By Joseph Chibueze
The Chief Executive Officer of Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, has called on the Federal Government to scale down the cost of governance in the wake of Nigeria’s rising public debt and its negative consequences for the economy.
The country’s public debt profile is projected to hit N45 trillion by the end of 2022 with a plan by the Debt Management Office (DMO) to borrow an additional N6.39 trillion to finance the 2022 budget deficit.
Dr. Yusuf who spoke with in an interview with the Guardian newspaper said the rising debt profile raises serious sustainability concerns. He said: “When we take account of borrowings from the Central Bank of Nigeria (CBN) and the stock of AMCON debt, the debt profile would be over N50 trillion.”
Contrary to the government’s claim that the challenge is not debt but revenue, he said: “The truth is that debt becomes a problem if the revenue base is not strong enough to service it sustainably. It invariably becomes a debt problem. Government’s actual revenue can hardly cover recurrent budgets, which implies that the entire capital budget is being funded with loans. This is surely not sustainable. What is needed is the political will to cut expenditure and undertake reforms that could scale down the size of government; reduce governance cost and ease the fiscal burden.”
He also counselled that even if the government must borrow, it is important to ensure that the money is used strictly to fund capital projects, especially infrastructure, that would strengthen the productive capacity of the economy.
The CPPE boss said that emphasis should be on concessionary financing as opposed to commercial debts, which are typically very costly to maintain.
“The unitary character of the country is making it difficult to unlock the economic potential of the sub-nationals. It is perpetuating the culture of dependence on the Federal Government. It is necessary to scale down the size of government and cost of governance. Fiscal sustainability is driven by both cost and revenue. Therefore, managing the major drivers of cost and revenue is imperative. As far as possible, the government should push back in sectors or activity areas where the private sector can deliver desired outcomes. We should see more accessioning and privatization at all levels of government. This would allow for the infusion of more private capital into the infrastructure space,” he said.