Debt is good. That is a phrase that is popular in business but the caveat is that debt has to be managed properly. The problem is in Nigeria. We have never used debt properly. We have always squandered debt and use it to fuel unsubstantiated and unsustainable consumption and when that happens a nation suffers. I have read extensively Yanis Varoufakis titles, And the Weak Suffer What They Must. The book tells the story of the Greek debt crisis and how Greece reached a debt ceiling so high it couldn’t sustain. Greece did all the wrong things by spending about six billion on an Olympics and incurring other debts that culminated into the massive problem it faced.
Nigeria is making the same mistake and it is time to stop the madness. In 2015 the debt was $7.3 billion and now it’s about $33 billion. Nigeria has constantly borrowed but the projects on ground and the GDP growth are not commensurate to the debts taken. They have been allegations of corruption and Nigeria is in dire straits. Don’t get me wrong. We need infrastructural development but it must be done with financial wisdom and that I must say is lacking. It is sad that we have gone back to where we were in 2004. In 2004 Nigeria had a debt burden of over $30 billion and it had spent over $35billion in 20 years to service the debt. In fact President Obasanjo did say he was ready to resign if Nigeria’s debt will be forgiven. Finally we got debt forgiveness.
It is a shame that we have returned to our bad ways. In 2004 we spent 1.4 billion to service debts which was the size of budgetary allocations to the health and education sector. This is to show the harmful effect of debt service. The money that ought to be spent on the development of crucial sectors are spent on servicing debt. The sad reality is that Nigeria has started the same macabre dance.
It has spent about 11 trillion in servicing debt in five years. Spending over N11 trillion on debt servicing is scary as that is a full year budget for Nigeria. Debt is bad as it steals the development of a nation. Just imagine the $30billion we spent cumulatively leading up to 2004 and the over 11 trillion spent now in servicing debt is spent on health and social development. I think it is time to be more circumspect and frugal and start saving for the future. Norway had the same oil with us and they have saved trillions for generations yet unborn. Let’s think Nigeria.
Rufai Oseni, rufaioseni@gmail.com
