Lagos Chamber of Commerce and Industry (LCCI), has expressed concern over the increasing debt portfolio of Nigeria.
Speaking during LCCI’s Annual General Meeting (AGM), Toki Mabogunje, the professional body’s president, stated that the country’s debt is fast becoming unsustainable.
According to her, in the light of the dwindling oil prices and production, Nigeria’s debt profile is likely to hit N34 trillion by the end of this year (2020).
Making reference to the Debt Management Office (DMO), Mabogunje explained that increase in Nigeria’s public debt was because of the fresh domestic and external borrowing, which she noted were meant to connect the wide fiscal deficit in the revised 2020 budget given the economic impact of COVID-19 and recent exchange rate devaluation.
She said: “The public debt stock grew by 8 percent to a whooping N31tn at the end of the second quarter which is equivalent to 21 percent of the GDP.
“At the peak of the pandemic in the second quarter, the Federal Government received financial support worth $3.4bn and $288.5m from the International Monetary Fund and the African Development Bank respectively, while negotiations are also on-going for a cumulative $1.8bn credit support from the World Bank, AFDB and Islamic Development Bank.”
The LCCI president further made mention of underperforming sectors, which she said has contributed to the country’s unstable economy due to their weak performances.
Mabogunje revealed that 19 sectors have contracted, 14 are in a recession, 11 sectors expanded, and two sectors had moderation in growth.
“While we commend policymakers for the interventions in reflating the economy and supporting business. We urge that special attention be given to sectors severely impacted by the pandemic. The federal government need to expeditiously redirect attention to these sectors including aviation, hospitality, entertainment and manufacturing. This has become necessary to protect jobs, preserve investments and provide the much needed liquidity required to revive the sector,” she added.
Nigeria’s debt portfolio
Recall that some weeks ago, DMO released the country’s debt report.
In the report, Unmask NG learnt that Nigeria’s total debt stock, which comprises foreign and local arrears, as at June 2020 stood at N31.01 trillion, which represents 8.31% increase when compared to her N28.63 trillion debt profile as at March 2020 (three months prior).
Out of the N31.01 trillion debt profile, external debt stood at N11.36 trillion, representing 36.65% of the total debt stock. On the other hand, domestic debt at N19.65 trillion, representing 63.35% of the total debt.
The DMO report also disclosed that N1.21 trillion was spent to service the loans during the period under review. While domestic debt servicing gulped N921.9 billion, the government spent N288.6 billion to service its foreign debts.
Here’s what we know
In spite of concerns from economy experts, industry players and stakeholders, and international bodies, the President Muhammadu Buhari-led government has channeled its focus on borrowings and adding to Nigeria’s alarming debt stock.
From recent comments by officers in Buhari’s cabinet, it is pretty much obvious that loans seem to be the only way the incumbent administration can secure funds to keep the economy running.
But the reality is, should the government continue on this trend, the increasing debt would not stop to disrupt large investments on infrastructures, which are meant to stimulate productivity and improve the standard of living of the people.