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Nigeria’s meagre early 2022 capital cost means N3 trillion borrowed for salaries, others

The Nigerian government borrowed over N3 trillion to cover non-capital expenditure in the first four months of 2022, a register that covers salaries, government running costs and even debt repayment, a PREMIUM TIMES analysis of government spending data shows.

The spending comes amid Nigeria’s bloated deficit spending and poor revenue.

The government in its fiscal performance report for January through April said the spending target for the period was N5.77 trillion, while the actual spending as of April 31 was N4.72 trillion.

A breakdown of the actual spending within the quarter shows that N1.94 trillion was for debt service, N1.26 trillion for personnel cost, including pensions. The remaining went to statutory transfers, overhead cost and debt servicing.

Only a meagre N773.63 billion was spent on capital projects — which should include everything from roads to bridges, rail and school and hospital buildings, projects that affect the generality of Nigerians.

The government’s retained revenue during the period was only N1.63 trillion, out of a target of N3.32 trillion, putting the deficit between actual spending and revenues at N3.09 trillion.

The new report, therefore, shows rather than borrow for investment in the nation’s human and infrastructural needs, the government continued to borrow to finance consumption, offset overheads, pay pensions, and settle related recurrent expenses. This is contrary to globally acknowledged fiscal advice that borrowing should be channeled toward capital expenditure.

Nigeria largely operates a consumption-based and rent-seeking economy with a fiscal and constitutional framework that engenders consumption, deepens poverty, and elevates misery amongst its estimated 200 million population.

Over the years, experts and policy analysts have warned of the danger of borrowing for consumption, as it weakens the nation’s fiscal position and raises debt management risks.

Debt Overhang

In the first quarter of 2022, Nigeria’s public debt rose to N41.6 trillion from N39.56 trillion recorded at the end of December 2021.

The Debt Management Office earlier in the month said Nigeria’s debt profile is prone to the volatility of oil prices and forex exchange risk.

According to a 2021 debt sustainability analysis, the DMO said the country’s debt profile shows moderate risk and is susceptible to shocks such as market perception, the share of debt held by non-residents and foreign currency-denominated debt.

In July 2020, amid growing concerns over Nigeria’s debt profile, the Minister of Finance, Budget and Planning, Zainab Ahmed, said the dual reality of COVID-19 pandemic and the drop in the price of oil in the international market made it inevitable for Nigeria to keep borrowing from external bodies.

Speaking at a webinar organised by the Nigerian Economic Summit Group, Fiscal Policy Roundtable and Tax Investment and Competitiveness Policy Commission, she stated that before the global health and economic challenges, Nigeria had been grappling with low revenue. She added that the crises had put the country in a difficult situation, which had made it difficult for the government to meet some of its obligations.

“We’ve had to grapple with low revenue, even before the pandemic. We had high debt, weak infrastructure base, low human capital and low revenue that is largely dependent on the foreign exchange earned from oil. So, there are many things we have loved to do that we cannot do,” she said.

“Due to the global economic slowdown and the revenue issues, what we are expecting is a GDP that would contract, in the best case scenario, by about 4.4 per cent and in the worst case scenario, it could be about eight per cent or more.

“We are in a very difficult situation but we are trying to manage that because if nothing is done, up to about 21 million jobs could also be affected by the impact of the pandemic. So, with all these statistics, we cannot overemphasise the importance of raising revenue.”

Mrs Usman listed some key programmes of the government designed to grow the economy and engender development, adding that there was a need for the government to mobilise external funding for the implementation of the proposed programmes.

“To achieve all these, we will have to keep mobilising external funding and seek debt relief,” she said.

“We continue to engage with the multilateral and donor agencies to access additional funding for crisis response, we seek moratorium from official partners for some of the loans that we have and support arrangements to secure commercial debt relief.”


Leading opposition candidates including presidential flagbearer of the Peoples’ Democratic Party (PDP), Atiku Abubakar, and that of the Labour Party, Peter Obi, have in the past warned against excessive borrowing.

In an opinion piece published in 2019, Mr Abubakar noted that it is scary that “Nigeria had taken almost as much foreign debt in the last three years, as she had taken in the thirty years before 2015 combined. He warned that “endless borrowing will lead to endless sorrowing”.

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In his interventions, Mr Abubakar urged the government to provide an enabling environment for business to thrive, rather than resort to “endless borrowing”.

He wrote: “Rather than profligate borrowing, what Nigeria needs to do is restore investor confidence in our economy. Key to that is respecting the independence of key institutions, such as the Judiciary and the Central Bank of Nigeria. Both of these institutions are now the captives of Buhari and his cabal, and though they are loath to admit it, they cannot take one step without watching their backs.”

Speaking during an interview in April, Mr Obi said the nation would rather starve than borrow to fund consumption.

“Nigerians will know the reasons for borrowing and it must be borrowed for production,” he said in response to questions on borrowing and debt.

“Nobody will spend a kobo or a dollar of borrowed money for consumption, instead we will all starve. That is why I told everybody there is nothing to share again, we must rebuild this country for the future of our children.”

Last August, at the African Development Bank Group 2021 Annual Meetings, the Director-General of the World Trade Organisation (WTO) and ex-Minister of Finance, Ngozi Okonjo-Iweala, the President of the African Development Bank (AfDB), Akinwunmi Adesina and the Governor of the Central Bank of Egypt (CBE), Tarek Amer, and other regional economic stakeholders expressed concern about rising national debts across Africa.

The experts warned that African countries face a high risk of falling into a debt trap, as debt service becomes a major burden in these economies.

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