OPINION: Nigeria’s Total Debt Hits N4.6 Trillion, Should She Continue to Borrow? – Excellent Traders

Nigeria’s total public debt stock hit N41.6 trillion ( USD100.07 billion) in the first quarter of 2022, from N39.56 trillion recorded as of December 2021. This is according to a statement released by the Debt Management Office (DMO). DMO says the amount represents the domestic and external debt stocks of the Federal Government of Nigeria, the 36 State Governments and the Federal Capital Territory. The question is: should she (Nigeria) continue to borrow?

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Now, should Nigeria continue to borrow, even as her current debt is above N40 trillion. The answer is YES and NO.

People and governments borrow for so many reasons, one of which is for investment. When you invest borrowed money, you will be able to pay off and have more left for other things. The only time borrowing is a bad practice is when a borrower borrows to feed or to buy luxurious things. In other words, borrowing for consumption is a bad practice, but borrowing to invest is not.

Is Nigeria borrowing for production (investment) or for consumption and other expenditures? If it is for the former, let her continue to borrow; if it is for the latter, let her discontinue.  But unfortunately, most of the borrowings are not for production but for consumption and the financing of budgets. The DMO in the statement it released has given a hint on this when it said “The Total Public Debt Stock includes New Domestic Borrowing by the Federal Government of Nigeria to part finance the deficit in the 2022 Appropriation Act . . .”

So, should Nigeria continue to borrow? The answer depends on what it is to be used for, like we earlier pointed out.

 

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