Experts Worry as Nigeria’s Debt Rose by 127% Under Buhari

Rising debt profile remains an issue in Nigeria, an economy with one of the world’s lowest revenue generation and that depends largely on crude oil.

Experts have said Nigeria’s rising debt profile will continue to weigh on the nation’s growth and ability to improve economic productivity, especially with debt service to revenue ratio presently at 99 percent.

In a recent interview, Dr. Muda Yusuf, the Director-General of Lagos Chamber of Commerce and Industry, said the rising national debt was a cause for concern.

Debt profile rose by 127 percent from to N28.6 trillion in March 2020, up from N12.6 trillion in 2015 when President Muhammadu Buhari became president.

Yusuf said, “The capacity to service the current stock of debt raises serious sustainability concerns.

“For instance, the debt service provision in the 2019 budget was a whooping N2tn whereas the total capital budget was N2.9tn. This implies that the debt service commitment was 70 per cent of capital budget allocation.

“Only recently, the National Assembly approved the revised 2020 budget of N10.8tn.

“The recurrent component was N4.9tn, which is 45.4 per cent. The capital component was N2.49tn, which is 23 per cent of the budget.”

“The debt service component is N2.95tn, which is 27.3 per cent.

“It follows that the sum of the recurrent provision and the debt service provision represent 73 per cent of the budget.

“It also implies that the debt service is 118 per cent of the capital budget provision.

“This percentage would be higher if we reckon with actual figures at the close of the budget year.”

Another expert, Dr. Sam Nzekwe, a former President, Association of National Accountants of Nigeria, explained that around a quarter of Nigeria’s yearly budget goes to debt servicing.

He further stated that while borrowing is not bad, it is important to deploy the fund judiciously.

He said, “Borrowing is not bad in the real sense of it, but what have you done with the money?

“Have you borrowed for recurrent expenditure or to finance capital project? If they are borrowing to finance recurrent expenditure, it is bad.”