With total public debt, federal and state governments, climbing to N35.46 trillion at the end of the second quarter of 2021, Akinwumi Adesina, president of the African Development Bank (AfDB), has said Nigeria’s debt service to revenue ratio is high, not “moderate,” as Nigeria’s Debt Management Office, DMO, has claimed.
Adeshina who made the disclosure yesterday at the opening of a two-day mid-term ministerial performance review retreat in Abuja said Nigeria must “decisively” resolve its debt challenges to ignite economic growth
“Nigeria must decisively tackle its debt challenges. The issue is not about the debt-to-GDP ratio, as Nigeria’s debt-to-GDP ratio at 35% is still moderate. The big issue is how to service the debt and what that means for resources for domestic investments needed to spur faster economic growth,” he said.
“The debt service to revenue ratio of Nigeria is high at 73%. Things will improve as oil prices recover, but the situation has revealed the vulnerability of Nigeria’s economy. To have an economic resurgence, we need to fix the structure of the economy and address some fundamentals.
“Nigeria’s challenge is revenue concentration, as the oil-sector accounts for 75.4 % of export revenue and 50 % of all government revenue.
“What is needed for sustained growth and economic resurgence is to remove the structural bottlenecks that limit the productivity and the revenue earning potential of the huge non-oil sectors.”
He said: “We must move away from so-called ‘youth-empowerment-programs.’ The youth do not need handouts. They need investments.
“That is why the African Development Bank is currently working with Central Banks and countries to design and support the establishment of Youth entrepreneurship investment banks.”
“Nigeria should make its youth the drivers of the new economy through the creation of Youth Entrepreneurship Investment Banks, which put new financial ecosystems around them to fully unleash their potential.”