Nation
‘Nigeria’s External Debt-To-Revenue Up 400% In 10 Years’
Nigeria’s external debt to total revenue increased from 8 per cent in 2011 to 400 per cent in 2020, a former governor of the Central Bank of Nigeria (CBN), Sanusi Lamido Sanusi, has said.
Sanusi lamented the situation while participating in an online roundtable discussion tagged, “Debt Relief for a Green and Inclusive Recovery in Nigeria”, organised by Heinrich Böll Foundation.
The former CBN governor said Nigeria has a debt services ratio of up to 90-96 per cent but there are certain other elements of debts that analysts have not paid attention to.
He said, “If you go through the CBN statistical bulletin, in 2011, the total federally collected revenue from all sectors was N18.9trillion at N165 to the dollar. This will have placed federally collected revenue in 2011 at $55.5billion.
“Meanwhile, debt at that time was $5billion, so, we had an external debt to external revenue of about 8 per cent in 2011. By 2020, we have an external debt of about $33.4billion but all revenues in 2020 were about $8.3billion. So, it has moved from 8 per cent to 400 per cent between 2011 and 2020.
“And this is a serious red flag that I’ve not seen being pointed out in the conversation around debt sustainability especially given the facts that exports are yet to be diversified at the book of our revenues from oil sectors given what we’ve seen and what have been discussed today about the prospect of hydrocarbons as we move into a greener world.”
Nigeria’s debt position has been a source of concern for development experts in recent years, especially in the midst of dwindling oil revenue.
Sanusi, who was recently deposed as Emir of Kano, noted that in measuring debt sustainability, the debt to Gross Domestic Product (GDP) ratio is a useless metric.
“You do not service debt out of GDP, you service debt out of revenues,” he said.
“If only 20 per cent of your GDP is paying taxes, if you have a debt GDP ratio of 20 per cent, you are likely to have a debt service to revenue ratio of 100 per cent.
“So, for a long time, I have been concerned about this idea that if (having) 25, 30 or 35 per cent debt to GDP ratio is fine, because you’ve got countries that are activating 90 per cent.”
He added that in the countries where debts to GDP numbers are high, tax is a major component of government revenues.
Sanusi also explained that high interest rates with high debts could lead to difficult financial situations.
He also explained further that another key part of the nation’s debt profile is the components of bilateral loans, of which China is a major player, with $3.2billion of Nigeria’s $4.1 bilateral debt, that’s about 78 per cent.
He explained that any talk about debt sustainability has to involve China as a very dominant player.
The former CBN governor agreed that the call for debt relief is in the right direction, but the nation needs to show serious commitment and review the structure of its government and economy.
He noted that as countries begin to lift Covid-19 restrictions on travels, there will be increased demand for forex on travel, further putting pressure on the country’s exchange rate.
“When the world reopens and people start travelling, that is going to lead to an increase in demand on forex for travel and that is going to exert further pressure on the balance of payments.
“Now, these are the kinds of considerations I think we need to bear in mind when we talk about the sustainability of a debt situation.
“Honestly, I think debt relief is very necessary if this country is going to have the fiscal space to pursue any kind of developmental objectives. We can’t be spending 90 or 100 per cent of our revenue on debt service and don’t have anything to invest in development.”
According to Sanusi, the country needs to invest in education and agriculture, stressing that these two sectors will help play a key role in lifting Nigerians out of poverty.
Part of the problem Nigeria faces, he said, is that there has been significant under-investment in education and health care, and the productivity of agriculture.
“And these are the kinds of things that we need to lift people out of poverty and bring sustainable growth,” he argued.
The former chief executive of First Bank also explained that the rapid rate of growth in population is a source of concern, adding that the country needs to have social policies around demographic growth.
“There are parts of this country where the fertility rate is more than eight (8) live births per woman, and again some societies are also polygamous,” he said.
“Now there’s no way that you are going to continue growing at 3.4 or 4 per cent when your economy is growing at a slower rate and expect to deal with poverty. And that is an unsustainable model.”
He also noted that setting up factories could help lead to economic growth.
He said, “One of the issues I have with people when they talk about removing the subsidy on electricity tariffs and how the tariffs are going to go on to avert some problems is that we worry so much about tariffs because we use electricity for consumption and the buck of the population is yet to understand that electricity is an import into production. You can’t burn it.
“So, if you take away the subsidy by having a cost recovery tariff, you could put that money into small and medium enterprises that will turn that electricity into real production of goods and services and lift people out of poverty.
“Now, it doesn’t have to be fossil fuels electricity, you can in the same way, for example, use these bonds to encourage setting up factories to produce solar panels. People talk about renewable energy but if you are going to be importing solar panels from China or the UK, it is not as effective as if you set up factories to produce these panels in Nigeria. You’ve got all the raw materials you need to produce solar panels.
“So, set up factories, produce these panels and then the subsidy come in, in form of making these panels affordable and the kind of financing you give to the micro-enterprises to turn this renewable energy into goods and services.
“Not just about producing renewable energy that will continue to be fuelling television sets, water kettles, video games, no; we want electricity so that micro, small and medium enterprises can begin to generate.”
Sanusi argued further that a very smart way of dealing with debt relief is to effectively ensure that government puts in the right policies and that money goes into the right areas that will lead to sustainable development.
He noted that what happened when debt relief was granted to Nigeria in the past was that Nigeria went back on spending on overheads, unnecessary petroleum subsidies, and subsidies on fertilisers, which has not helped the country.
