Why Nigeria’s Growing Debt Profile Is An Accountability Crisis-CISLAC

The Civil Society Legislative Advocacy Centre (CISLAC) has described Nigeria’s growing national debt as more of an accountability crisis than economic issues.

In his presentation at the ongoing IMF/ World Bank annual meetings in Washington D.C, CISLAC Executive Director, Auwal Ibrahim Musa (Rafsanjani) blamed the distracting nature of the Central Bank of Nigeria (CBN) economic policies, absence of an economic team, public procurement issues, ineffective tax system, policy actions that choke the middle class and informal sector amongst others as a major reason why Nigeria’s debt profile has defiled all economic prudence frameworks.

According to Auwal Ibrahim Musa (Rafsanjani) who also doubles as Head of Transparency International–Nigeria, “The Public Finance integrity in Nigeria is probably at its lowest state. The following are a major reason why her debt profile has defiled all economic prudence frameworks that exist in the laws.

“Faulty Tax Administration: The leakages that exist within the financial architecture of Nigeria as a country creates a default opportunity for ineffective taxation and consequently failure in optimizing our revenue that is required for national development.

“Extractive Sector Governance: The organized corruption in the oil and gas sector is a major issue that is expressed in several ways including oil theft and all other forms of sabotage within the trade value chain – fuel subsidy and other unproductive incentives. This trend has consistently left us in a situation where this revered sector is rather sapping revenue from the government instead of contributing substantially to fund developmental projects in Nigeria.

“Absence of an Economic Team: Like the saying goes “If you fail to plan, then you are planning to fail”. Every government should constitute an economic team of technocrats saddled with the responsibility of advising the President on economic issues at any given time in the life of every regime. The absence of such a critical team leaves room for knee-jerk approach to economic policies and interventions which lots of time falls short. Although this essential spending is being made by our governments today, the debate over how to deal with the debt generated by the COVID-19 crisis will be of vital importance to Nigerians.

“Choking Policy Actions: The consistent and ever-increasing budget deficit trend is a strategic way of getting capital projects out of the space as most of the revenue are channeled towards debt servicing and at most recurrent expenditure. This means that Micro, small and middle industries who are unable to provide basic infrastructural needs to operate will be closed down and the ones that can, will be producing at a very high cost and in-turn cannot compete comparatively with their international counterparts.

“Misplaced Economic Priorities: The legislature’s primary mandates are oversight, law making and representation. The legislator is never saddled with the responsibility of implementing projects at any level of government. This is arguably putting the constituency project concept as an economic misplaced priority. Also owing to the fact that these funds has never been accounted for nor has it ever had any resemblance of proper management in the past. We believe that it is better for the law maker to concentrate with his/her primary mandates but ensure that the executive implement any project as provided by the appropriation Act within a fiscal of the government.

“CBN Distracting Policies: The apex bank is saddled with the responsibility of regulating the entire financial sector by its fiscal policies and in turn serves a major driver of the economy of the country. Of recent we have seen the apex bank being engaged in some direct implementation of projects and service delivery. These projects and services are supposed to be domiciled in one of the Ministries, Agencies or Departments of the federal or state government. This action is rather distracting for the apex bank considering the enormous task of regulating and policy requirements that they should be responsible for on a day-to-day basis.

Public Procurement Issues: One of the major provisions of the public procurement Act of 2007 is that there most be a public procurement council who oversees the procurement processes in the country. But since over a decade now, this very important body has never been in place and creates a lacuna in the procurement management process. We all agree that the contract award and management in the country which is a direct function of public procurement processes has been a thing of worry considering the numerous irregularities that is alleged within the process.”

Recall that on the 7th of October 2022, the President of the Federal Republic of Nigeria presented the 2023 Appropriation bill to the National assembly. The budget estimate as contained in the bill is to the tune of N20.5trn with an expected revenue of N9.7trn and expected (additional) borrowing to the tune of N8.8trn; which if this scales through, Nigeria’s debt stock will be at N50.8trn.