AFRODEMPTION
(Saturday, August 15, 2020 – Second Forum)
Saturday 15th August, 2020 – Debt Management in Nigeria, Lapses, Global Best Practices, Alternative Revenue Sources, Recommendations.
Case study: Nigeria
PANELISTS: AD LEGEND, AD JAKE, AD OJI, AD MAIGEMU, AD DAVID, AD SOLOMON.
AD Jake
Debt is not bad. It enhances economic growth across nations. However, when debt is mismanaged, it becomes a bottleneck/burden. As the saying goes, “The borrower is a slave to the lender.” Interest rate on debt is a modern day slavery. Nigeria so far has failed with respect to debt management. One major problem is that we spend more than we generate.
Some drivers of the economy include:
1. Productivity.
2. Loses must be covered up for by using the principles of absolute and comparative advantages.
Value Added Taxes cannot in any way, make up for debt deficits. Nigeria keeps recording increase in Consumer Price Index and keeps transferring the burden to Nigerian consumers using tools like VATs.
Exchange Rate
Our imports outweigh our exports with unbelievable margins. The high instability in the Nigerian economy and its steep fluctuations make it irrational to always prioritize long-term loans.
Managing Debts
Policy makers must make a quick u-turn from the norm of always transferring burdens and economic shortfalls on final consumers.
Defaulting: This may be controversial, but one way to go is to rule out/pay off debts and start from the scratch.
Take absolute charge of inflationary trends. The outcome is a robust and self-sufficient economy, with an upward shift in the value of Disposable Income.
Overcome debt refinancing, which is simply strangling other sectors of the economy in order to make up for shortfalls in the original aspect(s) in which the debt was meant to be executed.
Government Agencies must be consolidated in order to checkmate debt deficits. This is basically talking about prioritization.
In view of prioritization, most states in Nigeria, with exception to highly productive states and the Federal Capital Territory, should be excused from external debt financing, unless there are verifiable and productive interests.
VATs must not be depended upon for debt payment/servicing.
Improve the economy. Boost productivity.
AD Legend
Debt, with respect to the running of nations isn’t bad in itself; it is an integral part of a Nation’s Foreign Policy which is simply the protection of a nation’s interest overseas.
US Debt Analysis
As of May 1, 2020 federal debt held by the public was $19.05 trillion and intergovernmental holdings were $5.9 trillion. At the end of 2019, debt held by the public was approximately 79.2% of GDP, and approximately 37% of the debt held by the public was owned by foreigners.
Nigeria’s Debt Analysis
Nigeria, Africa’s largest economy’s total public debt rose to $79.5 billion (N28.63 trillion) as of the first quarter of 2020. This represents a 15% increase from the figure that was recorded for the corresponding period in 2019, which was about $69.09 billion (N24.94 trillion).
This was disclosed in a latest publication by the Debt Management Office (DMO) on Friday June 3, 2020.
Recommendations
1. Nigeria needs more think-tanks in government for effective debt management.
2. Government institutions levied with the responsibility of debt governing and accountability must be strengthened to gain greater autonomy for the ease of penalizing corrupt public officials, implementation partners, and agencies with a view to debt mismanagement.
3. The Nation’s Foreign Policy framework must be overhauled so as to increasingly strengthen our relations with other nations. There are many irrelevant spending and investments we make that if we had cordial relationships with flourishing allies, those spending wouldn’t have necessarily come with a debt burden, but as grants.
Moreover, when it comes to partnership with nations, this cuts across the transfer of funds to sharing of knowledge, expertise, technology, military strength, natural resources, joint funding mechanics, to mention a few.
The political class must take drastic and purposeful measures if they don’t want to mortgage the future for the coming generations.
AD Maigemu
I don’t think there’s a better time for these discussions than now. Some African nations are currently suffering due to irresponsible borrowings. Getting a loan is not the problem; but are you using it as a burden or as a tool?
Recommendations
1. Understanding the reasons and implications of borrowing is very vital.
2. Corruption is a menace that must be squarely dealt with. Concerning the anomalies and mismanagements already highlighted, who is being investigated?
AD Oji
Recommendations
1. We need a more focused and pragmatic political class.
2. There’s crucial need to heighten the conditions for loan collection; such as public hearings and putting all factors like inflation and cash flow into keen consideration.
3. Don’t collect unnecessary loans. Identify priorities.
4. Heighten collaborations to spread burdens, especially if the project(s) under consideration benefits the parties involved. There’s much that we can achieve through partnership with other nations. The barter system also works at Foreign Policy level.
5. Quantitative and qualitative analysis must be done on repayment.
6. Strategies for loan repayment must be transferable across administrations. Vibrant policies must be sustained.
Next Transnational Forum: Saturday 22nd August, 2020
Focus: Low Intensity Conflicts (LIC) in Africa; Causes, Strategies, Sustenance, Political Influence, Sponsorship, Control, Possible Eradication.
Anchor: AD Legend.
ABOUT US
Africa Redemption Forum (AFRODEMPTION) is an independent forum that houses pan-Africanists from different fields of human endeavour who share a common goal—BELIEF IN AFRICA. Not only that, they are also willing to contribute their quota (expertise, intellect, time, and resources) in changing the narratives of the Black continent.
Their duty is to constantly look into the multifaceted challenges confronting the various nations of Africa in particular and the continent in general, while proffering strategic, implementable, and lasting solutions.
Afrodemption believes that the future is now! And whatsoever we desire to see happen in Africa tomorrow, today is when to begin. It is time to create our own democracy!
However, we recognize from history that Nigeria (the biggest black nation in the world and largest economy in Africa) has a very pivotal role to play. The direction of Nigeria goes Africa. If Nigeria fails, Africa has failed.
“Our lives begin to end the day we become silent about the things that matter.” -Martin Luther King Jr.
As we continue tackling the various issues from the root by hosting strategic thought sessions, bear in mind that Africa is the future.
The future of Nigeria and indeed, Africa is in our hands. And the TIME is NOW.
To join us, please send your full name, country, contact details, and interests to afrodemption@gmail.com.
