The House of Representatives has raised serious alarms regarding Nigeria’s increasing debt levels, emphasising the potential risks to its fiscal health and long-term economic viability. Recently, lawmakers referenced new data from Nigeria’s Debt Management Office (DMO) that revealed the country’s debt profile had increased to ₦121.67 trillion as of March 31, 2024. This shows an increase of ₦24.33 trillion in just three months, up from ₦97.34 trillion in December 2023. The document outlines the internal and external liabilities accumulated by both federal and state governments, indicating to the House an urgent requirement for monitoring to prevent possible economic instability.
Furthermore, the Lower House raised the alarm about what appears to be an unrestrained borrowing trend, cautioning that heavy debt repayments might limit essential investments in crucial sectors such as education, healthcare, and infrastructure. Representative Lanre Okunlola from Surulere II Federal Constituency in Lagos State introduced the motion titled “Need to Ensure Public Debt Oversight on Federal and State Governments Loans and Proper Utilisation of Borrowed Funds.” Okunlola noted that Nigeria’s growing debt load presents significant threats to its progress, particularly as it ranks among the 40 percent of developing countries that allocate more funds to debt repayment than to crucial social services.
Poor governance and transparency have led to significant inefficiencies.
Okunlola described the debt crisis as a strategically orchestrated reoccupation of Africa, which he claims has affected regional economic development. He also pointed out that a lack of proper governance and transparency in the administration of these loans has caused inefficiencies, resulting in funds being misused and citizens missing out on the expected advantages. This perspective, commonly shared among House members, emphasises the importance of robust legal protection to ensure that borrowed resources are entirely used for the public’s benefit.
Also, the resolution passed by the House directs the Committee on Aids, Loans, and Debt Management to conduct an extensive audit of every debt taken by both federal and state governments since Nigeria transitioned to democratic governance in 1999. This committee is tasked with assessing adherence to the compliance outlined in the 1999 Constitution, the Fiscal Responsibility Act of 2007, and the Debt Management Office Establishment Act of 2003. These structures require the National Assembly to review and authorise government borrowing to promote transparency and responsible spending.
Legislators set guidelines for banks to meet constitutional standards.
Lawmakers stress that loans taken by state governments from private banks and sanctioned by the Federal Ministry of Finance must also adhere to constitutional standards, as several debts have been granted without National Assembly approval. With various nations facing a difficult global economic landscape characterised by rising Inflation and fluctuations in international commodity markets, policymakers are becoming more attentive to their countries’ financial stability. Okunlola referenced a recent report from the DMO, pointing out that the increase in debt is partly due to the government’s initiatives to address budget shortfalls and finance Infrastructure projects.
However, he contends that accumulating debt without matching increases in Economic Growth indicates inefficiency and a failure to ensure responsible financial resource management. The recent motion received support from lawmakers across party lines, underscoring a collective concern regarding Nigeria’s approach to debt. Representatives pointed out that although borrowing can effectively fund public initiatives, poor oversight could jeopardise its objectives. There are worries that some governmental bodies responsible for managing the borrowed money might not possess the necessary skills for effective project delivery, while others may not adhere to legal requirements for approving loans.
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In reaction, the Aids, Loans, and Debt Management Committee will evaluate loans using various standards, including the need for the loan, compliance with procedures in its procurement, and its effect on the economy. Additionally, the committee will review if the resources were directed toward initiatives that may promote sustainable economic development. Given that the nation’s debt situation ranks among the most significant in Africa, this legislative assessment seeks to prevent additional increases and ensures that future loans are consistent with the country’s developmental priorities. The investigation evaluates the federal administration’s ability to fulfil its debt responsibilities while promoting social progress. Therefore, the committee plans to deliver its conclusions to the House within four weeks, which may result in potential legislative measures.