The Chief Executive Officer of Financial Derivatives Limited, Mr. Bismarch Rewane, has declared that “Nigeria is moving from a debt sustainability path to a debt trap path.”Nigeria’s total public debt stood at N121.67 trillion in Q1’24, which is made up of N65.65 trillion and N56.02 trillion domestic and external borrowings respectively, comprising of N111.52 trillion federal government’s debt and sub-national government’s N10.15 trillion debts.

Rewane made this declaration in his July 2024 presentation at the LBS Breakfast titled “Death or Debt Trap? 21st Century Road to Economic Salvation,” where he stated that debt accumulation is not bad in itself but its utilisation would determine if it would become a trap.According to him, proper use of debt could lead to better infrastructure and enhanced public services like healthcare, education, etc., but it could become a trap when its utilisation is directed toward consumption, corruption and mismanagement.

According to him, increasing bilateral and multilateral debt indicated rising financial commitments, increased borrowing for development projects and budgetary support that “suggest potential future financial pressure if the growth in debt is not matched by economic growth and revenue generation.” He said that the “high external debt-service-to revenue ratio is a concern and highlights the need for Nigeria to significantly boost its revenue generation capacity.”

Therefore, “continued efforts in economic diversification, export enhancement, and fiscal discipline are essential to maintain and improve Nigeria’s debt sustainability,” he stated.He also observed that there is a link between debt accumulation and productivity, pointing out that “a higher public debt than total factor productivity leads to several adverse outcomes such as higher interest rates, reduced investment, higher debt servicing costs, fiscal sustainability issues, limited policy flexibility and slower long-term economic growth.”

He also noted that debt service costs had been crowding out infrastructure expenditure, adding that Nigeria spent N5.7 trillion in 2022 on debt servicing. According to him, debt service cost was two times more than capital expenditure and nine times more than total health spending in 2022.In addition, debt service cost was seven times more than total education expenditure (recurrent plus capital) and six times higher than defense spending in 2022.Rewane also argued that debt servicing costs also come with significant opportunity cost.

He said: “The debt service costs of N8 trillion in 2023 could have been used for 5,000 km of dual carriage roads at N800 million per km; 1,600 schools at N5 billion per school; 80,000 primary healthcare facilities at N100 million per healthcare and 5,000MW of solar power at N1.5 billion per MW.”He held that the persistent gap between government revenues and expenditures has led to large and growing fiscal deficits in Nigeria due to subsidy payments, weak oil earnings due to suboptimal oil production, debt servicing costs, corruption and misallocation and lack of fiscal discipline, adding that the “EIU projects the fiscal deficit to widen to N19.32 trillion in 2028 from N14.77 trillion in 2024.”

Rewane also explored the link between debt and cost of living crisis, stating that, “economic mismanagement, debt, and the cost-of-living crisis are interconnected as economic mismanagement can lead to excessive debt, which in turn can contribute to a cost-of living crisis.”He added that debt accumulation could arise from “poor fiscal and monetary policies, inefficient allocation of resources, corruption, and lack of accountability.”This could lead to excessive borrowing and accumulation of debt and eventually cost-of-living crisis. “High levels of debt can lead to a cost-of-living crisis through inflation, currency depreciation and austerity measures,” Rewane said.

He noted that highly indebted countries are likely to be unstable, adding that “African countries’ high debt burden has become a call for concern. As increased borrowing is leading to soaring debt, countries are becoming entangled in a vicious circle of debt.“The burden of repaying high debts is increasingly running up against political realities in African countries.”Stating that Nigeria’s current total debt percentage of GDP is 52 per cent, Rewane cautioned that countries with high debt-to-GDP ratios are at greater risk of falling into a debt trap.His words: “Nigeria and several African countries have seen increasing debt levels in recent time.“High levels of debt denominated in foreign currencies can be risky due to exchange rate fluctuations.“Many African countries, including Nigeria, have significant portions of their debt in foreign currencies“If economic growth rates are stagnating or declining, it becomes harder to generate the revenue needed to service debt“High debt-service ratios, where a significant portion of government revenue goes to servicing debt, indicate financial strain.”

SmartPolician:
The Chief Executive Officer of Financial Derivatives Limited, Mr. Bismarch Rewane, has declared that “Nigeria is moving from a debt sustainability path to a debt trap path.”Nigeria’s total public debt stood at N121.67 trillion in Q1’24, which is made up of N65.65 trillion and N56.02 trillion domestic and external borrowings respectively, comprising of N111.52 trillion federal government’s debt and sub-national government’s N10.15 trillion debts.





