The truism remains that since 1970’s Debt crisis in Nigeria augmented attention to Debt statistics and to the World Debt Tables which are the predecessors to International Debt Statistics with the abrupt fall in oil price. However, once again the global financial crisis has awakened in the present millennium, hindering the growth of the domestic economy of Nigeria. Nevertheless, it is imperative for one to understanding that Debt is a phenomenon, which cannot be worn out, as there is no magnitude to a country’s economic stability that attains complete satisfaction. But what differentiates debt in developing countries and developed countries is their ability to pay back. In fact, the main lesson of the standard growth with debt literature is that a country should borrow as long as the capital thus acquired produces a rate of return that is higher than the cost of the foreign borrowing. Thus, the borrowing country is increasing the capacity and expanding output with the aid of foreign savings, and the debt is properly utilized, and the economy of the debtor’s country is enhanced. Unfortunately, this has never been the testimony of Nigeria, the external debt has been badly expended. In order to create a vivid understanding, it is appropriate to describe debt crisis. Theoretically, Collins dictionary define, debt crisis as the situation in which a country’s owed debt threatens to overwhelm them, so they become unable to service their debts, in turn, may threaten the stability of the economy.
The history of Nigerian’s external debt is contemplated by some to be widely connected with the epochs of misrule and persistent recklessness of its rulers. Nigerian’s external debt is the biggest in the whole of sub-Saharan Africa. Despite the numerous rescheduling by the finance creditors such as the Paris club, London Club and most popular World Bank and IMF, Nigeria meets very trivial part of its obligation in regards to the external debt. According to Semenitari, Nigerian’s external debt stock was $1billion, by 1991 it had risen to $ 33.4 billion, rather than having a reduction there had been an increase.
Prior to the Debt Cancellation of Nigeria by the Paris Club in 2005, Nigeria was to pay a colossal sum of $4.9 billion every year on Debt servicing, it would have been outrageously intolerable to achieve exchange rate stability or any meaningful growth to the economy. The debt relief of 2005 on the country, was indeed a breath of fresh air, however, such fresh air was polluted by 2007, as the Global financial and economic crisis began with the collapse of the sub- prime lending market in the United States. Subsequently the external debt outstanding increased from $3,545 million in 2006 to $3,654 million in 2007, $3,720 million in 2008 and $3.947 million in 2009. There is need for an outcry as Nigeria sinks deeper into external debt, by June 2013 the state's total outstanding external debt summed up to $ 3.013 billion. How then can this country, embark on a larger volume of domestic investment, which is ideally supposed to enhance economic growth and development?
Having being an opinionative discussion, I believe that first and foremost there should be a repositioning and revamp of the mindset of our leaders towards the domestic economy of the Nigeria. I stand without any fear of contradiction to support Semenitari assertions; the issue of debt burden can be tied to the ineffectiveness of the country’s leaders to properly allocate budgets and stick to the budget. Most of the country’s Finance is been wasted on unnecessary project, which are in no way gainful to the improvement of the country’s economic growth in the long run. The way forward for Nigeria, I recommend to cut off all extravagant government spending and Nigerian leaders should be more stringent in the proper implementation of the budget. Let Nigeria cut her coat according to her coat.
There is a popular saying, which says, “ He who pays the piper dictates the tune” this idiom reflects the outcome of foreign aid on any developing country. However , majority of international scholars opine that foreign trade is the greatest asset a country has in the international arena. This I agree with. Foreign trade is the oldest tactic in the book but still it remains the most efficient. It has been an economic force which spurred commerce, promotes technological advancement and growth. Saudi Arabia reduced its debt burden from 80% to in 2003 to just 10.2% in 2010 through selling of oil. No country is an island, neither can a country be able to provide for its citizens satisfactorily on its own. So why borrow when Nigeria can engage in productive international transactions with countries that are economically stable. It also engenders beneficial international reputation.
In addition to the aforementioned, Foreign Direct Investments, should be embraced and encouraged in other to generate improvement of the domestic economy. It creates job opportunity for the youths, it enables technical know-how for the workers which encourages capacity building, they increase tax, as these company such as shell, chevron etc also pay tax to the government. It helps improve the economy of Nigeria.
Furthermore, as said earlier, debt is a phenomenon, which can never be worn out, but the problem with Nigeria is that, the money which is borrowed is lavished without any trace, due to the decadence of the economy, instead of being inputted into the growth of the country. One can say debt relief, is also the way forward but how many times would we be granted debt relief. The money borrowed should be put into effective projects like infrastructural buildings, schools, invest in education, roads etc. let it be put in to increase the domestic investment.
Moreover, Nigeria has gotten to the point where even toothpick is been imported this has eroded our self-reliance and deepened our dependence on foreign imports, as well as reduced the local production and investment which is supposed to aid the growth of the domestic economy.
The fact that Nigeria exports more than it imports, creates debt crisis. I recommend an effective system should be put in place to monitor imports, if we import less and increase local production and investment, then we can satisfy our domestic needs and export the excess to earn foreign exchange. This would ultimately increase our Gross Domestic Product. (GDP)
Effective privatization, is another solution for Nigeria, it will empower the private sector and create more employment thereby generating more revenue to the government, which in turn brings economic growth and development.
Nigeria is a country which has been blessed by God with natural endowment, it beats my comprehension why Nigeria has chosen to focus solemnly on oil as it major exporting resource. The way forward is diversification of our natural resources, e.g give more attention to agriculture and harness other natural resources and help us to stop putting all our eggs in one basket.
Finally and most certainly. Corruption, a virus which has left this country in penury, it runs so deep in the veins of the society that is has become a status quo, the country would never be revived if there is no justice and if corruption is not eradicated. It would be myopic to say that corruption can be eradicated totally, as it is the cause of all the problems in Nigeria but in reality it cannot be, but it can reduced, by electing men and women of integrity into office, I believe they are some still out there, and all the evildoers should be adequately punished by the law to set the right example.
As I drop my pen, I end with this final note, charity begins at home, let us revamp the domestic economy of Nigeria, lets be Nigeriancentric by voting into power dedicated and responsive leaders who would chart a new course for our economic development and eradicate poverty in our land and reduce our external borrowing. I believe the future is bright for Nigeria if we can all join hands to do the needful.
GOD BLESS NIGERIA.