FORMER President Olusegun Obasanjo recently warned that coming generations of Nigerians would bear the brunt of the debt burden that is cripplling Nigeria’s economy. They would, he said, have no option but to pay. In a statement issued by his media aide, Kehinde Akinyemi, he emphasised that the incompetent management of the country’s resources had ensnared Nigeria in a destructive debt trap. President Obasanjo, who spoke during an engagement with the 2023 awardees of the Future Africa Leaders Foundation, an initiative of Pastor Chris Oyakhilome of the Christ Embassy Church, called for a more responsible use of public resources.
Nigeria removed the shackles of the debt burden in 2006 through a US$18 billion debtbuy back arrangement that saw the country pay over US$12billion to the London and Paris clubs under the Obasanjo government. Under the debt burden, Nigeria had to adopt austerity measures culminating in a Structural Adjustment Programme (SAP) that significantly weakened the capacity for service delivery and social protection. In the event of cutting social spending central to SAP, state legitimacy eroded even as the struggle over the shrinking resources of the state intensified. Ethnic and other divisions in the society deepened, leading to the outbreaks of intergroup violence, which has characterised social and political life in Nigeria since then. President Obasanjo laboured during his tenure to secure a debt relief for Nigeria and in October 2005, he secured a debt relief agreement worth $18 billion, leading to a substantial reduction of Nigeria’s debt stock by $30 billion. Nigeria made a final payment of US$12billion in April 2006 and Nigeria was cleared of its Paris Club debt. At the end of his tenure in 2007, the nation’s debt burden was reduced to US$2.11 billion, a major achievement of his administration.
Statistics from the Debt Management Office (DMO) show that Nigeria’s external debt rose from $10.32 billion in June 2015 to $22.08 billion on June 30, 2018. This means that the country’s external debt grew by 114.05 percent in the three years. Multilateral debt made up $10.88 billion or 49.28 percent of the country’s external debt profile. Most of the increases occurred in commercial loans. Commercial foreign loans, which stood at $1.5 billion as of June 30, 2015, rose to $8.8bn on June 30, 2018. The country’s exposure to commercial foreign loans rose by $7.3 billion or 486.67 percent within the period. Data from the DMO further put Nigeria’s public debt at N87.91trillion or US$114.35 in September 2023. Total external debt stood at N31.98trillion or US$41.6 and domestic debt amounted to N55.93trillion .
In his statement, Obasanjo asserted that the current debt overhang is the product of recklessness and mismanagement of the previous debt reliefs for the country. He declared that it would be almost impossible for any administration to get similar gesture of debt relief in the future. Debts, he said, are a trap that no individual or nation should fall into as they constitute an albatross to any economy. Earlier in the closing months of the Muhammadu Buhari government, Amina Mohammed, the Deputy Secretary-General of the United Nations, raised the alarm about the rising level of Nigeria’s debt. Earlier still, in 2017, a former Deputy Governor of the Central Bank of Nigeria (CBN), Kingsley Moghalu, described Nigeria’s rising debt burden as worrisome. He stressed that history showed that reliance on foreign loans failed to contribute to the economic growth and development of the country. Instead, the country became subject to creditor ‘conditionality’ when it was unable to meet its obligations in times of recession or crisis. Those in government did not heed the warnings. It is very unfortunate that under Yar’Adua, Jonathan, Buhari and Tinubu, the debt has spiked.
Obasanjo’s lamentation on debt burden would not have been an issue for public concern if there had been ample evidence of prudent use of the scarce resources. Huge borrowings did not translate into investments with promising returns and opportunities for growth and development. Instead, there is frightening rise in infrastructure deficit, unemployment, grinding poverty, socioeconomic distortions, all crystallising in insecurity in the land. Nigerian rulers must stop the borrowing spree. Leadership is about foresight; consecutive heads of government have not demonstrated this foresight. They have carried on with borrowing without any regard for the consequences. Their behaviour is beyond belief. The irresponsibility of those in government is bewildering. They have persisted in taking loans and accumulating debts that will burden coming generations, frittering those loans on unproductive ventures without a thought as to how to pay back.
President Obasanjo knows better as he presided over the inimitable and cheerless task of weaning the country off debts by securing a huge debt relief and associated payment of the remaining debt while he was in office. He knew that debt burden would only impoverish the debtors without adequate attention to how to pay back debts, inflicting heavy and long-term pains. Regrettably, his successors, including the present president, have shown indifference to this. They have piled up debts for the country while they feed their unhinged tastes and luxurious lifestyles without concern for productive and effective use of the loans.
The alarm from Obasanjo should sensitise all to the need to rein in this appetite for mindless borrowing devoid of logic, as it is a recipe for future penury which ought not to be the goal of the government.
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