At a time in Nigeria’s political history, the country stood at the cusp of an economic renaissance, having successfully negotiated its way out of the crushing weight of external debt. Under the skilled leadership of Dr. Ngozi Okonjo-Iweala, who served as Minister of Finance and Economy, Nigeria achieved what many thought was impossible, a significant debt forgiveness from its creditors. This milestone freed Nigeria from a heavy burden, leaving the country virtually debt-free. It was a period of hope and optimism as the nation was poised for economic growth without the shackles of external borrowing.
Fast forward to the present day, and Nigeria finds itself back in a precarious situation. Under the administrations of former President Muhammadu Buhari and current President Bola Tinubu, the country has slipped into an alarming debt spiral once again. The debt situation has ballooned to levels that threaten to cripple the nation’s financial future. With billions borrowed from international bodies like the World Bank and China, the country is now faced with a debt service burden that consumes a significant portion of its revenue.
According to the Debt Management Office (DMO), Nigeria’s debt as at June 2024 went up by ₦24.33trn in three months, making the debt profile to stand at ₦121.67 trillion. The DMO noted that the increase was from new borrowing to part-finance the 2024 Budget deficit.
The DMO explained that Nigeria’s total public debt as at June 2024 was ₦121.67 trillion, and added that as of March 31, 2024, the country’s domestic and external debts stood at ₦121.67 trillion.
The DMO also added that Nigeria’s debt rose by ₦24.33 trillion within three months from ₦97.34 trillion in December 2023 to ₦121.67 trillion, and that the debt represents external and domestic borrowings by the Federal Government and the 36 state governments and the Federal Capital Territory (FCT).
In fact, this disturbing return to indebtedness raises a myriad of concerns. How did we go from being debt-free to being heavily indebted once more? What happened to the prudent fiscal management that once shielded us from the need for constant borrowing? These are questions Nigerians must ask, as the consequences of our current debt situation weigh heavily on the country’s economy and future generations.
More troubling is the fact that, despite the growing debt, Nigerians are not seeing the tangible benefits in terms of improved infrastructure, social services, or job creation. Instead, we see a government bloated with high expenditure, where the cost of governance remains staggeringly high. Lavish spending on government officials, duplication of roles, and the ever-growing number of political appointees are just a few examples of the financial leakages that continue to plague the system.
It is deeply worrisome that as the country borrows more, the cost of governance remains unchecked. The Nigerian government must face the hard reality: the current path of borrowing is unsustainable. There is a pressing need for the government to cut the cost of governance. This includes reducing the salaries and allowances of public officials, trimming down the number of political appointees, and eliminating wasteful expenditures across all levels of government.
A leaner, more efficient government structure is not only desirable but necessary if Nigeria is to manage its debt and put the borrowed funds to productive use. Public investment must prioritize sectors that can stimulate economic growth, such as infrastructure, agriculture, and education, rather than being consumed by recurrent expenses that have little to no long-term benefit.
Nigeria’s return to a debt-ridden economy is indeed a cause for concern. We must remember the days of fiscal prudence that led to our debt relief and strive to restore those principles. The government must act swiftly to cut unnecessary costs and ensure that borrowed funds are used transparently and efficiently for the benefit of the people, not just the political elite.The stakes are too high for us to continue down this path. We owe it to future generations to break free from the cycle of borrowing and build an economy that can sustain itself without the crutch of external debt. The time for action is now, before the debt trap tightens its hold on Nigeria’s future.
Against the foregoing backdrop, it is expedient to urge President Bola Tinubu to make it a priority to intensify efforts towards freeing Nigeria from the crippling weight of both domestic and external debts. The country is at a financial crossroads, and the mounting debt burden is becoming unsustainable.
Without decisive action, Nigeria risks plunging deeper into a debt crisis, which could severely hamper economic development and social progress. It is essential that the administration adopts a robust debt management strategy that focuses on reducing excessive borrowing, increasing revenue generation, and enhancing fiscal discipline. The foregoing view is as the future of Nigeria’s economy depends on the steps taken now to avoid further debt accumulation.
One critical avenue that President Tinubu should explore is the possibility of negotiating for debt forgiveness, much like what was achieved under the leadership of Dr. Ngozi Okonjo-Iweala when she was Minister of Finance and Economy. At the time, Okonjo-Iweala successfully negotiated with Nigeria’s creditors to secure significant debt relief, which allowed the country to regain financial stability and focus on long-term growth. By pursuing similar negotiations, Tinubu could alleviate the crushing debt service burden that currently consumes a large portion of the nation’s revenue. International creditors may be open to renegotiating terms if Nigeria presents a credible and transparent economic reform plan, signaling its commitment to fiscal responsibility.
In addition to seeking debt forgiveness, President Tinubu must also take bold steps to reduce the cost of governance and improve the efficiency of public spending. Every naira saved from cutting unnecessary expenses and plugging financial leakages can be redirected towards paying off Nigeria’s debts and investing in sectors that will stimulate economic growth. By combining debt forgiveness negotiations with internal fiscal reforms, President Tinubu can pave the way for a more sustainable and prosperous economic future for Nigeria. The time to act is now before the nation’s debt burden spirals further out of control.
