Nigeria is sinking, Obasanjo raises alarm over impending bankruptcy

Former President, Olusegun Obasanjo

Chief Obasanjo reveals that, as at March 2019, Nigeria's external debt had risen to $81.274bn.

The former President, Chief Olusegun Obasanjo has condemned the rate at which the Federal Government of Nigeria continues to take loans for projects, stating that the country is sinking under the weight of debt.

He stated further that things might get worse for the country because the Nigeria needs 50% of its foreign earning to service the debts.

Obasanjo said he’s very disturbed for the future generation, who will inherit the loans.

The former president disclosed this on Friday, December 27, 2019, at an event in Lagos, where he presented a paper titled ‘Nigeria: The Challenges of Debt and Sustenance of Democracy.’

According to Obasanjo, Nigeria’s total external debt as at 2015 was about $10.32bn.

He added that by March 2019, the country’s external debt had risen to $81.274bn, adding that Nigeria needs at least 50 per cent of its foreign earnings to service such level of indebtedness.

“Such a situation talks about an impending bankruptcy. No entity can survive while devoting 50 per cent of its revenue to debt servicing”, Obasanjo warned.

Ex-President Olusegun Obasanjo says as at March 2019, Nigeria's external debt had increased to $81.274bn.  (Guardian)

“It has recently been pointed out that in 2018 that total debt servicing took over 60 per cent of government revenue. What’s more, we are not doing enough to address the fundamental, deep-seated and structural challenges that inhibit the expansion of our economy”.

The ex-president went on to criticize Nigeria’s political leaders, saying they have developed appetite for debt.

“Our political leaders have suddenly developed not just a taste for, but a voracious appetite for debt.

“As usual, most of such debts procured are hardly thought through.

“Predictably, ability to repay such debts is lacking.

“Unfortunately for us and unlike in the past, the new creditors are less tolerant of our limitations and inadequacies and are now demanding to manage institutions and agencies with a view to recouping their loans.”

Obasanjo, who served as a democratic President of Nigeria between 1999 and 2007, warned that “Using debt to finance growth and/or development is a double-edged sword that must be wielded with a high degree of discipline, responsibility and foresight.

“A well-calibrated debt for infrastructure and other developmental goals could be very positive. However, we do not need to speculate. We need to examine our historical experience.”

He, however, maintained that the Federal Government worsened the matter by seeking to add another $29.6bn loan to “our already overburdened debt portfolio.”

Recall that President Muhammadu Buhari recently submitted a loan request of $29.6bn to the National Assembly for infrastructural development.

Despite the criticism against the move by economic experts, there are indications that the Senate and the House of Representatives would approve Buhari’s loan proposal.

The Senate President, Dr Ahmad Lawan, and the Speaker of the House of Representatives, Mr Femi Gbajabiamila, have been accused of overseeing a rubber-stamp legislature for approving Buhari’s requests.
Credit: Pulse