The ONE Campaign has called on President Bola Tinubu to urgently implement fiscal reforms to tackle Nigeria’s rising debt and unlock resources for important sectors that will benefit millions of poor and vulnerable Nigerians.
In a statement by the anti-poverty organization, titled ‘Fiscal Reform in Nigeria: Navigating Nigeria’s Debt Burden Whilst Protecting Social Spending’, revealed Nigeria’s complex financial hurdles.
It stated that “excessive borrowing over the past decade has resulted in a threefold surge in the country’s public debt stock. Consequently, Nigeria faced a worrisome debt service-to-revenue ratio of 91 per cent as of 2021, marking a significant increase from 29 per cent in 2014.
“With projected external debt service reaching approximately $4 billion by 2025, up from $3 billion in 2023 and $2.5 billion in 2024, the country may encounter further challenges in debt repayment.”
According to the statement, Nigeria’s economy also suffers from insufficient revenue generation due to its heavy dependence on oil exports and failure to diversify, exposing the country to fluctuations in global oil prices and disruptions in local oil production.
“The government’s inability to enhance revenue generation has adversely affected investments in crucial sectors that could drive economic growth and yield positive outcomes, impeding progress in reducing extreme poverty and multidimensional poverty among its population.”
Nigeria country director at ONE Campaign, Stanley Achonu said, “as Nigeria grapples with rising debt and dwindling revenue, vulnerable citizens are disproportionately impacted due to a lack of government support in crucial areas that affect their well-being.”
Achonu stated that tackling these issues requires the government to take decisive actions that will ensure fiscal discipline and sustainable debt management and free up funds to invest in critical areas such as social protection, healthcare, agriculture, and education, among others, saying that the challenges are not insurmountable, but only if the leaders are willing to act quickly before it is too late.
The ONE Campaign recommended that the President Tinubu-led administration deploy both domestic and international solutions to surmount the debt and revenue challenges by increase debt sustainability by committing to use concessional sources for all debt, refinancing where possible to reduce the amount of service paid; increase debt transparency, particularly for terms agreed on collateralized debt, domestic subnational debt, and State Owned Enterprise (SOE) debt; and utilise innovations to refinance and reduce debt such as disaster clauses, debt swaps and other future opportunities to reduce debt and smooth payments.
Others, the Campaign said that the new government should free up resources for investment in social sectors by blocking leakages in public finance, including the haphazard use of tax incentives; prioritise government spending to maximise better outcomes that deliver on developmental goals; divert funds to be saved from the fuel subsidy removal to better-targeted programmes like infrastructural development and direct cash transfers to the most vulnerable; and working with the African Union to identify a common position/tax framework that Africa can champion in light of the current global debate on international tax rules.
ONE Campaign is a campaigning and advocacy organisation of over nine million people taking action to end extreme poverty and preventable disease, particularly in Africa.
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