AfDB seeks help for Nigeria buffeted by mounting debt
By Jeph Ajobaju, Chief Copy Editor
African Development Bank (AfDB) President Akinwumi Adesina has counselled Nigeria needs help from international institutions to tackle its debt, now $103 billion (N42.84 trillion) and growing.
His advice came after President Muhammadu Buhari sought debt cancellation for developing countries wracked by fiscal and liquidity challenges at the 77th session of the United National General Assembly (UNGA).
Adesina was speaking at the Nigeria International Economic Partnership Forum in New York where he said financing is critical to solving Nigeria’s development challenges.
He warned several countries, especially in Africa where the debt to Gross Domestic Product (GDP) ratio has increased, are at risk of high debt distress.
“Financing is critical,” he stressed, “because the debt to GDP ratio of Africa has increased to 70 per cent – several countries are the risk of high debt distress due to unstable, unsustainable debt levels.
“Nigeria’s total debt level is N42.84tn or $103bn. External debt levels stand at N16.61tn or $40bn. Ladies and gentlemen, Nigeria needs help to tackle this debt burden.
“International partnerships on debt are helping Africa, and Nigeria. The issuance of special drawing rights (SDRs) by the International Monetary Fund of $650 billion helped provide liquidity support for countries. However, Africa only received $33 billion out of all of that. Pretty small.”
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Additional SDRs
“A call made by the African heads of state for developed economies to rechannel $100 billion of additional SDRs to Africa will go a long way to reduce the debt burden in Nigeria,” Adesina added, according to Nairametrics.
“Allocating this SDR, some of this, through the African Development Bank will actually allow us to leverage it four times because we are a leveraging machine. We can deliver more financing to Nigeria and Africa.’’
Adesina stressed Nigeria and other African countries need debt relief as well as international partnership to tackle climate change.
“Nigeria’s growth will be conditioned on its ability to fix its massive infrastructure deficit,” he said, adding the National Integrated Infrastructure masterplan would require $759 billion funding until 2043.
Nigeria’s debt
Ballooning debt is a serious problem in the Nigerian economy with economic and finance experts expressing deep concern as more than 90 per cent revenue goes into servicing debt.
Debt has risen exponentially on President Muhammadu Buhari’s watching, moving towards the N50 trillion mark.
The debt burden is compounded by declining revenue with Ministries, Departments and Agencies (MDAs) short-changing the treasury in remittances to the Consolidated Revenue Fund (CRF).