AN Economist has faulted Senate President Ahmad Lawan’s claim that Nigeria can only fund infrastructural projects through borrowing.
Lawan made the claim on Thursday while briefing State House correspondents after meeting with President Muhammadu Buhari.
Nigerians have been expressing concerns over the astronomical increase in the country’s public debt over the past three years.
According to the Debt Management Office (DMO), Nigeria’s total public debt as of December 31, 2020 was N32.915 trillion, representing a 20.13 per cent rise from N27.40 trillion in December 2019.
The increase in the country’s total debt stock was mainly due to a 40.82 per cent rise in external debt from N9.02 trillion in December 2019 to N12.71 trillion as of December 2020.
Defending the Senate’s approval of series of loan requests brought by the president, Lawan said Nigeria’s options are limited due to revenue challenges being faced by the country.
“Nigeria is not rich, given the circumstances we live in, given the challenges we have. Our resources are so low, our revenues are so low and therefore, the option of not doing anything, just to sit because we have no money and we shouldn’t go for infrastructure development, is not even an option worthy of consideration.
“You cannot keep the economy stagnant,” Lawan said.
He said the other option left for the country was to engage in the public-private partnership.
But he added that there was a need to first create an enabling environment to attract investors in the country due to the security challenges being faced across the nation.
“Not many investors would like to come to Nigeria. In fact, even those inside Nigeria may not like to invest properly in this sector of infrastructure development,” the Senate President noted.
Lawan also said the Senate would ensure that Nigeria borrows responsibly and that the funds are utilised prudently on self-sustaining projects.
However, an economist, Micheal Okeke, who spoke on Channels TV programme Sunrise Daily said the Senate President was wrong to have said Nigeria had no other option aside from borrowing.
Noting that Nigeria was facing serious debt servicing challenges, Okeke said if the current level of borrowing continues, it could get to a point where creditors would no longer want to lend money to the country.
“We have the challenge of how to service the ones we have borrowed so it becomes an unsustainable arrangement.
“We have volumes of debt and you are saying the only option is more borrowing with the one that you have already. I tend not to agree with that; we have options and the options are if the economy is diversified,” Okeke said.
When asked about Lawan’s stand on ‘responsible borrowing’, Okeke asked how the Senate President would monitor a loan that would be repaid for five to 10 years.
“We all know about the level of embezzlement here, mismanagement of public funds and other human factors and before you discover, the money has been mismanaged. It becomes something that has happened several years ago and the actors have disappeared,” he noted.
Okeke also argued that infrastructural development in every country was supposed to be a long term plan and should not be handled as an emergency that is to be executed through borrowings.
Speaking on other available options for the country aside from borrowing, he said Nigeria was richly endowed in terms of human resources and solid minerals, as well as oil and gas.
He advised the government to diversify the economy in order to generate revenue from other sources.