Nigeria’s Current Debt Level Unsustainable, It Must Be Restructured—Adebajo
By Dipo Olowookere
The chief executive of Creative Financial Group (CFG) Advisory, Mr Tilewa Adebajo, has described the current debt level of Nigeria as “unsustainable,” tasking the President-elect, Mr Bola Tinubu, to make efforts to increase the country’s revenue when he takes over next month because his biggest challenge would be the nation’s “debt profile.”
Mr Tinubu was announced as the winner of the presidential election conducted on Saturday, February 25, 2023, by the Independent National Electoral Commission (INEC).
He defeated Mr Atiku Abubakar of the Peoples Democratic Party (PDP) and Mr Peter Obi of the Labour Party (LP). The two opponents of the former Governor of Lagos are in court to challenge his victory.
But Mr Adebajo, while speaking on Arise TV’s breakfast programme, The Morning Show, which was monitored by Business Post on Wednesday, said Mr Tinubu has a lot of work to do when he assumes office on May 29.
Last month, the Debt Management Office (DMO) said Nigeria’s total public debt stock went up 17 per cent to N46.25 trillion or $103.11 billion as of December 2022 from N39.56 trillion or $95.77 billion in 2021.
Some days ago, the World Bank disclosed that Nigeria spent 96.3 per cent of the revenue it generated last year to service its debts, meaning for every N1 earned in the year, about 96 Kobo was used to service.
It is believed that if the N23 trillion loan the federal government took from the Central Bank of Nigeria (CBN) and the fresh debts incurred this year are added to the 2022 debt stock, it will reach over N77 trillion.
During the interview, Mr Adebajo said things got worse for Nigeria that funds are borrowed for recurrent expenditures, especially for salaries, warning that the government can no longer earn more to cut expenses.
He faulted the government’s argument that Nigeria’s debt to gross domestic product (GDP) ratio was still healthy for the country to take more loans, emphasising that the huge amount of the revenue used for debt servicing was worrying.
“There is no bank in Nigeria that will give you money when you’re using 96 per cent of your revenue to service debt.
“In our households, we cannot use 96 per cent of our revenues to service debt because we can’t continue to borrow to pay salaries over the last six years; it’s not sustainable.
“So, we need to restructure that debt internally, and I think debt restructuring is something that we can sit down, we can negotiate and put the structures in place,” he submitted, saying this should be the priority of the incoming administration.