The President of the African Development Bank, Akinwunmi Adesina, has asked the Muhammadu Buhari-led government to decisively resolve the nation’s debt challenges to trigger economic growth.
As of September, the Debt Management Office (DMO) recorded the country’s total public debt at N35.46trillion at the end of the second quarter of 2021.
According to the 2022 budget proposal of N16.39trillion, N3.61trillion has been earmarked to service debt for the year, representing 22 per cent of the total expenditure and 35.6 per cent of the total revenue.
Speaking at the Mid-Term Ministerial Performance Review retreat, in Abuja, Adesina expressed worry over the country’s source of revenue for debt servicing.
He, however, acknowledged that the debt-to-GDP ratio remained “moderate”, adding that the economic resurgence was possible when Nigeria removes “structural bottlenecks” that limit the revenue-earning potential of non-oil sectors.
Adesina said, “Nigeria must decisively tackle its debt challenges. The issue is not about the debt-to-GDP ratio, as Nigeria’s debt-to-GDP ratio at 35 per cent is actually still moderate. The big issue is how to service the debt and what that means for resources for domestic investments needed to spur faster economic growth.
“The debt service to revenue ratio for Nigeria is high at 73 per cent. Things will improve as oil prices recover, but the situation has revealed the vulnerability of Nigeria’s economy. To have an economic resurgence, we need to fix the structure of the economy and address some basic fundamentals.
“Nigeria’s challenge is revenue concentration, as the oil sector accounts for roughly 75 percent of export revenue while according to the statistics of the Central bank 50 percent of all government revenue.
“What is needed for sustained growth and economic resurgence is to remove the structural bottlenecks that limit the productivity and the revenue earning potential of the huge non-oil sectors.”