Nigeria nears debt trap as Buhari fails to plug wastes, explore alternative funding options

NIGERIA’S President Muhammadu Buhari has accumulated huge debts in the last six years, but he has failed to plug wastes in several corners of his administration and is also reluctant to explore alternative funding options.

External debt has grown under his administration from $7.35 billion in 2015 to $23.57 billion, according to the Debt Management Office’s data analysed by The ICIR.

Nigeria’s public debt hit N33 trillion in March 2021, but Buhari is seeking new $4 billion and €710 million loans from lenders.

The amounts are expected to be approved by the Senate.

With the new loans, the country’s debt has overshot N35 trillion.

Analysts say Nigeria can do without these debts, asking the president to plug wastages in his government’s Ministries, Departments and Agencies (MDAs) and explore other funding options to avoid plunging the nation into a debt trap – a situation in which debts are hard to repay.


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Analysts are also worried that debt service-to-revenue was 98 per cent between January and May 2021, making further borrowing unsustainable.

A classic example of wastes in Nigeria is money pumped into the country’s three refineries.

In Warri, Port Harcourt and Kaduna refineries, N168.178 billion was lost in 2019, and only N1.681 billion was realised as revenue, according to The ICIR’s calculations of the companies’ financial statements.

In 2020, the moribund refineries wasted N153.084 billion, making only N5.216 billion as revenue.

In both years, Nigeria, the world’s poverty capital, lost N321.262 billion to refineries, an amount that can pay the minimum wage of 1,070 Nigerians in September 2021.

Apart from the refineries, the Nigerian National Petroleum Corporation (NNPC) pays N120 billion in opaque and corrupt subsidy regime monthly, amounting to nearly N1.5 trillion annually.

In sale of public assets, wastes have also been observed. Currently, the legislators are querrying the Presidential Implementation Committee for selling Radio Nigeria building for N100 million when its market rate is estimated at between N1 billion to N1.5 billion.

On Wednesday, there was also a discussion in the Senate regarding Nigeria’s N2 trillion loss to import waivers annually.

Hence rather than pay import duties, several companies enjoy waivers for bringing certain products into the country, the Senate said.

Political Economist Pat Utomi said that Buhari should take a cue from the military days of Olusegun Obasanjo, who had to cut wastes and spending while in government.

Speaking on Arise News’  ‘Morning Show’ on Wednesday, Utomi explained that after cutting wastes and reckless spending, Obasanjo brought down the cost of governance and stirred efficiency in governance.

He gave an analogy with a debt-ridden family, saying that a family who lived in debt would not be buying exotic cars as Nigeria would, saying that it was criminal to use borrowed funds to fund the security votes of governors and politicians.

Analysts are also asking the president to explore alternative funding options, saying some things could be done to fund projects in Africa’s most populous nation.

Economist and Chief Executive Officer of Economic Associates Ayo Teriba told The ICIR that Nigeria should enlist the government’s corporate assets into the equity market.

Director-General of the Lagos Chamber of Commerce and Industry Chinyere Almona said Nigeria’s president should turn the country’s assets into revenue generators.

She said physical assets such as idle or under-utilised properties could be repurposed and redeveloped for commercialisation to generate revenue, saying that  “corporate assets should be securitised via public share issuance to raise equities.”

“There is a need to replace existing debt stocks with asset-linked debt to ease the debt
servicing burden, attract greenfield FDI into publicly-listed state-owned companies, and generate new revenue streams from commercialised real estate portfolios,” she said in an emailed statement to The ICIR, urging the president to determine the value of the country’s assets.

On his part, Partner & Chief Economist, PwC Nigeria Andrew S. Nevin said Nigeria had $900 billion worth of dead assets in residential, real estate and agriculture land that should be revitalised and converted into liquid assets.

Chief Executive Officer of Cowry Asset Management Plc Johnson Chukwu told The ICIR that the government must grow the GDP beyond what it was currently and hands off building infrastructure.

“We need to find a model that accommodates private sector and multilateral funds into infrastructural funding,” Chukwu said.

“Like the current N15 trillion Infraco funding, the government should find a legal and commercial framework to make it commercially viable.”

He also noted that the long-term solution of seeking alternatives to debt was a productive economy.

“Improving ease of doing business, global competitiveness and learning from China, Vietnam and Brazil in tapping into private equity funding for wealth creation is critically important.”



    Associate Consultant for the British Department for International Development Celestine Okeke said the country must develop a framework that would attract private capital to infrastructure.

    Market and Projects Analyst Ike Ibeabuchi said the long-term option was to develop each region according to its strength.

    “The best way to develop alternative revenue is to grow the strength of each region. Develop Aba to attract foreign capital and tax revenue from leather. Grow cocoa and rubber in the South-West and South-South by boosting mechanised agriculture to attract chocolates and tyres manufacturers.

    “Many countries today do not have oil or commodities but grew their own strengths, and later attracted capital and revenue. Once you have these investors, you will have jobs for your people,  revenue from taxes, dollars from export and a strong economy that does not go cap-in-hand asking for money.”

    Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.

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