Debt relief is a crucial imperative for Africa’s economic recovery- Mahamat

Moussa Faki Mahamat, chairperson of the African Union Commission, has said that debt relief was an “urgent imperative” for many African states to give debtor countries’ economies a vital economic breathing space.

The chairperson made the statement in his speech at the opening ceremony of the China-Africa Summit in Beijing Calling for more diversity in the destination of investment.

Dozens of African leaders converged on Beijing for a summit that signalled China’s influence in a continent that it hopes will be a key ally in pushing back against the U.S.-led global order.

Nigeria is among the 10 countries on the continent burdened by the highest debt of 2.6 billion dollars owed to the International Monetary Fund, amid its economic challenges.

The Debt Management Office said the country’s total public debt stock has surged to N97.34 trillion as of the first quarter of 2023. The total debt stock comprises domestic and external debts of the Federal Government, the 36 state governments and the Federal Capital Territory.

The multilateral body has projected Nigeria’s public debt to Gross Domestic Product ratio to reach 46.6 per cent in 2024, and 46.8 per cent in 2025.

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However, the Bola Tinubu administration has borrowed N20.1 trillion from domestic investors in its first year, representing a year-on-year increase of 117 per cent from the previous year.

Muda Yusuf, chief executive officer, Centre for Private Enterprises, said in a recent TV interview that despite the huge debt, it was almost impossible for Nigeria not to borrow, and that the public debt was imperative for many African states.

“Nigeria needs to take a critical look at our debt profile, the majority of our debts should be spent on capital projects that would help wheel the economy,” he said.

Nigeria’s public debt stock which includes external and domestic debts stood at N87. 38 trillion in Q2 2023 from N49. 85 trillion in Q1 2023, indicating a growth rate of 75.27 per cent on a quarter-on-quarter basis.

The World Bank disbursed $751.88 million to Nigeria from a recently approved $1.5 billion loan. The amount was disbursed under the Nigeria Reforms for Economic Stabilisation to Enable Transformation (RESET) and the Development Policy Financing Programme (DPF) project.

“The current loan expected to be secured by the government is part of the foreign borrowing plan of the 2024 deficit budget to bridge the financing gap…The foreign loan is usually more concessionary, the rates are low and it’s tied to specific projects,” Yusuf said.

He, however, noted that the Federal Government could reduce the need to borrow by raising its oil and gas output.