Obasanjo Faults N88tn Debt Burden, Says Relief Mismanaged
Former President Olusegun Obasanjo says Nigeria and other African countries may find it difficult to secure debt relief considering their large debt profiles.
Obasanjo also indicated that the debt relief secured by Nigeria from the Paris Club during his tenure was allegedly mismanaged successive administrations, a situation that has plunged the country into huge and undeserved debt.
Nigeria’s public debt was N87.91tn as September, 2023, according to the Debt Management Office.
As a result, he noted that it might be impossible for the next generations of Africans to enjoy debt relief again considering the mismanagement on the continent.
In 2003, Obasanjo secured a debt relief for Nigeria. In October 2005, Nigeria and the Paris Club announced a final agreement for debt relief worth $18bn and an overall reduction of Nigeria’s debt stock by $30bn. The deal was completed on April 21, 2006, when Nigeria made its final payment, and its books were cleared of any Paris Club debt.
The former President, according to a statement on Wednesday by his Special Assistant on Media, Kehinde Akinyemi, disclosed this during an event with the 2023 awardees of the Future Africa Leaders Foundation, an initiative of Pastor Chris Oyakhilome.
Obasanjo was quoted to have said, “With the level of mismanagement of the previous debts written off for the country, it will be almost impossible for any administration to get similar gesture in the continent.”
Obasanjo described debt as a trap that no individual or country should fall into. While noting that leadership was the number one problem facing the continent, the former president added, “The coming generations will have no choice but to pay the current debt being incurred by different countries in the continent.”
Commending Oyakhilome for his effort in building leaders, he said, “A leader should be able to set good examples, be bold and courageous when making decisions, accepting mistakes and learning from them as well as having a realistic dream.”
In a related development, the former president stated that the country’s socio-economic situation could be better in four years or thereabouts with prayers and thanksgiving.
He expressed this hope at the Christian Association of Nigeria Ogun State’s 5th Thanksgiving service of his conferment as the Asiwaju Onigbagbo, Ogun State, held at the Olusegun Obasanjo Presidential Library, Abeokuta on Tuesday.
The former President was quoted to have said, “Think about it. If you have breathed the free air of God, you should have cause to thank God. So, things are bad, they may be good in a space of what, four years? and who knows for Nigeria, things that are bad today, maybe good tomorrow.
“That is our prayer and that is why we must never stop thanking God. In all situations, give thanks to God.”
According to the Debt Management Office, Nigeria’s total public debt rose to N87.91tn as of the end of the third quarter of 2023. Based on the data, total external debt stood at N31.98tn and domestic debt amounted to N55.93tn as of the period being reported.
Total domestic Federal Government debt stood at N50.19tn and states and the FCT was N5.74tn.
Commenting on the total debt, DMO said, “The servicing of the debts in addition to other debts, are clear demonstrations of the FGN’s commitment to honouring its debt obligations.”
In its Report of the Annual National Market Access Country Debt Sustainability Analysis, DMO noted that the country’s debt stock is within sustainable limits at 37.1 per cent (at the time) but is approaching a point where it has little space for borrowing.
It said, “The country’s debt stock remains sustainable under these criteria, but the borrowing space has been reduced when compared to Nigeria’s self-imposed debt limit of 40 percent set in the MTDS, 2020-2023.”
It however noted, “The projected FGN Debt Service-to-Revenue ratio at 73.5 per cent for 2023 is high and a threat to debt sustainability.
“It means that the revenue profile cannot support higher levels of borrowing. Attaining a sustainable FGN Debt Service-to-Revenue ratio would require an increase of FGN Revenue from N10.49tn projected in the 2023 Budget to about N15.5tn.”
Conscious of the dangers of continued borrowing, the Minister of Finance and the Coordinating Minister of the Economy, Wale Edun, recently stated that the Federal Government is committed to shifting focus towards revenue and away from borrowing.
At the signing of the 2024 budget, he said, “So, we’re relying less on borrowing and more on revenue, and I think you have to take the two together. I think we’re very optimistic about the improvements in revenue that will take place.”
He added, “We are bringing order to government borrowing, so ways and means is being eliminated by taking the funding that is required from the market, as opposed to from printing money by the Central Bank.”
