When President-elect, Senator Bola Tinubu, takes the reins on May 29, 2023, he would buckle under the hefty yoke of over $103.11b (N46.25t) debt left behind by the President Muhammadu Buhari-led administration. Unlike Buhari who inherited a debt of approximately $10.32b in 2015, Tinubu will also contend with another N22.7t Ways and Means Advances from the Central Bank of Nigeria (CBN).

Indeed, the current total debts put at about N77t has negatively impacted the nation’s economy pushing majority of citizens into abject poverty, unemployment and poor standard of living.

Additionally, there is a very controversial $800 million loan recently obtained from the World Bank. It’s to be used as palliatives ahead of the now-suspended fuel subsidy removal.

Data from the Debt Management Office (DMO) shows that Nigeria’s indebtedness to China has grown by 209 per cent in the last eight years, just as the DMO confirmed that the country’s total borrowing from the Asian giant climbed from $1.39b to $4.29b between June 2015, a month after the Buhari administration took over and December 2022.

Chinese loans account for 84.73 per cent of the country’s total loans, with the remaining 15.27 per cent coming from France, Japan, India, and Germany, according to the data from DMO.

As of September 30, 2021, the DMO listed 15 projects funded with Chinese loans, which included the Nigerian Railway Modernisation Project (Lagos–Ibadan section), Nigeria Supply of Rolling Stocks, and the Depot Equipment for the Abuja Light Rail Project.

It was these projects that a recent report noted that the country is defaulting in servicing her loans.  According to the report, Nigeria has failed to fully service its debt to China, which has accumulated to the tune of N110.31b in the last two years.

The DMO, according to the report, said the debts were incurred following the completion of the Nigeria Railway Modernisation Project (Idu-Kaduna Section), the Nigeria Railway Modernisation Project (Lagos-Ibadan Section), and the Nigeria Abuja Light Rail Project.

A breakdown of the data showed that in 2021, Idu-Kaduna Section’s principal fee was $38.46m (N17.25b) while the interest earmarked is $9.5m (N4.26bn). The Lagos-Ibadan section’s principal was not noted, although its interest stood at $24.07m (N10.80b).

During the period, the Abuja Light Rail Project had its principal amount at $38.46m (N17.25b), while the interest rate accumulated to $11.45m (N5.14b).  As of 2022, the report continued, the principal on Idu-Kaduna Section was $38.46m (N17.25b), while the interest fee was $8.52m (N3.82b). The Lagos-Ibadan Section interest fee stood the highest at $28.06m (N12.59b) with the principal amount not indicated. The Abuja Light Rail Project’s principal was $38.46m (N17.25b), with accumulated interest charges of $10.48m (N4.70b).

But the DMO in a rebuttal, on its website urged the general public to ignore the publication describing it as false. That notwithstanding, experts believe that Nigeria has, in the last eight years, obtained more loans than ever in the country’s history.

Ostensibly, these loans were meant to bring about economic prosperity and ensure an improved standard of living for the citizens. But unfortunately, that has not been the case, as poverty has soared uncontrollably in the last few years despite the massive borrowing by the government.

The DMO also recently announced that Nigeria’s total public debt stock as of December 31, 2022, stands at N46.25t (about $103.11 billion). The DMO said in terms of composition, total domestic debt stock stood at N27.55t (61.42 billion dollars), while total external debt stock is N18.70t (41.69b dollars).

It also added that the issuance of promissory notes by the Federal Government to settle some liabilities also contributed to growth in the debt stock. The National Bureau of Statistics in November last year released a report that showed that 133 million Nigerians were plagued by multidimensional poverty as the country spends over 80 per cent of its revenue on debt servicing.

This development has left the country with little or nothing to provide social amenities that can bring about better living standards for the people.
Baring his mind to The Guardian, the Executive Director, the Civil Society Legislative Advocacy Centre (CISLAC), Auwal Ibrahim Musa (Rafsanjani), regretted that despite the huge debt that the Buhari administration would leave behind, there are no tangible projects and programmes that changed the lives of Nigerians positively and brought about development.

He said: “In all honesty, monies borrowed under the Buhari administration were not spent in a transparent and accountable manner. If you are talking about the development of the railway system, compare what we have here with what you have in more serious countries. Here, our railway system is still analogue.

“Officials of this government are just desperate to borrow money and squander it. That is how this government within the last two months has awarded over N2t worth of contracts. These are contracts that they did not award in the last eight years, but they are doing it just one month after their leaving office. So, awarding those contracts is just to collect the money and abandon the projects. That is corruption and waste of public funds.”

Short of describing the government’s borrowing pattern as reckless, some stakeholders insist that if the borrowings had been to develop infrastructure, it would have made sense, against borrowing to pay salaries, or to disburse to the people in the name of palliatives, or poverty alleviation without any effect.

