Stephen Oyedemi: Nigeria’s Growing Debts Will Sabotage Future Prosperity

Over the last few years, Nigeria has consistently passed and implemented budgets with huge deficits. The recurrent expenditure component of the national budget increased from N316bn in 2010 to N4.232tn in 2017 with no substantial development to show for both the increase and all the associated debts.

According to the country’s Debt Management Office (DMO), the combined federal and state debt reached an all-time high of 19.6 trillion Naira (about 64.2 Billion dollars) as at the end of second quarter (Q2), on June 30, 2017; an increase of 20.5% over one year. Even though Nigeria doesn’t rank badly in terms of debt to GDP ratio, this is no reason to follow the unsustainable path of huge national debt acquisition.

According to a report by Punch, Nigeria’s total public debt increased by about N7.1tn between 2015 and 2017. The FG’s domestic debt increased by 40.71 per cent in this same period, while that of the states increased by 75.15 per cent.

When governments are able to entice and dissuade their citizens into believing that they (the government) should drive the economy, create jobs and provide all necessities from water and healthcare, to education and housing, the citizens will suffer for it in the long run.

History has shown that private enterprises are more efficient and prudent in the provision of human necessities than governments. The very fact that the Nigerian government is involved in many enterprises provide the fertile grounds for corruption. Most of these government-owned enterprises do not make any profit, but rather gulp mostly burrowed resources for no productive end. It is worrisome that the FG is seeking the permission of the senate to acquire additional $5.5bn loan to finance shortfalls in the 2017 budget at a time the country’s oil venture, NNPC is caught in a $25bn oil contracts scandal.

According to an observation by Catherine Pattillo, IMF Chief of Fiscal Policy at a monetary briefing in Washington on 14th October 2017, two thirds of all Nigeria’s tax revenue is presently applied to just servicing debt annually. The duty of our government should not be to pile up burdens for posterity under the disguise of providing social amenities that are hardly ever delivered.

The 17th century British philosopher, John Locke believed it was the desire for a stable and secure environment that led humans to create government, relinquishing some of their rights in order to retain other rights. This explains why government have obligations to its citizens. We can then say the primary duty of government is to secure its citizens. This means, logically that the citizens must also have an obligation to the government. This citizens’ obligation is often manifested in the form of taxes, fines, licences and so on without which governments will not be able to function. However, a question begs for answers; are government expenditures ever really justifiable?

Year on year, most governments run on ever increasing, big budgets which comes with their huge deficits in the name of growth. These deficits become the justification government officials put forward to propose increase in taxes and government borrowings. The Senate president, Bukola Saraki recently suggested a N10tn budget for 2018. This will definitely come with its huge deficits and long term burden.

It is important that we keep alive the conversation about how the government is directly and indirectly creating an unsustainable and difficult future for all of us. We should continually demand that the government’s role be limited to providing security and creating an enabling environment where every individual can flourish.

If Nigeria’s growing debt continues untamed, the citizens will lose more of their economic freedom, and in the future, we will have to pay higher taxes, pay more for permits, duties, licences and so on. All these will definitely translate to less prosperity for everyone.

* Stephen Oyedemi is a member of ASFL Executive Board and Director of Activism for West Africa. He is a graduate student at the University of Ibadan, Nigeria.