The Nigerian government under President Muhammadu Buhari’s administration, has been riddled with financial irresponsibility. This is evident in the dramatic increase of public debt in the country which has grown three times more than the aggregate number recorded by the preceding three administrations.
After successfully getting a write-off by the London and Paris clubs of international creditors, the Obasanjo government was left with $2.11 billion in foreign debt in 2007.
The Yar’adua-/Jonathan administration added $1.39 billion to the amount, while the Jonathan administration added $3.8 billion, bringing the country’s total foreign debt to $7.3 billion at the end of that term in 2015.
The Nigerian government external debt has grown to $28.57 billion by December 2020 with the $21.27 increase coming from Buhari’s administration. This shows the level of financial irresponsibility prevalent in the administration., The current level of debt in Nigeria is three times the total amount accumulated by previous governments since 1999.
Here are five ways the Nigerian government has been financially irresponsible.
Debt has become the government’s default solution for filling funding gaps. The executives have not been able to repay their debts and their constant abuse of funds, which has raised major concerns about debt in Nigeria.
Nigeria’s overall debt stock increased from N32.9 trillion in December 2020 to N39.6 trillion in November 2021. During the presentation of the approved budget for 2022, Mrs Zainab Ahmed, Minister of Finance, Budget and National Planning revealed that the government borrowed N6.7 trillion between January and November 2021.
According to the Senate President, Ahmed Lawan, funding in the 2022 budget will be based on massive borrowing. This traps the country between the devil and the deep blue sea.
Despite receiving a greater quota from the oil cartel, production issues have put the country on the verge of bankruptcy, with production averaging 1.3 million barrels per day. Between January and November 2021, the country barely collected N970.3 billion, despite a predicted oil revenue of N 2.01 trillion in the 2021 budget.
Nigeria’s current budget deficit is N7.05 trillion, with a greater figure predicted by the end of the fiscal year 2021. In 2021, the government aimed for a budget deficit of N5.6 trillion.
The government expects to run a deficit of N6.4 trillion in the fiscal year 2022, despite concerns regarding income production.
The Nigerian government is considering a variety of tax reforms to boost revenues. However, there are concerns that no amount of tax revenue will be enough to cover the level of financial irresponsibility by the executives if the cost of governance is not addressed, even as debts increase, while the Federal Government continues to explore new means of obtaining money through increased tax collections.
Size of Government
Dr Muda Yusuf, an economist and the CEO of the Centre for the Promotion of Private Enterprise (CPPE), said it has become imperative to reduce the size of government and the expense of governance, and that fiscal sustainability is determined by both cost and revenue.
“It is important to ensure that the debt is used strictly to fund capital projects, especially infrastructure projects, that would strengthen the productive capacity of the economy. This is the position of the Fiscal Responsibility Act. Additionally, emphasis should be on concessionary financing, as opposed to commercial debts, which are typically very costly.”
According to him, what is required is political resolve to cut spending and implement reforms that would shrink the size of government, lower governance costs, and relieve the government’s financial load.