Civil Society Legislative Advocacy Centre (CISLAC) says a major contributor to Africa’s rising public debt is the unprecedented influx of private lenders to developing economies, in search of higher returns outside advanced economies.
Mr Auwal Rafsanjani, Executive Director, CISLAC, said this at a news conference in Abuja on Monday. The conference addressed the ‘Increasing Role of Private Creditors in Nigeria’s Debt Crisis and its Human Costs.’ It was organised in collaboration with Christian Aid Nigeria, a non-governmental organisation.
Rafsanjani said Nigeria’s debt was growing and increasingly putting the country in a precarious situation, adding that it had significant implications for human rights.
He further observed that the situation had implications on education, health, climate change mitigation and adaption and that there was a need for collective action to address the debt crisis.
He said the past decade had seen the largest, fattest and most broad-based increase in debt in emerging and developing countries in the past 50 years.
He noted that the total debt in these areas had risen by 54 per centage points of Gross Domestic Product (GDP) to a holistic peak of almost 170 per cent of GDP in 2028.
“A major contributor to this increased public debt level is the unprecedented influx of private lenders flooding developing economies as they look for higher returns outside advanced economies.
“This is sequel to the global financial crisis of 2008.
“According to the Debt Management Office (DMO), Nigeria’s total public debt stock as of June 30, 2022 was N42.84trillion.
“It is instructive to recall that Nigeria’s debt service cost presently outweighs its revenue, with clear signs of economic dangers ahead,” he said.
Rafsanjani said with the refusal of private creditors to embrace debt relief initiatives, the Nigerian government would continue to spend a significant part of its budget to service loans.
He said this would come under stringent conditions, including high interest rates, adding that it would drastically reduce due commitment to more critical socio-economic sectors like health and education.
He said that in the Nigerian context, about 90 per cent revenue was devoted to debt serving at the expense of development projects.
He noted that the group was concerned with the lack of vigorous scrutiny and attention by lawmakers in granting requests for loans without reflecting the provisions of the Fiscal Responsibility Act and the greater implication for the nation’s economic state.
He pointed out that Nigerian legislators had the constitutional and legislative mandate to approve loan requests only on the basis of public interest and should put this clause as a prerequisite to any approvals they might want to give.
Rafsanjani said the group had inaugurated a research product centred on revealing and challenging the role of private creditors in hindering people’s recoveries to enhance the urgency with which the international community should address sovereign debt crisis.