Former President Olusegun Obasanjo has said Nigeria risks impending bankruptcy over the continuous accumulation of debt by the government.
Obasanjo said things might get worse economically as Nigeria, as well as other African countries, kept piling up debts, saying he was worried for the future generations who would have to pay such loans.
The ex-President said this on Friday in Lagos as a keynote speaker at the “Why I am Alive” campaign.
The initiative, tagged ‘The Nigerian Story,’ had the founder of Trinity House, Pastor Ituah Ighodalo, as chairman of the Board of Advisors.
Presenting his speech, titled ‘Nigeria: The challenges of debt and sustenance of democracy,’ a copy of which was made available to our correspondent, Obasanjo said as at 2015, Nigeria’s total external debt was about $10.32bn.
By March 2019, the former President said the country’s external debt had increased to $81.274bn, noting that to service this current level of indebtedness, Nigeria must commit at least 50 per cent of its foreign earnings.
“Such a situation talks about an impending bankruptcy. No entity can survive while devoting 50% of its revenue to debt servicing,” Obasanjo said.
“It has recently been pointed out that in 2018 that total debt servicing took over 60 per cent of government revenue. What’s more, we are not doing enough to address the fundamental, deep-seated and structural challenges that inhibit the expansion of our economy,” the ex-President added.
Obasanjo, who served twice as a democratic President of Nigeria between 1999 and 2007, said to worsen matters, the present government was currently seeking to add another $29.6bn loan to “our already overburdened debt portfolio.”
The President, Major General Muhammadu Buhari (retd), had recently submitted a loan request of $29.6bn to the National Assembly for infrastructural development.
Although several economic experts and Nigerians have knocked Buhari for the latest loan request, there are indications that the loan proposal will be approved by the legislature.
The Senate President, Dr Ahmad Lawan, and the Speaker of the House of Representatives, Mr Femi Gbajabiamila, have repeatedly said anything Buhari does is in the best interest of the country. Noteworthy, the Senate has already begun moves to accede to the request.
However, Obasanjo said although debt could be used to finance growth and/or development, he said it was a “double-edged sword” that must be wielded with a high degree of discipline, responsibility and foresight.