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‘Borrowing to service what we have borrowed’ – Obasanjo goes critical about debt profile

He pointed out that Nigeria's current budget is not the country’s total earning, revealing that a lot of it is also borrowed

Former Nigerian president Olusegun Obasanjo, a regular critic of President Buhari’s led government made his opinion known to the government amid renewed borrowing plans.

He warned that the country would have to commit half of its foreign earnings to servicing its indebtedness, given that it’s external debt grew by 700 percent to N24.947 trillion ($81.2.74 billion), from $10.32 billion in just four years.

Obasanjo was a special guest of a “Why I am Alive” campaign celebration which was themed “The Nigerian Story” in Lagos on Friday.

The event was created by media personality and chief executive of Eureka Productions, Caroline Moore and moderated by Pastor Itua Ighodalo and is “designed to empower young Nigerians for the future by tapping into the key lessons from success stories of eminent personalities that have contributed to the social, economic and political growth of Nigeria.”

The former president further said: “I do not need the brain of any genius to conclude that those who use statistics to dig us deeper into debt are our enemies: statistics can be used to serve any purpose, and that is why Winston Churchill talked of lies, damn lies and statistics, meaning statistics can be made master of lies.”

He pointed out that Nigeria’s current budget is not the country’s total earning, revealing that a lot of it is also borrowed; out of which the country spends 25 percent to service these debts.

“Simply put, we are borrowing to service what we have borrowed and yet we are borrowing more,” the former military head of state and civilian ruler said.

He cautioned the government that situations like this leads to impending bankruptcy, insisting that “no entity can survive while devoting 50 percent of its revenue to debt servicing.”

Nigeria’s Growing Dept Concerns

The Nigerian government hopes to get approval from the National assembly for the aquisition of $29.96m loan which it says is meant for capital expenditure.

The 8th senate under the leadership of former Kwara state governor, Bukola Saraki had rejected a similar loan request presented to it. However with the current senate president, Ahmed Lawan, it is almost certain the Federal government would get the needed approval to acquire the loan.

Lawan had while reacting to accusations he is being rubber-stamped by the executive to assent to every requests brought to the legislature, defended that he wasn’t elected to oppose the executive arm.

As at June 2019, the Debt Management Office (DMO), an agency which advices the government on debts and loan aquisitions, had said Nigeria’s total debt profile is N25.7 trillion.

This it said totals the debts of the federal, states governments and the Federal Capital Territory (FCT), with the federal government responsible for 80 per cent of the debt.

The agency further noted that external borrowing accounted for about 32 per cent of the total debt, while 68 per cent was domestic.

Aside growing debts, the meteoric rise in poverty is another National issue for the Federal government. According to a 2018 report by the World Bank, almost half the population of the country it’s tagged ‘the poverty capital of the world’ is living below the international poverty line ($2 per day), with unemployment peaked at 23.1%.

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