Fact Check: Is Obasanjo’s claim on Nigeria’s external debt true?

Nigerian former president Olusegun Obasanjo claimed that Nigeria’s external debts has grown to N24.947 trillion or $81.274 billion in the last four years.

Obasanjo on Friday in Lagos at the first edition of the Nigerian Story organised by the ‘Why I Am Alive’ campaign said Nigeria risks bankruptcy with its penchant for loans under the current administration and the amount used in servicing the loans.

He said he feels it is his “duty and responsibility as a citizen to enrich public discourse with insights and perspectives on topical national issues.”

“In four short years by March 2019, our external debt grew to N24.947 trillion or $81.274 billion. To service this current level of indebtedness, we must commit at least 50 percent of our foreign earnings. Such a situation talks about an impending bankruptcy,” Obasanjo said.

That claim does not reflect the true state of Nigeria’s external debt.

What is Nigeria’s external debt rate?
According to Nigeria’s Debt Management Office latest report released in June 2019, the country’s total debt stock is $83.883 billion, made up of $27.163 billion of external debt and $56.720 billion domestic debt.

DMO reports on Nigeria’s debt every three months. Out the $27.163 billion, $22.887 billion is owed by the Federal Government. The states and FCT are responsible for $4.274 billion.

It is therefore not correct to say that Nigeria’s external debt alone is $81.274 billion.

Buhari’s administration debt history
DMO reports that at the end of March 2015 – two months before Buhari took office on 29 May – the country owed a total of N12 trillion.

At the end of June 2015, this debt had risen slightly to N12.1 trillion. This was US$63.8 billion at the official exchange rate of the time, N196.95 to the dollar.

By the end of June 2018, total public debt had almost doubled to N22.4 trillion. The debt office said the latest increase comprised of a US$2.5 billion Eurobond issued by the government in February 2018. (Note: A Eurobond is a loan given out in a currency that is different to the currency of the country where it is issued.)

This took Nigeria’s total debt to US$73.2 billion, using the Central Bank of Nigeria’s 2018 exchange rate of N305 to the dollar.

History?
Since assuming office in 2015 President Buhari’s governments have added considerably to the nation’s debt, which the DMO puts at $83 billion at the end of June. In essence, the nation’s debt is about where it was in 2005-06 – a time Obasanjo was the president of the country.

As at December 2004, Nigeria’s debt was US$36 billion which Obasanjo, as the president then said was unsustainable. Nigeria spends more on interest payments than it does health care and education. Given this debt level, Nigeria cannot achieve the Millennium Development Goals.

Hence, in October 2005, Nigeria and the Paris Club announced a final agreement for debt relief worth $18 billion and an overall reduction of Nigeria’s debt stock by $30 billion. The deal was completed on April 21, 2006, when Nigeria made its final payment and its books were cleared of any Paris Club debt.

However, analysts opined that “to have squandered the debt reduction in just fourteen years and have no tangible economic progress to show for it is beyond disappointing.”