BimbolaOyesola, [email protected]
Last Week Tuesday, Nigeria got another approval of nearly $2.2 billion loan from the World Bank. However, reactions have continued to trail the nation’s new move, more so as it further pushes the country deeper into debt, which future generations may have to contend with.
The Nigerian Employers’ Consultative Association (NECA) has expressed concern at what it described as seemingly unquenchable appetite of government for loans.
Director-general of NECA, Dr. Timothy Olawale, said the employers’ association received the news with concern, bearing in mind that the new addition brings Nigeria’s total exposure to foreign and domestic loans to over $80 billion.
“This is not only worrisome, but also alarming. The growing debt stock with huge percentage of the budgets over the last decade going to debt servicing needs to be stopped,” he said.
The NECA director-general noted that borrowing could have been permissive, given the state of the economy, but not to the clearly humongous level it has turned out to be.
He stated that incurring debt for developmental purposes is not in question, but the over N25 trillion debt stocks, taking over 20% of annual national budget to service should be enough source of worry.
He reasoned that though the argument of debt to GDP ratio is tenable, the IMF warned that Nigeria’s debt-to-GDP ratio, though good, is risky and cannot be guaranteed going forward.
Expressing further concern at the seeming insatiable appetite of government to borrow, Olawale averred that “Government cannot continue to mortgage the future of the citizens through unsustainable borrowing. It is expected that, with recent efforts at recovering looted funds stashed home and abroad, government would have alternative sources of funds to meet its developmental objectives.”
While advising government on alternative course of action, Olawale said, “we recall the Executive Order 7 of 2019 on the Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme. The main objective of the Scheme is to accelerate road infrastructure development for balanced economic growth in Nigeria by granting approval to private sector entities to construct and refurbish eligible roads across the country in exchange for tax credits, which could then be applied against company income tax payable. Thus, the motivation for the Scheme derives from the desire to take advantage of private sector funding and discipline to enhance road infrastructure development in the country. The scheme has a lifespan of 10 years reckoning from the commencement of EO7. We are aware that the private sector is already involved in the scheme and government should allow or encourage more private sector participation”
The NECA boss noted that in as much as the loan is targeted at some six development areas, Nigeria have no reason to continue to borrow, especially, barely a year after the World Bank disbursed about $2.4 billion to the country.
He said that government should make genuine efforts to block all the leakages and wastages in government rather than overburden present and future generations with debts.
The Trade Union Congress president, Quadri Olaleye, also stated that loans were not bad when judiciously used.
According to him, the United States of America and some other big countries also are owing, but the difference between Nigeria and those countries is that they use their loans to better their society, while in Nigeria it is either looted or used to pay bogus salaries, allowances and also buy luxury cars for politicians.
“It beats my imagination that at a time life has no meaning in Nigeria, our lawmakers are debating on preferred official cars,” he said.
He noted that the present government has added considerably to the nation’s debt.
He said, “In fact, it has returned us to where we were 14 years ago. Our debt now exceeds $85 billion. Reports have shown that Nigeria’s debt is about where it was in 2005-06, before we benefited from massive debt relief under Obasanjo. To return to where we were in just 14 years without any significant economic progress is a huge disappointment.