CISLAC raises alarm over Nigeria’s debt profile

…Legislature responsible for the country’s debt problems

Amid devastating insecurity, soaring food prices, poverty and rising inflation, the Civil Society and Legislative Advocacy Center issued an alarm on Monday about the government’s indifference to the country’s crippling debt crisis.

Barely two decades after exiting debt from the Paris Club, Nigeria has plunged deeper into a debilitating debt trap as a result of the borrowing spree started by the country’s government, the center stressed.

Speaking to journalists about “the role of private creditors in Nigeria’s debt crisis and the human cost,” civil society executive director Auwal Ibrahim Musa Rafsanjani said, “In the context of Nigeria, about 90 percent of government revenue is dedicated to debt service at the expense of development projects.”

Concerned that little to no attention is being paid to the country’s debt crisis, CISLAC, in partnership with Christian Aid Nigeria, launched a one-year investigation to find a solution to the debt situation.

While claiming that private creditors in international finance have added a new dimension to the Nigerian debt crisis, the director expressed concern about the impact of the situation on the government’s budgetary strength and its ability to respond to socio-economic emergencies.

He reflected on the policy options to deal with the debt crisis and claimed that “Nigeria is already in another debt trap. Records from both national and international financial and debt institutions regarding Nigeria’s debt reveal a state in crisis.”

“According to the Debt Management Office, the total national debt of Nigeria was N42.84 trillion as of June 30, 2022.”

“It is instructive to recall that the cost of Nigeria’s debt service outweighs the revenue, with clear signs of economic danger ahead.

“There are implications for this rising debt stock in Nigeria with a total external debt of approximately $40 billion and a private credit composition of $15.9 billion representing 39.8 percent of the total external debt stock. Eurobonds take up the bulk of commercial loans with a total portfolio of $15.62 billion.”

The director criticized the lack of transparency in lending and borrowing and the inability to track funds, largely attributing the predicament to lawmakers’ carelessness in granting loan requests to the detriment of Nigerians whose interests they were chosen to protect .

“We are deeply concerned about the lack of strong oversight and attention by lawmakers in granting loan requests without reflecting the provisions of the Fiscal Responsibility Act, and the wider implications of the country’s economic condition.”

“The Nigerian legislators have a constitutional and legislative mandate to approve loan applications only on the basis of the public interest and should make this clause a condition of any approvals they may wish to give to the president’s requests for further loans.”

Rafsanjani revealed that CISLAC with the support of its partner, Christian Aid, is passionate about increasing the urgency with which governments are tackling the country’s debt crisis.

He said this solution included research dedicated to fully highlighting the Nigerian context and the extent of indebtedness to private creditors for policy options and deliberate efforts to end it.

“We have launched a research product aimed at revealing and challenging the role of private creditors in hindering people’s recovery to increase the urgency with which the international community must address the sovereign debt crisis.”

“This research has been commissioned by Christian Aid to fully highlight the Nigerian context and the extent of indebtedness to private creditors for policy options and deliberate efforts to end it.”

“It aims to contribute to an international financial architecture and macroeconomic environment that facilitates the observance of human rights and the taking of climate action in the care-centric economy.”

The Center urged all state and non-state actors to heed this call and minimize collective actions to nip this issue in the bud as we head for a fiscal cliff, in the interest of the growing population of poor Nigerians whose lives are affected by the crisis.”