By Adewale Sanyaolu
The African Development Bank (AFDB) yesterday, warned against Nigeria’s rising debt service to revenue ratio, urging the country to decisively tackle its debt challenges.
This was even as he said AfDB will invest $3 billion in support of local pharmaceutical industries in Africa, including Nigeria.
He further raised the alarm that Nigeria’s debt service to revenue ratio was high at 73 per cent
AFDB President, Dr. Akinwumi Adesina, who painted the dire economic situation of the country’s at the Mid-Term Ministerial Performance Review Retreat, held at the State House in Abuja, noted that things will improve as oil prices recover. According to him, the situation has revealed the vulnerability of Nigeria’s economy, adding that for Nigeria to experience economic resurgence, it must fix the structure of the economy and address some fundamentals.
‘‘Nigeria must decisively tackle its debt challenges. The issue is not about debt-to-GDP ratio, as Nigeria’s debt-to-GDP ratio at 35 per cent is still moderate. The big issue is how to service the debt and what that means for resources for domestic investments needed to spur faster economic growth,’’.
Adesina disclosed that Nigeria’s challenge is revenue concentration, as the oil sector accounts for 75.4 per cent of export revenue and 50 per cent of all government revenue.
He stated that what was needed for sustained growth and economic resurgence was to remove the structural bottlenecks that limit the productivity and revenue earning potential of the huge non-oil sectors.
According to him, Nigeria should significantly boost productivity and revenues from its non-oil sector, with appropriate fiscal and macroeconomic policies, especially flexible exchange rates that will enhance international competitiveness. On the pandemic, thye AfDB boss said due to COVID-19, Nigeria’s economic growth rate declined to -1.8 per cent in 2020, which, he said, mirrored the pattern across Africa, as the continent posted a -2.1 per cent growth rate in GDP, its lowest in two decades. He added that the GDP growth rate for the continent will recover to 3.4 per cent this year but project Nigeria’s economic growth rate will rebound to 2.4 per cent this year and reach 2.9 per cent by 2022.