Worried by the increasing debt profile of the government, former Deputy Governor of the Central Bank of Nigeria (CBN), Professor Kingsley Moghalu on Wednesday, cautioned the federal government to put a stop to further foreign borrowing.
Moghalu made this remark while delivering a speech titled: “Overcoming Poverty: The Secret of the Wealth of Nations,’ at the 2018 Bullion Lecture organised by the Centre for Financial Journalism in Lagos.
According to Moghalu, the increased foreign borrowing which the government had raised in the past three years has the country “back into a debt trap that will weigh down the future generations of Nigeria.”
Nigeria’s external debt rose to $18.91 billion (N5.787 trillion) as at the end of December 2017, while domestic debt rose to N15.937 trillion, bringing the total debt stock of the country to N21.725 trillion ($70.92 billion), latest data released by the Debt Management Office (DMO) had shown.
But responding to Moghalu’s comment, the Director, Portfolio Management, DMO, Dele Afolabi, who represented the Director General of the debt office, Ms. Patience Oniha, defended the increased foreign borrowing by the government, saying the funds were being utilised for infrastructure development.
He explained: “Borrowing on its own is not a bad thing. Through borrowing, the country has been able to do a lot of things.
“We have finance infrastructure. So, to say we shouldn’t borrow, I don’t agree with that. You can borrow and use for developmental projects.
“Currently, we are refinancing domestic debts with external loans. We have brought down cost of domestic borrowing and ultimately the cost of servicing these debts will reduce.”
Continuing, the ex-CBN deputy governor called for the deregulation of the downstream petroleum sector; the scrapping of the Nigerian National Petroleum Corporation (NNPC) and reform it as a partially privatised company, as well as the constitutional repeal of the Land Use Act, which according to him traps the wealth of Nigerian’s citizens in the hands of choking grip of bureaucracy.
Moghalu, who is currently the President, Institute for Governance and Economic Transformation (IGET), pointed out that the path out of poverty to prosperity in the country must pass through five preconditions which he listed to include: a worldview of a philosophical foundation for the Nigerian state; an economic vision founded on an economic philosophy that is aligned with foundational worldview; science, technology and innovation as the driver of the economy; economic complexity and vibrant institutions.
He added: “Nigeria has gotten it wrong in a fundamental manner as far as its understanding of wealth and poverty of its citizens are concerned, and that is why 152 million Nigerians are poor.
“This is a matter of philosophical emptiness of our political leadership class; the relative absence of sound economic thinking among even our supposedly enlightened class of ‘economists’ who continue to believe that classic economics with its focus on economic growth statistics, instead of a focus on economic philosophy, organisation and development, will result in economic transformation.”
According to him, in order to address the myriad of problems facing the country, the citizens must now elect a new kind of leadership that offers something radically different by virtue of possessing the insights and having the political will to take the economic management of Nigeria in to a new direction of soundness, quality and results.
Responding to questions about his chances in the forthcoming election, Moghalu told his audience: “That was how they dismissed Donald Trump, that was how they dismissed Emmanuel Macron, and I want to tell you that the ground is shifting in Nigeria.
“You cannot say that not participating in the sleaze that passes for Nigeria’s politics should disqualify me from running for Nigerian’s president, not having local government funds should not disqualify me.
“The people of Nigeria have woken up. We have been captured by the political class. But the people have decided to move in. Let it be clear, we have a strategy for mobilisation, we have a strategy for organisation, we have a message and a vision that is very clear.”