Nigeria Employers Consultative Association, NECA, in Lagos has raised the alarm that Nigeria’s debt profile could hit N77 trillion in June 2023, saying returning the economy to the path of sustainable growth demands that certain fundamentals must be gotten right.
The umbrella body for employers in the country warned that the government is overburdening the citizens and businesses with excessive taxation, urging the government to act fast before and arrest the economy from sliding into deeper challenges I n the face of dwindling revenue and myriads of economic challenges and with seeming confusion on how to address the challenges.
Speaking in Lagos, NECA’s Director-General, Adewale-Smatt Oyerinde, said among the fundamentals to halt the slide “are stable and highly predictable revenue streams, growth-focused monetary and fiscal policies, a secure and business-friendly environment and a legal, regulatory and legislative system that promotes equity, justice and enables enterprise competitiveness. These fundamentals are currently either lacking or highly compromised.
Nigeria’s growing debt profile has been an object of discourse and concerns for stakeholders in recent times.
Total debt stock stood at 7.50trillion naira in 2012 had grown to about 42.8trillion as of June 30, 2022.
The country’s public debt has been under scrutiny for rate of growth debt service to revenue ratio and how it is utilised.
Speaking on this ballooning debt Nigeria is currently dealing with, Fellow Chartered Accountant and Management Consultant, Lead Consultant and CEO 2612 Consulting and Professional services, Peter Adebayo, said it is frightening, worrisome and a cause for alarm.
He noted that Nigeria did not get to where it is with debts by accident but by choice.
He recalled previous administration and how debts profiles have been handled.
“President Obasanjo’s administration left behind a debt profile of 2.42trillion naira from about 3.55trillion naira he met when he assumed office in 1999.
Mr Adebayo said Obasanjo’s administration has been the best time ever for Nigeria in terms of debt management.
From Jonathan’s administration, after Ya’radua died, Nigeria’s debt profile rose to 12.6trillion naira which represents a 38% increment in 12 months.
“Between 2017 and 2018, debt profile moved from 21.73trillion to 23.39 trillion naira.
“From 2018 to 2019, debt profile rose from 23.39 trillion naira to 27.4 trillion, an increase of 4.01%. From 2019 to 2020, debt profile moved from 27.4 trillion to 39.23 trillion which represents a 5.52 trillion dollars increase.
“In 2021, Nigeria moved from 39.23 trillion to 39.56 trillion, a devastating experience.
“Last year, 2022, Nigeria’s debt profile which stood at 39.56 trillion in December rose to 46.25 trillion .
There have been projections that by May 2023, Nigeria’s debt profile will likely hit 77 trillion naira.
“This means there will be inflation by the end of May, which means we are sitting on a keg of gun powder waiting to explode.
Speaking further, Mr Adebayo said servicing of debt is a function of how much you have been able to secure by way of loan.
He added that an integral part of our national lives as a nation is our budgetary system.
According to him, Nigeria over the last ten years has consistently run a deficit financial system.
There are a lot of anomalies that have characterised Nigeria’s budgetary system. We cannot sustain expenditure profile any longer.
This according to Mr Adebayo is a reality we must be prepared to face.
Mr Adebayo said we should come to terms with the fact that we are in the wrong paths and start doing things differently as there is still hope for Nigeria.
“There is an urgent need for a reform and a complete overhaul of our budgetary control system and the budgetary architecture needs to be calibrated.”
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