Debt Servicing Presents Grave Economic Challenge for Nigeria, CISLAC, Others Express Concern

The Civil Society Legislative Advocacy Centre (CISLAC) and the Tax Justice and Governance Platform have sounded the alarm, highlighting a critical economic challenge facing Nigeria. The concern is centered around a significant portion of the country's revenue being directed towards debt servicing.

Comrade Auwal Musa Rafsanjani, the Executive Director of CISLAC, emphasized that a staggering N8.25 trillion is allocated for debt servicing, with the president aiming for debt servicing to constitute 45% of the total income. He urged the Nigerian government to reduce its reliance on international and particularly private creditor borrowings.

Addressing reporters in Abuja on Friday during the "Addressing Nigeria’s Fiscal Challenges and Public Debt Management" event organized by CISLAC and Tax, Rafsanjani pointed out that borrowing accounts for approximately 60% of the annual debt servicing cost, with a focus on prioritizing concessional loans, as mandated by legal stipulations.

Rafsanjani stressed that the current economic scenario in Nigeria, characterized by dwindling government revenues and escalating public debt, requires immediate and strategic interventions. He revealed that as of December 2022, 80% of Nigeria's total revenue was dedicated to debt servicing.

"While the new government has commended itself for allocating more funding to social services in its 2024 budget, the reality is that the country is set to spend six times more on servicing debts than on building new schools and hospitals in 2024. The pattern of bloated recurrent spending, new borrowings, and unsustainable debt servicing costs persists in its N28 trillion 2024 budget," he added.

Rafsanjani also highlighted the compounding challenges arising from the government's persistent reliance on borrowing and the substantial loss of revenue through tax expenditures.

Juliet Ukanwosu, the Executive Director of Extractive 360, emphasized the need for the Ministry of Finance, Budget, and National Planning, along with related agencies, to enhance revenue generation by expanding the tax net, improving tax compliance, and revising tax incentives. Ukanwosu proposed exploring revenue streams such as carbon taxes, aligning with progressive taxation principles, to further augment government income.

Furthermore, Mr. Harry Udeh, the Executive Director of Support Training Entrepreneurship Programme, emphasized that principles of transparency and accountability should guide the administration of tax expenditure. Udeh stated that the tax justice platform called for annual budgets to be accompanied by a tax expenditure statement detailing the aforementioned analysis.