By Victor Uzoho
The Chartered Institute of Bankers of Nigeria (CIBN), has urged Nigerians to embrace import substitution models that ultimately promote home-grown products and services, economic growth, and sustainable development in the country.
The President/Chairman of Council, Dr. Bayo Olugbemi, made the call during the 2021 CIBN Fellowship Investiture in Lagos, themed, Nigeria’s Rising Debt Profile: Issues and Implications for Sustainable Economic Development.
Olugbemi said the theme was inspired by the growing concerns of Nigerians about the country’s rising debt profile and the need to educate the public on this issue as well as proffer sustainable management strategies.
While noting that there was nothing wrong with borrowing, he said: “Public borrowing, public debt, and public debt management are normal features of a modern economy. However, the major concern with borrowing, be it as an individual, organisation or a nation, is simply the purpose of the borrowing and the capacity to repay.”
We must also pursue the path of efficiency, ensuring that all recurring costs that may potentially lead to excessive borrowing are reduced to the barest minimum.
Meanwhile, the CIBN President said the high debt levels cannot be overlooked. Historical accounts show that high debt ratios could negatively impact or worse still, reverse economic growth.
Citing a World Bank report stating that a public debt-to-GDP ratio of 77% and above would result in an adverse impact on Nigeria’s economic growth, he urged the government to do all it can to minimize excessive borrowing.
He equally charged stakeholders in the banking and finance industry to always support the government’s efforts and initiatives aimed at improving the economy toward inclusive growth and development.
“We must also pursue the path of efficiency, ensuring that all reccurring costs that may potentially lead to excessive borrowing are reduced to the barest minimum,” he added.
On his part, Africa Tax and Legal Services Leader, PWC Nigeria, Taiwo Oyedele, said Nigeria’s public debt over the past five years (2015-2020) had expanded by an average of 21.02% while revenue on the other hand expanded by an average of 5.19% and economic growth averaged 0.15%.
Oyedele said: “By implication, the rate of expansion in public debt in Nigeria is fast outweighing the revenue mobilization capacity of the government. Consequently, the debt to GDP ratio expanded from 20.32% in 2015 to 34.98% in 2020 (IMF). This pace of increase in the public debt stock, particularly, raised the fiscal sustainability concerns on Nigeria.”
