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Adi, Otobo, Anikulapo seek end to unsustainable public borrowings

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An economist at the Lagos Business School, Dr. Bongo Adi, Amb. Eqeviome Eloho Otobo, a US-based financial expert and ex-editor of The Guardian on Sunday, Jahman Anikulapo, yesterday, took a turn to condemn Nigeria’s appetite for debt financing, saying it would plunge the country into a major financial crisis if it remains unchecked.

Adi, who gave a keynote on ‘Debt Burden and Quest for Economic Recovery’ at the unveiling of Prime Business Africa, a new online newspaper, said the country’s debt to gross domestic product (GDP) was tolerable at 22 per cent.

He, however, warned that the debt to revenue ratio, which stands at about 90 per cent, portends danger to the economy.He expressed concern about the debt fungibility rate, saying the current political economy that tilts towards total state control was a challenge. The inability of the country to convert its debt to production input, he said, was a blight on the economy.

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Adi noted: “Debt is cheaper than equity as a means of financing”. But he expressed reservation that where the cost of borrowing was extremely high and the borrowed funds not channelled to the human, physical and social infrastructure required to create future wealth, debt comes at an unbearable cost.

The economist urged the government to begin aggressive incorporation of the private sector participation in infrastructure development to reduce its reliance on debts.

Eloho said the debt to GDP ratio was over 30 per cent and warned that “borrowing to fund recurrent expenditure was a major red light” and a sign that the future was bleak.

He observed that Nigeria’s tax to GDP “is currently about nine per cent, which is half of other Africa’s 18 to 20 per cent performance”, advising that the government reviews the opportunities in tax funding as against its rising appetite for debt.

Eloho, who is a consultant for public and private sector organisations in the United States, said no country borrowed for consumption escapes a major financial crisis, noting that Nigeria’s debt accumulation rate called for caution.

Anikulapo, a member of the board, said there were also transparency issues regarding the country’s external debts, which he said was a major source of worry to the citizens. He said Nigerians, who bear the burden of the debt deserved to know the true status of public borrowings.

Dr. Marcel Mbamalu, the publisher and editor-in-chief of Prime Business Africa, said the publication would make a bold statement on the country’s economic and business reporting.

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