Time for moratorium on borrowing

A $1.5 billion loan being contemplated by the Nigerian government is just the latest addition to the long list of the country’s borrowing spree. The government explained that the loan, to be raised from the World Bank, will be used to fund climate resilience, early childhood development and social protection. The social protection component is part of the government’s plans to cushion the impact of ongoing economic reforms on vulnerable Nigerians. With the country’s total indebtedness – both local and foreign- currently put at over N160 trillion, the government shows no signs of reducing its proclivity to pile up debt. An indication of the rate at which Nigeria’s indebtedness is rising is seen in the change in the country’s external debt, which rose from $51.9 billion in the first quarter of this year to $ 54.523 billion in the second quarter. Within the first half of the year, Nigeria spent $1.824 billion on debt servicing, including principal repayment, interest payments, and other charges, according to the Debt Management Office (DMO). Now, the government wants to add to that by borrowing to allegedly feed people. Nigerians wonder the economic justification for this, or is it just the pursuit of populism? Given the rate at which the country’s debts have ballooned since the present administration assumed office, a call for a moratorium on foreign loans has become imperative. This will enable a proper audit of the country’s indebtedness to be conducted to ascertain the uses to which the numerous loans have been put, and ultimately, Nigeria’s gains from such loans. This is in the best interest of the country’s economy, bearing in mind that a country’s level of indebtedness must be considered in terms of its sustainability. The current level of debt is obviously too high for the country, and the signs of its potential interference with the running of the economy are quite evident, given the cost of servicing the existing debts. If previous administrations had embarked on such a borrowing spree, the country would by now have been overwhelmed by debts. The time is now for a proper assessment of the usefulness of these uncoordinated loan harvests. We must begin to interrogate in what ways have they benefited the country versus other alternatives. This is relevant and must be explained by the leaders of the country, especially the National Assembly. The Legislature has an oversight duty over the nation’s finances, including the government’s borrowing and spending activities. As the arm of government saddled with constitutional oversight of the nation’s finances, the National Assembly should rise to its obligations now and exercise its powers on this matter. Nigerians have noted with dismay the speed with which our lawmakers approve every loan request presented to them by the president. Rather than subject such requests to critical assessment on a need-by-need basis, these people’s representatives generally give their nod as if nothing is at stake with loan taking. In our view, loan request assessment and approval should go beyond the usual terse statement that Mr. President means well for the country, and the subsequent speedy approval. The management of the nation’s economy goes far beyond this because economic issues are more complex than they seem. This is more so with debt because every loan taken now represents a claim on the country’s future revenues. Depending on the country’s preparedness for such obligations, a seemingly harmless loan taken now could become an albatross on future generations whose destinies are being mortgaged by the present generation. Nigeria’s rising debt profile is not only worrisome because of the size; it is more disturbing because of the evident disconnect between that size and what the loans have been used for in the interest of the country. Nigerians need accountability on the nation’s indebtedness. What, in concrete, specific terms, has each of the loans been used for? The government needs to rise to its responsibility and get the economy really working because that is the only way for the country to stand on its own. If the economy is working well, Nigerians will be able to take care of themselves and would not need handouts either from World Bank or any other creditor. If there were no insecurity, our teeming farmers would produce enough food to feed the nation and for export. No country can go far with this uncoordinated method of economic management. As the nation hopes to transition from stabilisation to production and ultimately to prosperity through the economic reform programme, the government must take stock of its approaches so far, including the sourcing of funds. Without this, we might just be living under the illusion of solving today’s problems while actually creating tomorrow’s headaches. UPDATE NEWS: Nigerians can now invest ₦2.5 million on premium domains and profit about ₦17-₦25 million . All earnings paid in US Dollars . Rather than wonder, click here to find out how it works .