Nigeria has a really big challenge on our huge borrowing culture: we are now spending 97% of our revenue just to service debt. The implication is that most of our recurrent expenditures are now financed through loans and that creates a vicious circle, triggering the need for more loans. In other words, if you have to borrow to pay salaries and handle basic things, you will keep spending more revenue on servicing debts. Simply, Nigeria needs a new playbook to get out of the circle if we hope to save to build the infrastructure of the future.
Debt servicing obligations gulped 97 percent of the Nigerian government’s total revenue in 2020, a report has shown.
According to BudgIT, a civic-tech non-profit organisation, of the N3.42 trillion generated as revenue, Nigeria expended N3.34 trillion on debt servicing.
The report said total expenditure stood at N10.01 trillion.
“This means nearly all FG’s salaries, overhead & CAPEX (Capital Expenditure) were financed with loans & CBN support,” the civic group said.
According to BudgIT’s “2020 Budget Implementation Analysis” report released on Friday, N4.65 trillion was spent on non-debt recurrent expenditure.
“In 2020, FG projected a total revenue of N5.37tn; however, the actual total revenue eventually stood at N3.42tn. This represents a 63.71% revenue performance,” BudgIT said.
“The cost of servicing FG’s debt is drowning Nigeria as the cost continues to grow, gulping a total of N3.34tn (97%) from the total revenue.”The Nigerian government’s revenue from oil however recorded a significant boost of N1.41 trillion, surpassing the oil revenue projections of N1.01 trillion.
With insecurity scaling across Nigeria, the debt problems will remain. The bad guys have moved to even kidnapping emirs, and there seems to be no solution in the near future: “The police in Kaduna State say the Emir of Kajuru, Alhassan Adamu, and 10 others have been kidnapped by suspected bandits in the early hours of Sunday in Kajuru town, headquarters of Kajuru Local Government area of the state.”
The near future looks extremely challenging for Nigeria with all these paralyses; we need to pray for a good landing in the nation. In America, the biggest problem is that companies cannot find workers to hire; in Nigeria, insecurity has made it largely impossible for farm workers to go to their farms, creating a huge crack on future food security.
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I would be writing a policy for the Africa Economic Conference this coming week. The summary of the work is this: Debt must service debt.
In the first place, the reason for incurring incur debt is so there can be productivity. So, if debts are not making you debt-free, then stop collecting debts!
The problem is not access to loans but it’s poor management.
One way we can develop is by leveraging the international financial system. One of which is green financing. I am aware that developing nations can have access to $80 billion, but what are we doing to partake in that spicy deal- Nothing meaningful!
So, if we want to rise, we need meaningful people to speak sense into the head of leadership. So, they bought a stake in Dangote instead of investing that money in a better long term project. Zimbabwe has Lithium as a resource which is pivotal for green tech if we set up industries there on the grounds of AfCFTA.
20% of Dangote 19 billion USD project is 3 billion USD, and the cost of a manufacturing plant is 300 million USD. A tenth!
Invest that money in this, and we would make a good return because rather than playing catch up later, we are leading.
The problem lies in planning. We are currently in bad shape. The government continues to borrow to pay salaries, with high governance cost; an average govt director or high-rank govt official still drives a new car that cost around #20m, which they finally sell to them at a low price after their tenure, among other insane spendings and above all borrows to service debt.
Cut spending and carry us along with your sustainable plan, No
We will suffer with pride and see only the bright future
I was discussing with some colleagues this past week. I said we would be having a rough next year, “Sapa” will be coming in strong. We will have our final thesis defence on Friday, and the future seems so uncertain. To stay and build for Nigeria or just “JAPA”, I have in time past criticized the “JAPA” mentality. Why go to another man’s land, develop the country only to be treated like shit and go ahead to fight systemic racism or carry placard “Black Lives Matter” while our dear country remains shitty. If you’re lucky, you get to control your career; if not, you live from paycheck to paycheck.
Why all the stress when we can all build our country in less than ten years, if we are indeed together.
The future remains uncertain; why not leave and try to build good stuff and make history — The memoir of a fresh graduate