Nigeria’s ballooning debt burden remains one of the major challenges the new government is facing. The Debt Management Office of Nigeria disclosed recently that Nigeria’s total public debt hit N87.38 trillion at the end of the second quarter of 2023. The figure represents 75. 29 per cent compared to N49.85 trillion recorded at the end of March this year. This is quite disturbing because most of Nigeria’s revenue is now being channelled to debt servicing obligations at the peril of basic social services in the country. This becomes even more worrisome when viewed against the backdrop that Nigeria remains the world poverty capital as designated by the World Poverty Clock report of 2023. It means debt will drive more Nigerians into extreme and multidimensional poverty if urgent and drastic steps are not taken by both the Nigerian Government and the International community.
Much more, owing to the significant debt burden, Nigeria lacks the fiscal capability to fulfil its commitments to achieve the Sustainable Development Goals (SDGs) and contribute to the attainment of the climate goals of the Paris Agreement. Instead of making accelerated progress, the country, like many others African countries, is regressing during what the United Nations has termed a “Decade of Action”.
Nigeria’s deepening debt crisis does not occur in isolation. High fiscal deficits in many African countries have made it difficult to build resilience and tackle the multiple shocks (i.e., Covid-19 pandemic, natural disasters and insecurity occasioned by terrorism and banditry). As at last year, eight African countries were in debt distress and thirteen at high risk of debt distress.
Against this backdrop, African leaders, who recently gathered at the Africa Climate Summit in Nairobi from 04-06 September, called for debt relief across the continent to allow countries to get on with responding to the climate and other development crisis.
Also, debt activists from around Africa, Asia, Latin America and around the world converged on Bogota, the Colombian capital from 20-21 September to review the growing debt crisis in the global south. This is premixed on the backdrop that the current debt context is dominated by a rising trend in its burden on the economies of southern countries, with an ever-growing list of countries defaulting or facing high debt risks with no concrete possibilities of resolution, in a vicious circle that prioritises debt servicing over other urgent needs such as social protection, health, education, and climate.
The asymmetries between North and South, and between creditors and debtors, occur within the framework of a financial architecture that favours the most developed countries and the groups that concentrate the greatest capital power in the world.
The costs of the crisis are unevenly distributed, with the heaviest burden bearing down on the population that is more exposed to economic, social and climate vulnerabilities.
AFRODAD and its partners had in Dakar, Senegal organised the third edition of African Forum on Debt and Development (AFCODD III) from 29 August – September 1 2023 with the theme; “Reimagine, Rethink, Reorganise and Remobilise Africa for a new World Order.” and I recall the remarks of the Executive Director of Trust Africa, Dr. Ebrima Sall at that event that “we need a new world order because this old world order is not working for Africa.”
For us to achieve a new world order of our dreams, we therefore need to reposition the most populous black nation in Africa and of the world at large, our dear country Nigeria to provide leadership to the rest of Africa. That is why the message of President Ahmed Bola Tinubu at the UNGAS is very timely and in the right direction. President Tinubu pointedly said “Nigeria shouldn’t be pitied; Africa shouldn’t be pitied. There should be a level playing ground, there should be some kind of mutually respectful relationship between Nigeria and the rest of the world.”
We seek to take a cursory look at the various debt management options available to Nigeria to bring its debt to sustainable levels and to achieve debt relief. Nigeria and other African countries need debt cancellation given that debt remains an instrument for rich developed countries of the North to dominate countries of the south.
At the peak of the Covid, Climate and Economic crisis in 2021, the Board of the International Monetary Fund approved the release of $650bn Special Drawing Rights (SDR) to help boost the liquidity of member countries. African countries received US$33.8 bn out of which Nigeria received $3.35bn as its share. There are concerns that the allocation of the 2021 SDR was insufficient to support post-covid economic recovery especially for low-income countries like Nigeria.
The conversation on (SDRs) in Africa remains a highly technical subject with little access to information available to policymakers and the public about how they work. In addition, parliamentary oversight has been noted to be weak from studies conducted by ANEEJ in Nigeria and Ghana. To enlighten the understanding of development stakeholders on this subject, ANEEJ will be rolling out various enlightenment activities in the days and weeks ahead. AFRODAD on its part has been conducting a series of webinars on SDRs across the continent. This conference will review the utilisation of SDRs in Nigeria and the current debates around SDR reallocation to countries in most need such as Nigeria without having to exacerbate the debt crisis.