He noted that highly indebted countries are likely to be unstable, adding that “African countries’ high debt burden has become a call for concern. As increased borrowing is leading to soaring debt, countries are becoming entangled in a vicious circle of debt.“The burden of repaying high debts is increasingly running up against political realities in African countries.”Stating that Nigeria’s current total debt percentage of GDP is 52 per cent. Many African countries, including Nigeria, have significant portions of their debt in foreign currencies“If economic growth rates are stagnating or declining, it becomes harder to generate the revenue needed to service debt“High debt-service ratios, where a significant portion of government revenue goes to servicing debt, indicate financial strain.”


/rewane-nigeria-moving-from-debt-sustainability-to-debt-trap/

Freetech:


Ghana GDP to debt ratio is 88%, while Nigeria own is still about 50%.

Waking at this early hour to post rubbish and unsubstantiated report from this day, emergency Nigeria lover, fake news/ bad news carrier. Can you now rest?

The man you support is shouting Production all over the world but has never produced anything for Nigeria.

Gdp is a function of how productive a country is. Instead of you going out there to produce something you are here crying about debt.

Can you tell is how you want to produce people will without availability of fund?

Every loan taken is very transparent and linked to specific project unlike during PDP years.

Do something good with your life. Politicians children are flexing and enjoying themselves abroad, you are drying up. Wise up pls

SmartPolician:
Huncle Bismarch Rewane, it seems you have suddenly forgotten that you were appointed to serve in this government.

In fact, every APC government gives you the opportunity to serve as an economic policy adviser, what do typically achieve as a professional adviser?

SmartPolician:
Huncle Bismarch Rewane, it seems you have suddenly forgotten that you were appointed to serve in this government.

In fact, every APC government gives you the opportunity to serve as an economic policy adviser, what do typically achieve as a professional adviser?

Freetech:


Ghana GDP to debt ratio is 88%, while Nigeria own is still about 50%.

Waking at this early hour to post rubbish and unsubstantiated report from this day, emergency Nigeria lover, fake news/ bad news carrier. Can you now rest?

The man you support is shouting Production all over the world but has never produced anything for Nigeria.

Gdp is a function of how productive a country is. Instead of you going out there to produce something you are here crying about debt.

Can you tell is how you want to produce without availability of fund?

Every loan taken is very transparent and linked to specific project unlike during PDP years.

Do something good with your life. Politicians children are flexing and enjoying themselves abroad, you are drying up. Wise up pls

malali:
1. Economic Diversification and Revenue Generation

• Promote Agriculture and Agro-processing:
• Support farmers with subsidies, improved seedlings, and modern farming techniques.
• Develop agro-processing zones to add value to raw agricultural products and create jobs.
• Expand Mining and Solid Minerals Sector:
• Invest in exploration and mining of solid minerals like gold, tin, and limestone.
• Ensure regulatory frameworks to attract foreign investments and partnerships.
• Boost Manufacturing and Industrialization:
• Provide incentives for local manufacturing to reduce import dependence.
• Improve infrastructure such as power supply and transportation to support industries.

2. Enhance Public Financial Management

• Improve Tax Collection and Compliance:
• Strengthen tax administration to curb evasion and broaden the tax base.
• Introduce tax incentives for compliant businesses and individuals.
• Transparent Budgeting and Expenditure:
• Adopt zero-based budgeting to ensure funds are allocated based on current needs and priorities.
• Enhance accountability by making budget details publicly accessible and involving civil society in monitoring.

3. Prudent Debt Management

• Limit Borrowing to Productive Projects:
• Prioritize loans for infrastructure projects that have clear economic returns (e.g., roads, power plants).
• Avoid borrowing for consumption or recurrent expenditures.
• Develop a Comprehensive Debt Management Strategy:
• Set clear debt limits and guidelines for federal and state governments.
• Regularly review and assess debt sustainability and repayment plans.

4. Strengthen Anti-Corruption Measures

• Enforce Anti-Corruption Laws:
• Strengthen anti-corruption agencies like EFCC and ICPC with more autonomy and resources.
• Prosecute and sanction corrupt officials and individuals without bias.
• Promote Transparency in Public Procurement:
• Implement e-procurement systems to reduce human interference and corruption in public contracts.
• Publish procurement details for public scrutiny and accountability.

5. Encourage Private Sector Participation

• Public-Private Partnerships (PPPs):
• Collaborate with private investors to fund and manage large infrastructure projects.
• Ensure clear legal frameworks to protect both government and private sector interests.
• Ease of Doing Business:
• Simplify business registration processes and reduce bureaucratic hurdles.
• Provide incentives like tax holidays and grants for startups and small businesses.

