As of March 2022, Nigeria’s debt stock stood at $100 billion. Stakeholders at the African Conference on Debt and Development (AFCODD) have expressed worry over Nigeria’s expanding debt profile.
According to a breakdown by the Debt Management Office (DMO), as of 31 March 2022, domestic debts totaled $60 billion and overseas debts were $39 billion.
They are concerned that the debt ceiling has not been established, despite Section 42(1) of the Fiscal Responsibility Act of 2007 providing that “The President shall, within 90 days from the commencement of the Act and with advice from the Minister of Finance, subject to approval of National Assembly, set overall limits for the amounts of consolidated debt of the three tiers of government.”
They lamented the fact that since the FRA’s passage in 2007, no President has established the combined debt ceilings for the federal, state, and local governments, which has made the debt management situation worse.
Speaking at the conference was David Ugolo, Executive Director of the African Network for Environment and Economic Justice (ANEEJ), who also expressed concerns about the country’s inability to account for the $3.5 billion in Special Drawing Rights (SDR) that the International Monetary Fund (IMF) will give it in 2021 as a direct response to the economic crisis brought on by the Covid-19 pandemic.
Ugolo bemoaned the secrecy surrounding the use of the SDRs, the Federal Government’s failure to release any information, and the absence of parliamentary discussion on the SDRs issue in Nigeria.
To this end, he urged the National Assembly to hold a public hearing on the matter and invite the Minister of Finance, Budget, and National Planning as well as the Governor of the Central Bank to explain how the $3.4 billion SDR facility granted by the IMF, which has been fully utilized since August 23, 2021, and the $3.4 billion Covid-19 facility, are being used.
Ugolor emphasized the importance of adopting a pan-African strategy for the contribution, distribution, and management of SDRs that recognizes the potential to provide more public good to Africans.
In addition, Taiwo Akerele, the Country Representative for Policy House International, noted that one of the primary causes of Nigeria’s debt crisis is the nation’s desire for borrowing.
It was decided that instead of promoting further borrowing, Nigeria should make the most of its abundant resources by improving its debt recovery management system to stop profit shifting, illegal financial flows, tax evasion and avoidance, unchecked looting with impunity, and unneeded tax holidays.
He also bemoaned the fact that the current Debt Servicing Strategy 2020-2023 is not inclusive because it does not take into account contemporary reality and lacks a more inclusive approach for citizens and CSOs, as well as the fact that many of the underlying assumptions, such as real GDP, the volume of oil production, and continued reliance on the Debt/GDP ratio, are no longer valid.
According to Akerele, Nigeria’s debt strategy and policies need to be reviewed right away in order to include civil society participation in loan contraction and monitoring processes.
However, a conference communiqué urged the need to continue examining the global financial system because multilateral financial institutions were founded and run in ways that restrain the growth and development of the south, including Nigeria.
