Nigeria’s president seeks approval for fresh external loans

Nigeria's President Muhammadu Buhari has submitted a request to parliament seeking approval for $4.17 billion and 710 million euros in fresh loans to fund projects outlined in the 2018-2021 borrowing plan. This move comes amidst a backdrop of growing concern over Nigeria's escalating debt service burden, which has ballooned to 11 trillion naira between 2015 and 2020. Eze Onyekpere, the Lead Director at the Centre for Social Justice, recently joined CNBC Africa to shed light on the fiscal challenges facing Nigeria and to provide insights on the implications of the new borrowing request. Onyekpere expressed skepticism over the need for additional borrowing, highlighting that Nigeria's debt has surged from 12 trillion to over 32 trillion naira during President Buhari's tenure. He emphasized the alarming disparity between debt servicing expenditure and capital expenditure, noting that the government is currently utilizing a staggering 97.7 percent of its revenue to service debts, leaving minimal resources for essential government functions. The situation raises significant concerns about the sustainability of Nigeria's debt levels and the fiscal health of the nation. Onyekpere underscored the importance of adhering to fiscal responsibility guidelines and cautioned against borrowing for recurrent expenditures such as salary payments, which could further strain the country's finances. He called for a reassessment of the borrowing strategy, advocating for a shift towards financing infrastructure projects through public-private partnerships and empowering government-owned enterprises to independently raise funds for their projects. Additionally, Onyekpere emphasized the need for stringent cost-benefit analysis and revenue-generating project selection to ensure responsible borrowing practices. The issue of corruption was also addressed, with Onyekpere urging the government to combat revenue leakage and review tax concessions to bolster revenue streams. In conclusion, Onyekpere's recommendations focused on promoting sustainable borrowing practices, enhancing transparency, and strengthening fiscal discipline to safeguard Nigeria's economic stability. As the government grapples with mounting debt obligations, the path forward will require prudent financial management and a concerted effort to address structural challenges within the fiscal framework.