6. Invest in Human Capital Development

• Improve Education and Skills Training:
• Invest in vocational and technical education to equip youths with job-ready skills.
• Increase funding for primary and secondary education to build a strong foundation.
• Enhance Healthcare Services:
• Expand access to primary healthcare by building more facilities and training healthcare workers.
• Implement health insurance schemes to reduce out-of-pocket expenses for citizens.

7. Boost Export and Trade

• Promote Non-Oil Exports:
• Support export-oriented businesses with grants and low-interest loans.
• Negotiate trade agreements that favor Nigerian products in international markets.
• Improve Trade Infrastructure:
• Upgrade ports and customs processes to reduce delays and costs for exporters.
• Develop trade hubs and logistics centers to facilitate smoother trade flows.

8. Strengthen Macroeconomic Policies

• Maintain Stable Monetary Policies:
• Control inflation through effective monetary policies and stable interest rates.
• Manage foreign exchange rates to ensure stability and predictability for businesses.
• Fiscal Discipline and Management:
• Reduce wasteful government spending and reallocate funds to critical sectors.
• Regularly review fiscal policies to align with current economic realities.

9. Public Awareness and Engagement

• Educate Citizens on Debt and Economic Policies:
• Launch awareness campaigns to explain the importance of prudent debt management and economic policies.
• Engage communities through town hall meetings and media platforms to foster understanding and support.
• Promote Civic Responsibility:
• Encourage citizens to participate in governance and hold leaders accountable.
• Support community-based initiatives that contribute to economic development.

Only these can avoid the debt trap and move towards economic prosperity.

Freetech:


Ghana GDP to debt ratio is 88%, while Nigeria own is still about 50%.

Waking at this early hour to post rubbish and unsubstantiated report from this day, emergency Nigeria lover, fake news/ bad news carrier. Can you now rest?

The man you support is shouting Production all over the world but has never produced anything for Nigeria.

Gdp is a function of how productive a country is. Instead of you going out there to produce something you are here crying about debt.

Can you tell is how you want to produce without availability of fund?

Every loan taken is very transparent and linked to specific project unlike during PDP years.

Do something good with your life. Politicians children are flexing and enjoying themselves abroad, you are drying up. Wise up pls

SmartPolician:
Huncle Bismarch Rewane, it seems you have suddenly forgotten that you were appointed to serve in this government.

In fact, every APC government gives you the opportunity to serve as an economic policy adviser, what do typically achieve as a professional adviser?

Freetech:


Ghana GDP to debt ratio is 88%, while Nigeria own is still about 50%.

Waking at this early hour to post rubbish and unsubstantiated report from this day, emergency Nigeria lover, fake news/ bad news carrier. Can you now rest?

The man you support is shouting Production all over the world but has never produced anything for Nigeria.

Gdp is a function of how productive a country is. Instead of you going out there to produce something you are here crying about debt.

Can you tell is how you want to produce without availability of fund?

Every loan taken is very transparent and linked to specific project unlike during PDP years.

Do something good with your life. Politicians children are flexing and enjoying themselves abroad, you are drying up. Wise up pls

Freetech:


Ghana GDP to debt ratio is 88%, while Nigeria own is still about 50%.

Waking at this early hour to post rubbish and unsubstantiated report from this day, emergency Nigeria lover, fake news/ bad news carrier. Can you now rest?

The man you support is shouting Production all over the world but has never produced anything for Nigeria.

Gdp is a function of how productive a country is. Instead of you going out there to produce something you are here crying about debt.

Can you tell is how you want to produce without availability of fund?

Every loan taken is very transparent and linked to specific project unlike during PDP years.

Do something good with your life. Politicians children are flexing and enjoying themselves abroad, you are drying up. Wise up pls

Freetech:


Ghana GDP to debt ratio is 88%, while Nigeria own is still about 50%.

Waking at this early hour to post rubbish and unsubstantiated report from this day, emergency Nigeria lover, fake news/ bad news carrier. Can you now rest?

The man you support is shouting Production all over the world but has never produced anything for Nigeria.

Gdp is a function of how productive a country is. Instead of you going out there to produce something you are here crying about debt.

Can you tell is how you want to produce without availability of fund?

Every loan taken is very transparent and linked to specific project unlike during PDP years.

Do something good with your life. Politicians children are flexing and enjoying themselves abroad, you are drying up. Wise up pls

SmartPolician:



Source: https://www.thisdaylive.com/index.php/2024/07/12/rewane-nigeria-moving-from-debt-sustainability-to-debt-trap/