For instance, the Executive Director of the African Centre for Leadership, Strategy, and Development (Centre LSD), Mr. Monday Osasah, at a recent function described the nation’s rising debt as worrisome.According to him: “The burgeoning trend of our debt is worrisome especially when over 60 per cent of our meagre revenue is now being used for debt servicing, rather than for growing and developing our infrastructure.’’He, therefore, tasked the incoming government to pursue revenue generation aggressively to tackle the country’s debt burden.

At a one-day Leadership and Development Policy Dialogue Series (LDPDS) with the theme: “Nigerian Debt Sustainability Threat: Issues, implications, Lessons, and Solutions for the Next Administration,” Osasah said that Nigeria has to be deliberate with revenue generation to harness a balanced economy because current revenue does not match the high debt servicing burden.

A Fiscal Policy Partner and Africa Tax Leader at PricewaterhouseCoopers (PwC), Mr. Taiwo Oyedele, in his submission, said that one of the factors contributing to rising debt is the inefficiency of government spending and questionable priorities.

“Rather than prioritise basic infrastructure and human capital development, we often incur expenses on white elephant projects, and even when the projects are desirable, the costs are often inflated and completion time unduly protracted leading to cost escalation and lower public value,” he said. He advised the government to harmonise taxes and revenue agencies to address revenue leakages while leveraging data for tax intelligence to widen the tax net.

The National Coordinator, the Human Rights Writers Association of Nigeria (HURIWA), Comrade Emmanuel Onwubiko, while acknowledging that loans taken by the government were approved by the National Assembly, he flayed the Ninth National Assembly for allegedly being a rubber stamp.

According to him: “Apart from the Second Niger Bridge, let them show us other projects that they executed with all the money that they borrowed.”  He advised the incoming government to first of all tackle insecurity as that is the only way that investors, both foreign and domestic could invest in the country. He also called for the strengthening of anti-graft agencies so that they can effectively wage war against corruption.

“Borrowing is not wrong,” Professor Jonathan Aremu, an economist admits, “but it becomes wrong when the reason for the borrowing is not productive. So, the question now is to what extent has the borrowing been productive? Most of the time we borrow for consumption, not for investment. Can you imagine government borrowing money to pay salaries or to share it with people as palliative?

“How will this money that it is disbursing make the beneficiaries more productive in the economy? Will it not increase the national debt? If you cannot determine the level of productivity it will bring to the economy, or the welfare implications, then there is a question mark there,” he said.

On his part, the Director of, Institute of Fiscal Studies (IFS), Godwin Ighedosa, said that although the country’s Nigeria’s debt ratio to the Gross Domestic Product (GDP) is still low when compared to what obtains in other climes, “we must ask ourselves in what context is the country borrowing these loans in the first instance? Does the country have the capacity to repay the debts?

Ighedosa continued: “Has the government made judicious use of the money borrowed? What did we spend all the monies on? Did we spend them to generate activities that will benefit the people?

“The current debts implications are numerous more so as the debts may continue to limit our fiscal space for effective public sector service delivery. Worse still, the government will continue to have a shortage of funds to inject to various sectors of the economy if it continues to spend her lean revenues to service debts,” he said.

He noted: “If we are not careful, some of our creditors, such as our financial creditors/institutions may start calling for repayments of the loans at very tight schedules. This may force Nigeria’s bonds to be down-graded in the international and capital market, this might cost Nigeria more to borrow.”

Ighedosa, however, suggested that government can go for debt rescheduling while making sure that funds borrowed are properly accounted for, and properly utilised. A professor of agriculture economics at the University of Calabar, Omo-Ogun Ajayi, who lamented that it is worrisome to see Nigeria deploy her lean revenues to service debts in an unsustainable and risky manner, added that “already, the cost of debt servicing is over and above the government’s retained revenue.

He suggested: “Let’s review our debts and find a way around servicing them sustainably. Examples abound in the way Venezuela, Zimbabwe, Angola, and many other debtor countries navigated their way around. So, we should make Nigeria more circumspect in dealing with debts.”

He cautioned the incoming administration to ensure that it cuts down on the cost of governance, holds the NNPC Limited accountable for fuel subsidies, and remittances, and guarantees security of life and property. Nigeria can do without further borrowing. We must restructure the current debt servicing to beat the debt trap of the borrower. Nigeria must be great, not a slave to the lender.”

Prof. Sheriffdeen Tella, while also commenting on the nation’s debt profile said: “We warned the government and suggested what to be done, but it seems to be profiteering at the expense of the nation.”

He suggested that the first thing the new administration should do is to seek to restructure the loans, including asking for a moratorium on those that will be due for repayment shortly.

“Moratorium means suspending payments of such loans in the interim. Once that is granted, we will not be able to borrow for some time, and we don’t need the loans. It will give us breathing space on loan repayments. Nigerian professionals, including financial experts, are ready to help out by offering advice and the government needs to tap into this.”