Buhari to leave behind nearly N80tr national debt, after 8 years as President
By Jeph Ajobaju, Chief Copy Editor
Muhammadu Buhari will leave behind N80 trillion national debt when he relocates to Daura on May 29 after eight years in Aso Rock as President of Africa’s populous country.
The Debt Management Office (DMO) often dismisses fears about the skyrocketing debt but economists and financial analysts raise alarm over the huge amount which demands more than 90 per cent of revenue to service.
The DMO in its report for the fourth quarter report of 2022 (Q4 2022) said total debt was about N46.25 trillion.
Total domestic debt was N27.55 trillion and external debt N18.70 trillion ($41.69 billion) in December 2022, the DMO explained.
However, with new debts and approval by the National Assembly (NASS) for the securitisation of the Ways and Means loans of the Central Bank of Nigeria (CBN), total debt could surge beyond N80 trillion by 29 May 2023, up from N12.6 trillion on 29 Mary 2015 when Buhari became President.
Borrowing to fund budget deficits became routine in the Buhari years. DMO data estimates budget deficits from 2015 to 2023 will be more than N47.73 trillion, per reporting by Daily Post.
Federal budget deficit rose 370.54 per cent from N2.41 trillion in 2016 to N11.34 trillion in 2023, and the World Bank said Nigeria spent 96.3 per cent of its revenue on debt servicing in 2022.
However, Finance Minister Zainab Ahmed objected to the World Bank figure, clarifying 80.6 per cent of revenue was spent on debt servicing in 2022.
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Need to restructure, renegotiate loans
SD & D Capital Management Chief Executive Officer, Idakolo Gbolade, decried the heavy loans acquired since 2015 and urged the incoming administration to restructure and renegotiate the debt to avoid collapse, per reporting by Daily Post.
Said he: “The outgoing government has been financing the budget from loans since 2015 which gave rise to the unbearable loan position the country is now shouldering.
“We had continuously increased the debt stock even in the face of dwindling revenue. Major infrastructural projects executed or being executed do not have the capacity to repay the loans due to insecurity and wrong prioritisation of projects.
“Projects like the rail network are facing security challenges which have made them unable to generate adequate revenue. Other projects like roads are not commercially viable because they are not tolled.
“Investments in aviation have not also yielded enough revenue to service the loans used for its execution.
“In the face of insufficient revenue to service existing debt, the debt stock has increased to 77 trillion due to the securitisation of the ways and means of the facility to the tune of N22.7 trillion.
“The debt situation in Nigeria is precarious and needs urgent intervention by the incoming government.
“The present indebtedness must be negotiated and repayment restructuring should be done to give breathing space for infrastructural development.
“The government should also look at public/private sector initiatives on major projects as against financing mainly by additional loans.”
Professor Godwin Oyedokun, an accounting and financial development expert at Lead City University, Ibadan, lamented “the present government has mortgaged the future of our future generations. It is alarming that we find ourselves in this situation.
“The incoming government has a lot of debt to cope with. The good thing is that the incoming government is part of the outgoing government.
“This high debt profile means that we will continue to repay this from future earnings.
“Future earnings are surely not going to be sufficient to cope with the government’s expenditure.”