NECA raises alarm over Nigeria’s debt profile

Nigeria Employers’ Consultative Association (NECA) has raised an alarm over the rising debt profile of the country, describing the position as worrisome.

The Director General of NECA, Mr. Timothy Olawale, made the position of NECA known in Lagos on Monday when reacting to the release of third quarter report of the Debt Management Office (DMO) and 2019 budget assumptions.

Olawale said: “Figures released by DMO showed that the Federal Government’s domestic debt profile rose to N15.814 trillion in September 2018 from N15.629 trillion in June 2018 (1.19 per cent increase).

‘’This figure becomes more worrisome when we look at the total public debt stock, comprising external and domestic debts of the FGN, the 36 states and the FCT hitting US$73.208 billion (N22.38 trillion) recorded in June 2018.

“This trend, which is very disturbing, could have a negative effect on the developmental capacity of Nigeria, despite government’s financial managers’ argument that the rate of increase is within a manageable limit.

‘’Financial experts at the International Monetary Fund, IMF, and the World Bank have, in fact, advised that the revenue-to-debt ratio is unsustainable and it portends a serious danger for the future generation.

“While the effect of the increasing debt may not be immediate in totality, it could be catastrophic in the long term with a chunk of revenue consumed by debt servicing to the detriment of infrastructural development.

‘’This, sadly, is the current reality as N2.140 trillion from the N8.8 trillion proposed 2019 budget, has been earmarked for debt servicing, representing about 25 per cent of the total budget allocation.”

On the impact of government’s excessive borrowing in the domestic market, Olawale said: “The size of government borrowing in the domestic financial market also continues to be a major source of concern as this has in no small measure, affected the chances of the real sector to access funding at a reasonable cost.”

Speaking on how government can find its way out of the debt predicament, the NECA DG said: “The federal and state governments, as a matter of urgency, must take deliberate steps aimed at cutting the cost of governance and recurrent expenditure.

“Government also needs to start paying serious attention to workable investment schemes, collaborating strongly with the private sector, which is the engine room for economic growth.

“Government has to recognize the important role of the private sector in building a robust economy, as oil revenue alone is not enough to place the country on the path of sustainable development. Government must, therefore, make commitment to facilitate a favourable environment with policies that will attract private investors.”