Nigeria has a new Minister of Finance, Olusegun Aganga a managing director at Goldman Sachs branch in Britain. Aganga, a free marketer has a substantial experience in private industry together with his academic brilliance, he can efficiently manage and oversee Nigeria’s financial house. The minister of finance must be ready and keen to make sure that Nigeria will not fall into the trap of large external debt and higher inflation. This is important because Nigeria should not be throw back to the gloomy days of large foreign debt. Nigeria was overwhelm with the increasing interest rates and arrears accumulated by the servicing of the foreign debt.
Nigeria’s external debt is currently over $5 billion dollars. Many Nigerians will be surprised to hear that Nigeria is still an indebted nation after she exited from the debt of Paris Club and London Club in 2006. Nigeria finally settled her debt of $36 billion but most Nigerians might think that Nigeria is forever free of external debt. But a thriving nation is likely to be in debt provided that the available credits are invested appropriately for creation of further wealth and improving the well being of the nation. Nigeria should try to establish criteria and benchmark for borrowing, at least to make sure that her debt does not exceed 2-3% of her GDP.
In December of 2009, the former minister of finance, Mansur Muktar highlighted the state of Nigeria’s debt: “Nigeria’s exit from the Paris Club debt in 2005/2006, the external debt stock dropped dramatically and substantially from $35.94 billion to $3.54 as at the end of year 2006 but rose to $3.947 billion at the end of December 2009, including the $3.686 billion obtained from multilateral organizations namely World Bank, African Development Fund (ADF), International Development Association (IDA) and African Development Bank (AfDB) which has 40 year repayment period and 10 year moratorium period.” It is essential that this is conveyed to average Nigerian taxpayers so that they become watchdogs to the finance of their country.
Also making the clarion call of country’s debt is Dr. Ngozi Okonjo-Iweala, the managing director of World Bank and the former finance minister of Nigeria. Okonjo-Iweala was among the principal leaders that facilitated and guided the country’s successful exit from both Paris and Club of Creditors in 2006. Recently in a lecture at University of Calabar she said, “In April 2006, Nigeria paid off the last installment due on its debt settlement agreement with the Paris Club, thereby erasing 30 billion dollars in external debt and reducing government external debt to 3.5 billion dollars.”
Therefore the new minister of finance, Olusegun Aganga should deliberately and carefully monitor the country’s debt. The minister must closely work with Sanusi’s Central Bank of Nigeria to tame inflation which can easily frustrate economic growth and further weaken the depreciating naira. Nigeria is issuing bonds to raise money for infrastructures development. Aganga must get involve and make sure that money raised will not be wasted and the burden of the debt passed down to powerless Nigerians.