Former President Olusegun Obasanjo on Friday lamented the rising debt profile of Nigeria, saying the country risks going bankrupt over the appetite of the government for accumulating debts.
The ex-president, who expressed worry for future generations that would have to pay back the debts, said things may get worse for Nigeria and other African countries economically over piling debts.
He spoke in Lagos as a keynote speaker at the “Why I am Alive” with his speech, titled ‘Nigeria: The challenges of debt and sustenance of democracy,’ noting that as at 2015, Nigeria’s total external debt was about $10.32bn but had increased to $81.274bn as at April 2019.
According to him, to service this current level of indebtedness, Nigeria must commit at least 50 per cent of its foreign earnings.
“Such a situation talks about an impending bankruptcy. No entity can survive while devoting 50 per cent of its revenue to debt servicing.
“It has recently been pointed out that in 2018 that total debt servicing took over 60 per cent of government revenue. What’s more, we are not doing enough to address the fundamental, deep-seated and structural challenges that inhibit the expansion of our economy,” the ex-President added.
To worsen matters, the present government was currently seeking to add another $29.6bn loan to “our already overburdened debt portfolio”, he said.
However, Obasanjo said although debt could be used to finance growth and/or development, he said it was a “double-edged sword” that must be wielded with a high degree of discipline, responsibility and foresight.
He said: “A well-calibrated debt for infrastructure and other developmental goals could be very positive. However, we do not need to speculate. We need to examine our historical experience.
“Everyone knows that our governments are notoriously deficient in serious and adequate discipline and most often lack competence and consistency as well.”
Continuing, the ex-President said the country borrowed to build a light rail in Lagos and embarked on the project, but a governor abandoned the project for his full term of four years at 65 per cent completion – when the country should have started paying down on the loan.
He said this type of situation was not in Lagos alone but in other states like Rivers and Cross River.
“The Federal Government built a nice looking extension to the Murtala Mohammed International airport that looks completed from outside but not in service.
“To rub ‘aboniki’ on the injury, some clowns are talking of demolishing the main airport and rebuild from scratch. Where on earth is a poor country wasting resources that way?”, he asked.
Obasanjo said his fears were born out of his experience about jumbo loans “and my agony in getting rid of our external debts and developing a sustainable approach to address our domestic debts.”
He said: “It was a painstaking exercise that involved not just a national strategy but a continental and international one which eventually yielded significant gains.
“To now see all those efforts, go to waste barely less than 15 years after that watershed moment is more than disturbing. It is painful and retrogressive.
“Nigeria’s leadership was key in the campaign for debt relief in the late 90s/early 2000s. Our relapse into debt will be wrong, signalling to the rest of the continent and could be tantamount to backing the entire continent into another era of ‘highly-indebted poor countries.’
“For once, all Nigerians need to rise up and shout in one voice and call on the National Assembly to rise up to its core duty and responsibility and save our children and our grandchildren and great-grandchildren from being mired in debt.
“Let us use other options. Saudi Arabia, I understand, will be raising over $20bn to finance projects through private equity. We can do likewise.
“We have several national assets that could be used to raise some of the funds that we need in this respect for infrastructural development to give assurance to private sector investors and PPP (Public-Private Partnership) investors, if necessary.”