By Bassey Udo
The Nigerian economic think-tank, the Nigerian Economic Summit Group (NESG) on Thursday proposed a ten-point integrated strategy that combines debt, revenue and expenditure planning towards sustainable debt management in the country.
The proposal was contained in a report on the action plan for revenue optimisation, expenditure efficiency and debt management.
The formal presentation of the full report on debt management and sustainability in the Economic Community of West African States (ECOWAS) to the Debt Management Office (DMO) was in conjunction with the Open Society Initiative for West Africa (OSIWA) at the Debt Management Roundtable (DMR), an initiative of the NESG.
If the debt management agency finds the proposal useful, it might be adopted for possible implementation in the country.
At the inauguration of the DMR in March 2021, it was tasked with providing viable alternatives and recommendations for sustainable public debt management by the government.
The initiative was in response to growing concerns over rising public debt profile in major countries, including Nigeria and possible spill-over effects to other ECOWAS economies, if left unchecked.
The Director-General of the DMO, Patience Oniha, described the launching of the report as timely, saying this could not have been more appropriate with the global debt levels already rising pre-COVID-19 and still growing since the COVID-19 pandemic started in 2020.
Oniha said concerns around debt sustainability have expectedly heightened, with World Bank’s World Economic Outlook estimates suggesting global sovereign debt grew from 49.1 percent of gross domestic product (GDP) in 2014 to 57.9 percent in 2019.
In sub-Saharan Africa, the World Bank said the figures grew from 35.1 percent of GDP in 2014 to 55.4 percent in 2019.
The respective figures for 2021, the DMO said, were 66.7 percent and 60.3 percent.
She said indications were that the trend would continue, as the economic consequences of COVID-19 may linger for a longer period, coupled with the increased economic pressures in the form of rising inflation from higher food and energy prices caused by the Russia-Ukraine war.
In its World Economic Outlook for April 2022, the IMF projections showed the average debt-to-GDP ratio in West Africa was expected to rise to 67.2 percent in 2022, from 56.4 percent in 2019.
The NESG CEO, ‘Laoye Jaiyeola, highlighted in his statement the depth of research and sub-regional collaboration involved in the production of the report, noting its significance for sustainable debt management across the region if adopted and implemented.
“At the NESG, our mission is an open, inclusive, sustainable and globally competitive economy. We champion sustainable debt management, because unsustainable public debt accumulation is inimical to economic growth, not only in Nigeria, but ECOWAS as a whole,” he said.
Nigeria, Jaiyeola noted, was a focal point for debt sustainability, considering that the country accounts for 50 percent and 67 percent of the ECOWAS region’s total debt and GDP respectively.
This situation, he said, behoves stakeholders in the country to adopt more sustainable strategies to create the required fiscal space for national development, with positive knock-on effects in other ECOWAS nations.
The DMR Chairman, Taiwo Oyedele, identified corruption in public spending, insecurity, geo-political challenges, resource over-dependency, and a shallow tax base, as some major drivers of unsustainable debt.
“The DMR report is holistic and includes workable recommendations that, if adopted, can prevent West Africa from getting into a debt trap. Debt in and of itself is not a bad thing. It is what we do with the debt that really counts. So, how can we begin to apply the resources that we make – whether internally generated or money borrowed – in an efficient manner, to promote productivity and prosperity for our people?” he said.
The report, he added, provides answers that should help steer Nigeria and other ECOWAS countries towards debt sustainability.
In addition, he said, the report provides some background on the ECOWAS fiscal landscape and public debt portfolio, including several policy recommendations for debt sustainability and key performance indicators.
The presentation, held at the National Debt Management Office in Abuja, was witnessed by representatives from Nigeria’s public and private sectors, including the International Monetary Fund (IMF) Country director, Zainab Mangga, as well as Abel Essien of the ECOWAS Commission and Paul Adeyeye of OSIWA.