Finance minister Ngozi Okonjo-Iweala recently assured the nation that its rising debt profile was nothing to worry about. It did not take long before she publicly admitted that Nigeria was running out of cash. She equally recognized the monumental theft of the country's crude oil: at least 400, 000 barrels per day.
In view of the bad shape of the nation's economy, every concerned citizen should worry about debts incurred by both the federal government and the state governments. Quietly but steadily, politicians are eating up the country's future. Worse, the borrowed funds have not been used to build human or physical infrastructure. The debt profile of the states is particularly alarming because there is no evidence that the borrowed funds reached the states.
In some states, projects embarked upon with these loans are never completed. A typical example is the Zaria city water and sanitation project that has gone on for ages. Kaduna State signed a loan of US$100 million in February 2012 ostensibly to improve water and sanitation in the city of Zaria, a city that has been bogged down by water crisis for too long. To date, the problem has not been solved. Yet, Zaria is home to one of the largest universities in the country, a federal college of education, a state polytechnic, a college of aviation and numerous research institutes. This has translated into an unbelievably high student population. The consequence: a large population without water and sanitation is likely to face health hazards.
Even though it has impressive internally generated revenue (IGR), Lagos is still heavily indebted. Most of the oil-producing states are very much indebted too, in spite of the 13 per cent derivation fund they get from the federation account. Eight years after the so-called "debt forgiveness" bought with $18billion on the watch of this same finance minister, Nigeria is back to using a large chunk of its revenue for debt servicing and not for infrastructure development.
This time therefore calls for wisdom, especially on the part of the non-oil states that have nothing to fall back on. They should learn to raise their IGR and depend less on their monthly share from the federation account. Most of them have agricultural potential; they should harness it for the employment and wellbeing of their people.
The politicians should be warned to stop mortgaging the future with unserviceable loans. At the macro level, heavy borrowing will naturally push interest rates up and crowd out private-sector investment, resulting in job cuts and higher unemployment rates - all these in an environment already grappling with the ills from lack of jobs for its youths. Wise nations spend borrowed money only on regenerative investments. If all the loans procured by the governments in the past decade or two had been used to fix the electricity sector, for instance, the economy would have since taken off. Funds that could make a difference in basic needs such as education, health and energy should not flow into debt servicing. Nigeria should be spared the tragedy of a heavy debt burden.