustainable debts caused by unrealistic/over-bloated budgets, weak revenue mobilization efforts, misplaced spending priorities and a lack of transparency and accountability in public finance management.
The charge was made by stakeholders at the Media Presentation of Research on Tax Expenditure and Debt Management organized by the Civil Society Legislative Advocacy Center (CISLAC) and supported by Christian Aid (UK) Nigeria.
In his welcome remarks, Auwal Ibrahim Musa, the Executive Director, CISLAC explained that it is common knowledge that Nigeria’s debt profile has continued to grow, and it allocates most of its budget revenue to debt servicing at the expense of investing in more critical social sectors and infrastructural development.
He added that “the lack of accountability mechanism in the utilization of loans for the purpose for which they were granted/taken” is one of the issues leading to the growing debt burden in the country.
Ibrahim Musa noted that to ensure responsible debt management in the country, “commitments and actions should be taken towards investigating the movement and spending of loans received by the Federal Government in the past and present administrations, including but not limited to the $3.4 billion loan obtained from the International Monetary Fund (IMF) as reported in the 2020 annual audited report published by the Auditor-General of the Federation.
“Revising legal and institutional frameworks related to debt management, emphasizing transparency and accountability. This includes empowering bodies like the Fiscal Revenue Commission and the Debt Management Office to enforce laws and regulations.”
The CISLAC’s ED thereafter added that FG can mobilize revenue through tax reforms which is crucial for Nigeria’s fiscal sustainability, adding that “the government should prioritize measures aimed at reviewing and updating tax laws to improve efficiency, equity, and revenue generation, and close loopholes and addressing tax evasion and avoidance through robust enforcement mechanisms.”
While presenting the report titled ‘Tax Expenditure and its Implications on Debt Management and Sustainability in Nigeria’, Mr. Botti Isaac, the research consultant, also highlighted misplaced priority in spending as the government oftentimes converts loans meant for specific projects to personal spending.
Isaac called on the National Assembly “to review existing legal and institutional frameworks relevant to debt management with the view to closing existing loopholes and strengthening transparency and enforcement.”
He also noted that the Fiscal Revenue Commission (FRC) should live up to its mandate and enforce penalties where necessary.
While noting that progressive taxation can be adapted as a substantial source of revenue that can reduce loan uptake, Isaac said “there is a need for a concrete framework and changes to the tax system should be guided by progressive taxation principles that protect low-income earners and the poor.”
He also added that “FG should establish a wealth tax policy to increase tax revenue from the super wealthy individuals and organizations in the country.”
Earlier, Mr Victor Arokoyo, the Head of Programmes at Christian Aid, explained that the organization is “concerned with issues of debt in Nigeria as it relates to the capacity of the government to deliver in social services. We can see a growing interest in govt taking loans but they should take it responsibly, in line with the provision of the law.”
Arokoyo said, “we are interested in how we can begin to reduce the issue of debt in Nigeria and one way to do that is to increase revenue generation, reduce incentives given to international organizations and widen the tax net instead of increasing the tax of those that are currently paying.”
He noted that the report will enlighten citizens and CSO groups on the debt burden in the country and most importantly “to engage the governments in their respective capacities and ensure all stakeholders are doing the needful.”
Munachi Ugochukwu, Senior Programme Officer at Christian Aid, also noted that 37% of Nigeria’s total external debt figures are owed to private creditors and the government will spend six times more on servicing debts than on building new schools and hospitals in 2024.
He charged the government to adopt effective revenue generation models and stop the unrealistic budget that the country keeps developing without sufficient resources to service it.