Nigeria’s debt situation has been wrongly emphasized as distressed when it is not yet an extreme cause for concern.
For some time now, economists have been debating the sustainability of Nigeria’s debt. Between 2015 and the first quarter of 2021, Nigeria’s total debt increased by 230 per cent from N12.6 trillion to N41.6 trillion. This debt collectively reflects the domestic and external borrowings of the Nigerian government, our 36 states and Abuja. According to the IMF’s 2022 macro stress test, by 2026, Nigeria might spend 100 per cent of its revenue on servicing debt. To critics such as Dr Azubuike Nkala of the Orient Daily, the government’s continued borrowing is irresponsible and Nigeria needs alternative solutions other than debt for funding its economic plans.
Nigeria’s policymakers, however, have been defending their borrowing practices and explaining their necessity. At the public presentation and breakdown of the 2022 appropriation bill in October 2021, the Minister of Finance, Budget and National Planning, Zainab Ahmed, stated that borrowings were instrumental to Nigeria’s exit from recession. Considering the considerable growth in Nigeria’s debt over the past six years, the question of whether our debt situation is sustainable is more than justified.
Every year, The Republic publishes the most ambitious writing focused on Africa, from news and analysis to long-form features.
To continue reading this article, Subscribe or Register for a Free Pass.
Already a subscriber? Log in.