“What happened in the past was that we had this debt relief and then we went back to borrowing money, spending on salaries, overheads, and unnecessarily petroleum subsidies all sorts of fertilisers sub discount and those are the kind things that need to end,” he lamented.
“But we also need to bear in mind that as we take them out, the way to minimise impact is to address the real SDGs considerations, education, healthcare, renewable energy accompanied by training, the productivity of agriculture and this is really about the policy deficit that we’ve had in the last few decades,” he said.
The Senate yesterday approved the bills for the establishment of Federal University of Medical and Health Sciences and College of Education, Bende at its plenary session.
The two bills sponsored by the Deputy Speaker of the House of Representatives, Hon . Benjamin Kalu came to the Senate for concurrence after the approvals from the House of Representatives.
The Deputy Leader of the Senate, Sen. Lola Ashiru in the absence of the Majority Leader presented the recommendations of the Lower Chamber for consideration and Concurrence .
The Bill for an Act to establish Federal College of Education, Bende in Abia State seeks to provide full-time courses, training in technology, applied sciences, commerce, social sciences, arts and humanities among others.
Kalu had in his lead debate stated that Bende has remained undivided since its creation in 1976, even though with the size of four local government areas as found in comparative federal constituencies.
“Despite its strategic location in Abia and sharing a border with Akwa Ibom, with a growing population and landmass, there is no tertiary institution in the Federal Constituency operated either by Federal or State Government. Bende deserves to have the presence of a tertiary institution to serve the education need of the teeming youthful population, especially now that the need for well-trained educationists has risen. This is accompanied by the need to fill the gaps created by both the consequences of brain drain and the lack of qualified educationists to provide quality training at all levels of education,” he said.
For the bill seeking the establishment of Federal University of Medical and Health Sciences, Bende, Abia State, he said when it becomes law, the university will be charged with the responsibility to, among other things, offer full-time training leading to the award of degrees in medical and health sciences.
Nneka Amaechi-Nnadi
South East Caucus of the Senate has appealed to President Bola Ahmed Tinubu to immorttalise late Professor Humphrey Nwosu considering his commitment to achieving a practical democracy for Nigerian.
The Senators visibly angered by the Senate’s rejection of the need to immortalise the late National Electoral umpire who stood for democracy through the turbulent 1993 elections stormed out of the Senate Chambers and spoke to the press .
The Chairman of the South East Caucus, Senator Enyinnaya Abaribe ( Abia South), as he did in plenary on Wednesday, presented a motion for immortalisation of Humphrey Nwosu by naming the national headquarters of the Independent National Electoral Commission ( INEC) , after him , for laying the foundation in 1993 and conducting the freest and fairest Presidential election in the country .
The late Professor Nwosu was the National Chairman of the National Electoral Commission ( NEC) , now known as Independent National Electoral Commission ( INEC) , who through option A4, conducted the June 12, 19993 presidential election , adjudged to be the freest and fairest in the country.
Abaribe in the motion co – sponsored by 15 other Senators , said late Humphrey Nwosu deserved to be immortalised like other heroes of the June 12 , 1993 presidential election .
He also urged the Federal Government to honour the late former electoral umpire with post humous national honours .
But Abaribe’s request , seconded by Senator Victor Umeh (Anambra Central) and supported by Senators from the South East including forner Senate Leader, Yahaya Abdullahi ( Kebbi North) , was roundly rejected by other Senators who said the deceased deserved no immortalization .
Specifically , Senator Adams Oshiomhole ( Edo North) , in his contribution to the debate said the motion to him, was nothing but an attempt to manipulate and rewrite history.
“ Professor Humphrey Nwosu as NEC Chairman in 1993, failed to deliver on the June 12 , 1993 Presidential Election for lack of Courage
“ He who is not ready to die for something , will die for nothing
“ If he was afraid of the gun from announcing the election results and winner in 1993 , he cannot be rewarded now , more so, when many Nigerians died for what he inadvertently created “, he said .
Nneka Amaechi -Nnadi
The Chief of Defence Staff (CDS), Gen. Christopher Musa, says the Nigerian Military is committed to facilitating sustainable food security in the country through the establishment of farms.
Musa said this in Abuja yesterday during the unveiling of the Defence Farm and Agro-Allied Products Logo.
He noted that the agricultural sector played crucial role in guaranteeing food security which was requisite for sustainable national security.
He said that the adverse impact of climate change, environmental degradation and conflict across some parts of the country had continuously threatened food security with dire consequences on national security.
According to him, to address this, the Defence Headquarters in May 2023, conceptualised the Defence Farm and Agro-Allied Products initiative.
“This is with the aim of keying into the federal government’s efforts at addressing food security challenges in the country.
“The initiative which aligns with the ‘People Centric’ policy thrust of my leadership concept is aimed at creating job opportunities and enhancing rural infrastructural development while significantly contributing to food security in the Country.
“Considering the extensive consultation, planning and preparation made by the committee thus far, I am optimistic that the Defence Farm and Agro-Allied Products initiative will have a positive transformative impact on host communities while enhancing national security.
“With similar initiatives replicated across the country, I envision a future characterised by modernised farming techniques in which the agricultural sector significantly contributes to economic growth and national development.”
The CDS enjoined all members of the Armed Forces and the general public to embrace the initiative and maximise its associated gains.
He expressed gratitude to President Bola Tinubu, for his sterling leadership and relentless pursuit of national peace, security and economic prosperity.
He also appreciated the efforts of members of the committee who worked assiduously to actualise the initiative.
Earlier, the Chairman, Defence Farms Committee,