Nigeria has had substantial economic growth and progress over the last few decades, but it has also suffered an increasing debt burden, which has been a major concern for politicians and experts.
All over the world, governments borrow when their revenue streams are inadequate. Therefore, public debt is crucial in supporting government spending, particularly in cases where revenue increases and spending cuts are not possible.
Nigeria’s debt was estimated to be approximately $10.32 billion in 2015. This was a relatively low level of debt in comparison to other African countries at the time. However, over the next few years, Nigeria’s debt began to increase rapidly.
By the end of 2016, Nigeria’s debt had risen to $57.39 billion, an increase of over 450% from 2015. This increase was largely due to the decline in global oil prices, which had a significant impact on Nigeria’s economy, as oil exports are a major source of revenue for the country.
In order to address this growing debt burden, the Federal government implemented a number of measures aimed at reducing debt and improving fiscal sustainability.
The introduction of a debt management strategy was one of the key measures to reduce Nigeria’s reliance on foreign borrowing and increase domestic debt. The government also implemented a number of fiscal reforms, including the removal of fuel subsidies and the introduction of a more efficient tax system.
Despite these efforts, Nigeria’s debt continued to rise over the next few years.
By the end of 2019, Nigeria’s debt had reached $83.88 billion, an increase of more than 45% from 2016. As a result of declining revenues and high spending, the government continued to rely on borrowing to finance its budget deficit.
Speaking on today’s episode of ThisMorning, Int’l Finance and Economics Analyst, Mukhtar Mohammed said when you are subsidizing in any economy, you don’t subsidize for the poor alone because when you do that it means the rich will contine to enrich themselves as they will have a way of
increasing their goods and services.
He noted that if subsidy is being run in an economy, it would touch everybody.
Mr Muktar said a subsidy scheme that is affected by just one party does no one any good.
The rich according to him will always cut corners to ensure they benefit from the subsidy.
According to Mr Mohammed, we keep doing things the same way and expect a different result.
“You are looking at the Mass Transit but you’re only thinking of the civil servants.
“How many percentage of the civil servant do we have in
Nigeria. The informal sector has been killed already by this Administration through the naira denomination”.