Current Debt Situation of Nigeria – Is the condition really bad?
The current state of the country of Nigeria is not very pleasant with domestic debt hovering over it like a large carrion bird. It is imperative for the country to keep a watch over its domestic debt in order to ensure that it does not crowd out the private sector through the domestic debt market and as a result of this stifle the real sector. Organizer of the Nigeria Development and Finance Forum (NDFF) Jide Akintunde stated that more number of Nigerians are getting uncomfortable with the current debt profile of the country. According to him, although the debt to GDP (gross domestic product) ratio is still within the acceptable threshold, there is an immediate need to restrain expenditure so that the country is prevented from reaching unsustainable levels. Akintunde was quoted saying that just because the country has a low debt to GDP ratio; it should not do such activities which will push it towards the threshold level very quickly. If such a situation happens then there will be little scope to approach the debt market in future perhaps when undesirable global situation which normally put an impact on the prices of commodities, including crude oil will put a pressure on public expenditure. This might imply that Nigeria would be borrowing at a higher cost.
Akintunde was quoted saying all of these ahead of a two day conference of NDFF to be held on 24th and 25th May in London and having the theme ‘Reforming to Harness market Opportunities and Improve Social Indicators in Nigeria’. He said that such issues regarding development will be raised at the conference so that an agenda for the government is set on the path which it should follow and policy direction that it should pursue. He said that although there were quite a lot of transformations taking place in the government and also the economic sphere, there needs to be done a lot more in order to make the economy more stable. A practical example would be when one of the banks disclosed its profits warning that the position it held in 2011 might be a position of loss, it jolted the system and made people believe that the banking system still has residual risks existing within its walls. Ever since this announcement, one or two other banks have also issued negative warnings.
The conference in London is scheduled to coincide with the one year anniversary of the current administration and will provide an opportunity for the participants to assess government policies and decide how well the economy is performing. A participant in the Africa Business Round Table, Dr. Ken Ife and is also one of the participants in the London conference said that the trade profile of Nigeria needs to be re energized so that a certain level of foreign direct investments is attracted in order to bring about infrastructural development. It has been seen that Nigeria has been doing poorly in all logistic performance indicators, global enabling trade indicators, trade performance indicators and also corruption perception index. Hence there is a need to reassess the position of the country and look at ways and means in which the performance of the country can be improved as these are the parameters that people outside the country see before they make a decision to invest in the country.
Akintunde emphasized the need to start involving more number of Nigerians in the discussions on the economic growth and development of Nigeria. Such an action is needed as there are many Nigerians who invest enough money in the Diaspora and as a result they should have a say in the economic decisions of the country.
Author Bio: Paulette Noonan is a regular writer with Debt Consolidation Care and is also a contributory writer with other financial sites. Expertise is woven around various aspects of the debt industry and with her e-books she tries to impart to people the different situations and simple solutions to get out of difficult situations.