This paper takes a critical look at the global debt management and Nigeria’s debt profile; the plans put in place to manage the rising Nigeria’s debt profile. It uses the theory of dependency as a framework of analysis. The theory sees the third world as states in the periphery, prevented by various Western-inspired obstacles (debt trap, IMF/World Bank policies, etc.) from entering into the active center. Issues discussed include: foreign debt management, Nigeria’s debt profile between 1999 and 2016. The paper revealed that the foreign debt management strategies adopted by the Nigerian government were not effective in reducing her foreign debt burden. It concludes that Nigeria has relied much on both external and internal debts to finance its development projects between 1999 and 2016 which put her debts profile so high.
The issues of foreign debts have enveloped the whole of African countries, and are of external and internal nature. Internally, the high importation rates, African huge dependence on foreign aid, and high rate of corruption by government officials induced borrowing. Externally, the global economic crisis, the changing oil price in the international market, and so on, initiated debt in African states. In the late 1970s and 1980s, countries of the South, particularly African countries, experienced severe savings gap and shortage of funds for investment in the face of low international interest rates; some countries succumbed to the temptation of resorting to external borrowing. Nigeria was one of those countries that went a-borrowing.
Nigerian foreign indebtedness started during the military regime of Gen. Olusegun Obasanjo in 1977. The government first borrowed N600 million (1 billion US dollars) which was followed with another huge borrowing of N734 million (1.456 billion US dollar) in 1978. Thereafter, there was borrowing by both the federal and state governments which later aggravated the Nigerian debt problem (Omenmma, 2008). According to Daily Sun of October 25, 2010, Nigeria’s external debt stock was less than one billion dollar in 1970. By the second half of 1980s, the debt profile had deteriorated seriously due to persistence inability of the country to meet its external debt service obligations. The external debt stock, which was about $9 billion in 1980, grew to nearly $19 billion by 1985 which corresponds to the debt stock at level of 15% and 24% respectively. By 2001, the debt stock as percentages of total export and GNP was 14% and 83% respectively. The country’s total external debt stood at N10.6 trillion as at December, 2016. According to Ighommenghian (2013),
Data from the Nigeria’s debt management office shows the nation’s total debt profile stood at $10.43 billion at the end of 2012. That it was uplifting to know that Nigeria was almost free from debt reprieve that could not be managed adequately to foster economic development. Instead of the debt management office, the Central Bank and federal government to carefully manage the debts, it appears that they are interested in contracting more debt for the country.
However, in consideration of the foreign challenges, Nigerian government established debt management office in October 2000. Omoniyi (2011) maintained that debt management is the gamut of institutional and technical arrangements in organizing the liabilities of a country so that the debt service burden is kept within sustainable level. The technical aspect is concerned with the determination of the amount (level) of debt the economy can sustain and that the conditions of borrowing are on favorable terms and are consistent with the future debt serving capacity. In both aspects, more attention is given to reducing the debt service burden or keeping it stable.
According to Amaefule (2014), “Nigeria’s debt profile had jumped from $48.36 billion to $65.25 billion between March 31, 2013 and March 31, 2014”. On February 17, 2017, the Debt Management Office maintained that the nation’s total debt profile currently stood at $57.39 billion. It comprised external and domestic debts of the federal government, those of the 36 states of the federation and Federal Capital Territory, as at December 31, 2016. The country’s debt profile has risen from about N794 billion in 1999 to N10.6 trillion in 2016. In the opinion of Dr. Abraham Nwankwo, the Director-General of the debt management office, Nigeria’s debt profile is estimated to cross the N11 trillion mark at the end of 2016 and could rise to as high as N14 trillion at the end of 2017, when it is expected that foreign debt management strategies adopted by Nigerian government will reduce the external debt and bring economic development. Thus, the main focus of this work is to assess foreign debt management and Nigeria debt profile between 1999 through 2016.
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