‘Nigeria’s Burgeoning Debt Needs Urgent Remedial Legislation’

With Nigeria’s external debt rising to around $45 billion amidst a flocking out of the country by investors, the Chief Executive of CFG Advisory, Tilewa Adebayo has stressed the urgent need for remedial legislation as well as an overhaul of the trade, industrialisation and investment policy of the country.

Latest data by the Debt Management Office (DMO) puts the nation’s debt both external and domestic at N121.67 trillion as at March 31, 2024, up from N97.34 trillion which it was at the last quarter of 2023. The figure covers obligations of the Federal Government and the 36 state governments and the Federal Capital Territory (FCT).

Speaking at the Bi-monthly forum of the Finance Correspondents Association of Nigeria (FICAN) in Lagos yesterday, Adebayo noted that whilst the country has received positive outlook ratings from credit rating agencies, the Caa1 rating of Moody’s Investor Services still classifies the country in the range of junk bonds.

He noted that “the unchecked fiscal  expenditure and the unauthorised ways and means of financing, now over 30 times the limit at N30 trillion, remains a key risk to Nigeria’s economic recovery out of stagflation to sustained growth in 2024.”

Noting that debt servicing obligations of the country are set to surpass revenue, he noted that “all financial circuit breakers have been breached and there is need for remedial legislation.” Adding that the senate does not have the right to securitize the Ways and Means, he said “doing that is illegal.

“The government needs to negotiate with creditors to restructure and extend the maturities of debt, allowing for more manageable repayments and reduced interest rates. Ghana, Zambia and Ethiopia have all defaulted on external debt obligations. Nigeria should take a cue.”

Adebayo whilst commenting on the recent exit of the country by companies, said there is need “to take a look at the trade policy. Nigeria’s investment policy is in need for serious overhaul as investors are leaving in droves.

If the economy is going to work, trade investment industrial policy must be top priority for the government.

“Reviving the Nigerian economy in stagflation with low GDP growth, high levels of debt, and fiscal deficits is indeed a complex and challenging task. Nigeria, like many other countries facing similar issues, can pursue a combination of short-term and long-term strategies to reform its economy toward sustainable growth.

“The government needs to take austerity measures such as implementing fiscal discipline by reducing non-essential government spending, eliminating wasteful subsidies, and improving the efficiency of public services.

On taxation, he said the government ought not to raise taxes but rather “expand the tax base, improve tax collection, and introduce new sources of revenue, such as value-added tax (VAT) and property taxes. They also need to improve transparency and accountability in government spending to build public trust and attract foreign investment.”


Tags: No tags

Add a Comment

Your email address will not be published. Required fields are marked *