TheCable

Kingsley Moghalu, former presidential candidate of the Young Progressives Party (YPP), has advised the federal government to consider the public-private partnerships (PPP) approach in infrastructure development — as a way of reducing the nation’s borrowing.

In June, the Debt Management Office (DMO) said Nigeria’s total public debt stock hit N33.10 trillion as at the end of the first quarter of 2021.

Also, BudgIT, a civic-tech non-profit organisation, said out of the federal government’s total revenue (N3.42 trillion) in 2020, N3.34 trillion (97 percent) was used for debt servicing.

Moghalu, in a recent statement, said the country is on a “dangerous and debt-induced fiscal cliff” as the continuous borrowing is “mortgaging” the future of Nigeria’s youth.

“The rate at which Nigeria’s public debt has increased in the last six years is unprecedented, alarming, and unsustainable. On the average, over N3.6 trillion is being added to the public debt annually,” he said.

“This massive borrowing, and the infrastructure investment that has been used to justify it, have grossly under-performed.

“Public-private partnerships should be the dominant approach to infrastructure development in a country like Nigeria, instead of contract awards that, from information available from comparable projects in countries such as Ghana and Ethiopia, are at best overvalued and, at worst, grossly inflated in their costs.

“It is debilitating that Nigeria is spending so much money that should go to development toward merely servicing the interest on our debt, not repaying the debt. It also makes justifications based on our debt to GDP ratio off-point.

“We have to stop further borrowing and start to manage the current obligations in order to avoid a sovereign debt default or, at best, a costly restructuring. Further borrowing will lead to a disastrous debt bubble bust.

“As alternatives to debt, the government needs to focus on increasing domestic revenue, by expanding the tax base – not by increasing tax rates as has been done with the value added tax (VAT) – and by introducing reforms for ease of paying taxes while abolishing multiple taxation.”

Moghalu further said the introduction of forensic audit of budgets is important to ensure value for money and support public revenue growth by restoring investor confidence in the economy.

He added that for Nigeria to realise a positive long-term public revenue outlook, the economy must be successfully diversified through value-added exports.