Former President Olusegun Obasanjo has raised considerable concerns about Nigeria's escalating debt profile, describing it as a substantial burden for both current and future generations.
Speaking during a Zoom interactive program titled "Boiling Point Arena" on December 9, 2024, Obasanjo highlighted the alarming increase in Nigeria's national debt, which surged by N12.6 trillion in just three months, reaching N134.3 trillion ($91.3 billion) by the end of the second quarter of 2024. This represents a 10.35% increase from the N121.7 trillion recorded in the first quarter of the year.
Reflecting on his tenure, Obasanjo recalled his efforts to secure debt forgiveness for Nigeria before leaving office, emphasizing that the current debt situation poses a huge challenge for both present and future generations. Despite these concerns, he expressed optimism about Nigeria's future, advocating for transformative leadership and a robust fight against corruption to improve the nation's trajectory.
Obasanjo cited South Korea and Singapore as exemplary models of progress rooted in merit-based and integrity-driven leadership. He noted, "The best way to fight corruption is from the top. In South Korea, their leaders make appointments based on merit, and that has become the country’s legacy."
He further elaborated on his experience with Lee Kuan Yew, Singapore's former Prime Minister, who emphasized leadership grounded in trust and integrity. "Leadership must be about service, not self-enrichment," Obasanjo stated.
He criticized those who view leadership as a means to personal gain, adding that corruption in government could only be eradicated by creating a critical mass of individuals committed to refusing illicit gains. "The fight against corruption must be consistent. It’s not a one-regime affair. It must be a daily commitment. If one administration lets its guard down, corruption spreads like a hydra-headed monster," he warned.
Obasanjo also stressed the need for constitutional amendments to address Nigeria's systemic challenges, stating that sustainable development and national integrity hinge on transparency, accountability, and divine purpose. "National progress is only achievable through consistency in action, leadership built on accountability, and the collective effort of leaders and citizens committed to a shared vision for the nation," he said.
The former president's remarks come amid growing concerns over Nigeria's debt-to-GDP ratio, which has been exacerbated by various factors such as government spending, revenue, economic growth, inflation, exchange rates, and interest rates. The national debt has increased over time, raising questions about its sustainability and solvency.
In addition to domestic challenges, Nigeria's indebtedness to international bodies has also grown. As of September 2024, Nigeria's debt to the World Bank's International Development Association (IDA) had risen to $17.1 billion, marking an increase of $600 million in just three months. This highlights the broader issue of external borrowing and its implications for the Nigerian economy.
The impact of Nigeria's debt on economic growth is a pressing concern. An increase in public debt can decrease the volume of net savings at the national level, leading to higher interest rates, reduced investment, and a slowdown in the growth of capital stock. Public debt can also crowd out private investment and threaten economic growth through higher long-term interest rates, higher inflation, and higher future distortionary taxation.
Moreover, the extensive use of domestic borrowing can have severe repercussions on the economy, including economic destabilization due to stringent conditions imposed by lenders, increased costs of financing government programs and projects, reckless spending that triggers inflation, and what some describe as "economic slavery."
Obasanjo's call for transformative leadership and a robust fight against corruption is echoed by many experts who believe that addressing Nigeria's debt crisis requires a comprehensive approach. This includes implementing effective debt management strategies, promoting fiscal discipline, enhancing revenue generation, and fostering economic diversification.
The Debt Management Office (DMO) Nigeria plays a crucial role in coordinating the management of the country's debt. Established to centrally manage Nigeria's debt, the DMO is responsible for developing and implementing strategies to ensure debt sustainability and support economic growth. However, achieving these goals requires collaboration between government agencies, policymakers, and stakeholders to address the root causes of the debt crisis and implement long-term solutions.
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