The impact of incessant borrowing on Nigerian economy
Borrowing isn’t bad for all the right reasons. In fact, it has formed an integral part of economic activities the world over from time immemorial. Nigeria's plunge into the abyss of indebtedness to became one of the world’s most indebted countries both internally and externally began in her colonial days when the dire need to finance the creation and expansion of road and other infrastructure necessitated it. Sadly, it became a trend such that by 1954, Nigeria’s external debt stood at the whooping sum of £21,238,000 (according to jstor.org). But today, it's worse off. Drawing from the statistics released in March 2023 by Nigeria's Debt Management Office (DMO), the totality of her debt both internally and externally is N46.25 trillion or $103.11 billion. Wawu!!
Now, the very first irony of this reality is that Nigeria as a country displays a terrible laxity in the generation of revenue through diversification, deregulation, local production and exportation of goods that could help service the loans and still have enough to support or improve the social and economic lives of her people through subsidies on fuel, forex, education, etc.
Another impact of this milieu is that it encourages waste. Nigeria, no doubt, is flagrantly wasteful! It's like a wickedly programmed flow from the system of government whose multiplicity is laughable to the legislative chambers of about 500 people whose fiscal budget alone is always around 25-30% of the total budget of over 200 million people and the corrupt civil servants who inflate contractual budgets for kickbacks. So, it's needless it's to say that about a quarter of these loans are not really used to improve infrastructure and other things that could generate revenue instead, they are used for unproductive recurrent expenditure. Just few days ago, a news broke that the president's salary and those of lawmakers were being review upward to about 110% in a heavily indebted country! Of course, that alone will push the poverty level up higher. In turn, it will weigh down on the growth of Nigeria's GDP and increase unemployment.
We are no strangers to the uncreative and mental inertia of many of our political actors. But more and more borrowings expose their folly and desperation to generate revenue (which will be eventually wasted or embezzled) through terrible taxation policies even in the least productive sector. The very reason many sprouting and some well-rooted ones evade or falsify tax records.
The impact of Nigeria's borrowing and indebtedness may be inexhaustible but what is sure is that Nigeria can take some major but necessary steps to first block all the waste channels at the top echelons in government and re-channel her energy toward nursing the production and growth of local industries through good policies and subsidies.
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