Although the Nigerian economy grew by 3.54 percent in real terms in the second quarter (Q2) of 2022, however, when compared to Q2 2021, it reported a 1.47 percent decline from a 5.01 percent growth rate.
As the country’s economy continues to worsen, the situation has generated a lot of concerns as stakeholders warn the federal government against further borrowing which they stated was crippling the nation’s economy.
The Buhari-led administration’s unbridled lust for debts has reached a crisis point, with the country settling on the World Bank’s Top 10 International Development Association borrowers’ list.
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The World Bank had last year warned the Nigerian government against financing deficits by borrowing from the CBN through the ‘Ways and Means,’ stating that doing so puts pressure on the country’s expenditures, including increasing the cost of debt servicing.
Currently, over 90 percent of all federal public revenue is spent on debt servicing, which has been described as a recipe for disaster.
With debt servicing exceeding retained revenue by as much as N310 billion in the first four months of 2022, the debts are clearly unsustainable.
However, analysts in the financial sector have projected that the continuous borrowings by the federal government in 2022, were due to low oil outputs resulting in a decline in oil revenue which was affected by incessant oil theft.
The country’s debts rose by about N4 trillion in the past five months to take the portfolio to N45.25 trillion. According to the National Bureau of Statistics some weeks ago, it reported that the urban inflation rate stood at 20.95 percent, which is 3.36 percent higher compared to the 17.59 percent recorded in August 2021.
Added to these myriads of fiscal challenges is that Nigeria does not have the financial capacity to fund its next budget.
Displeased with this, Nigeria Employers’ Consultative Association, NECA, has warned against more borrowings that will ravage the nation’s economy.
In a recent statement, NECA cautioned the Federal Government against further borrowing, contending that the nation is faced with acute and self-inflicted revenue challenges and a rising debt profile, among many other economic headwinds.
They noted with dismay that even with the nation’s current level of indebtedness, the Government is still poised to borrow over N11 trillion to finance the 2023 national budget.
In their words;
“Organized businesses have witnessed varied challenges in recent months. From a shortage of FOREX, and a stringent regulatory environment to non-alignment of fiscal and monetary policies, which when combined makes doing the business difficult.
“It is obvious to all discerning stakeholders that the nation is faced with acute and self-inflicted revenue challenges and a rising debt profile, among many others. Even with the nation’s current level of indebtedness, the Government is still poised to borrow over N11 trillion to finance the 2023 national budget.
The association also disclosed that most businesses in Nigeria are struggling to stay afloat this period, as quite a number of them are now on the brink of collapse due to the pressures from the economic policy environment.
The organization lamented that at the last count, organized businesses are presently faced with over fifty different taxes, levies, and fees at all tiers of government, some of which are duplicated.