MAY 29 HANDOVER: BUHARI ADMINISTRATION PASSES ON N46 TRILLION IN DEBT TO TINUBU

The N46.25 trillion debt load would be passed on to the next government by President Muhammadu Buhari.

Nigeria's overall debt stock has reached 46 trillion, according to the Debt Management Office.

According to report, the government said it has secured approval from the World Bank on another N369 billion loan ahead of the elimination of gasoline subsidies in June 2023, despite the dust already created by the enormous existing debt burden.

Nigeria's debt profile has expanded from N12.6 trillion in 2015 to nearly N46 trillion in 2023 during the Buhari government.

The scenario has continued to generate budgetary concerns, particularly since the International Monetary Fund, IMF, stated that Nigeria's treasury will be nearly depleted by debt servicing by 2022.

The Federal Inland Revenue Service claimed it collected N10 trillion in revenue in 2022, with a N21.83 trillion budget expenditure in 2023 based on deficits of N11.34 trillion.

Nigeria is currently choked by the challenges of debt sustainability and economic insecurity.

Tinubu would take on the onerous task of overcoming the country's economic challenges after his inauguration on May 29, 2023.

However, economic analysts believe that repairing Nigeria's debt-ridden economy will be difficult.

Prof. Bongo Adi, a Professor of Economics at Lagos Business School, told media on Monday that Buhari's government has mortgaged the country's future through onerous liabilities.

According to him, the Nigerian economy will face difficulties in the coming days since Buhari has left the country bankrupt.

However, he said that the only plausible alternative for the new government is to seek debt renegotiation, as is common practice around the world, if the government has credibility.

"With such a colossal debt burden without apparent means of repayment, the already unsustainable debt profile undermines fiscal sustainability, no matter what the next government will do.

"There is another borrowing spree of $800 million from the Word Bank without how to pay back.

"They are taking advantage of borrowing to share among themself as they want to exit because they know that nobody would hold them to account.

"There is nothing else to talk about; Nigeria is broke. The coming days are not going to be nice at all. Because if you look at the horizon with this kind of debt, we are not bleeding only from the financial side but all ramifications.

"Medical doctors and professionals of all cadres are leaving, so who will create the money to pay back the loans? The factors that drive economic activities are fast depleting.

"So when they go on accumulating loans, they endanger the lives of everybody. Based on the way it is, today's situation is better than what we will see in the incoming days. They are handing over a dead economy to Tinubu, and I don't know which magic he would perform.

"The World Bank's advice has never helped Nigeria or a developing country. There is nothing they would tell you that will work.

"The only thing I can tell you is to renegotiate our debts; however, for anyone to listen, there must be credibility. Now will the incoming government assemble credible individuals?

"The most important thing is to give young Nigerians hope to stay in the country, but then you have to stabilise the economy and security. Every country invests in the youth, but that is not the situation in Nigeria, so who would grow the economy? The priority of the coming government should be how to find creative ways to assure the youths of hope in Nigeria", he stated.

Furthermore, Dr. Ayo Teriba, Chief Executive Officer of Economic Associates and an economic specialist, stated that Buhari's government made the mistake of not transitioning from income-based debt management to an asset-based debt management approach.

He claimed that this is what Brazil and India did to attract Foreign Direct Investment into their respective countries.

He urged Nigerians to support the appeal for the new government to prioritize equity financing over debt financing in order to expand the economy.

"They replaced the government that enjoyed an income boom from commodity prices. An annual average oil price per barrel had been way below $100pb, but the Buhari economy faced declining revenue.

"It continued borrowing such that towards the end of the administration, debt cost rose as high as the revenue. It is threatening the fiscal outlook of the country that by the time you pay interest on them, you won't have anything left.

"The Buhari administration would have changed our borrowing model but did not because they kept hoping the oil price would increase.

"The incoming government has learnt a lot from the mistakes of Buhari. Going forward, the incoming should borrow against assets, not against income. For example, Saudi Arabia and Malaysia did the same thing.

"I expect the incoming administration will not issue the same instrument as Buhari's government did.

"Nigeria should move to asset-based borrowing, in the process, unlock revenue for both investors. Nigeria has options: the country is blessed with a lot of assets.

"Instead of issuing debt, equity should be issued; I don't see why Nigeria cannot attract equity. Nigeria's prospect of attracting equity is brighter than that of India and Brazil. The clarion call is for Nigerians to support the incoming government to transit to equity issuance. Nigeria's potential of issuing equity is greater than that of debt", he stated.

According to Mr Idakolo Gbolade, CEO of SD & D Capital Management, the next government must be prepared for serious business because significant harm has been done to Nigeria's economy.

He emphasized that Tinubu's administration must find innovative ways to increase the country's revenue capacity.

"The incoming government should by now know that they are coming for serious business, and their handling of our loan portfolio in the next six months after inauguration will be one of defining moments in the administration.

"Apart from the world bank loan of $800 million, the out-going government had also planned to use additional loans to fund the 2023.

"The new government needs to devise ingenious ideas to avoid a debt trap similar to Kenya by ensuring that urgent measures are implemented to increase revenue and cut waste.

"The government must reach out to significant lenders like China to readjust repayment terms so that funds to be freed up will be used for targeted infrastructures that can generate additional revenue.

"The incoming government should also critically look at CBN policy measures aimed at curbing inflation to adjust it to reality on the ground.

"Proactive measures must be taken to shore up our oil and gas revenue, and we must renew confidence in our trading partners with assurances that we can fulfil our obligations.

"Issues like subsidy removal and palliative must be adequately spelt out, and accountability must be on the front burner going forward.

"Revenue-generating agencies of government should be audited with a view to producing better performance and surpassing set targets.

"Nigeria has huge untapped economic opportunities and resources which must be explored for the betterment of the people", he stated.

According to Mr Idakolo Gbolade, CEO of SD & D Capital Management, the next government must be prepared for serious business because significant harm has been done to Nigeria's economy.

He emphasized that Tinubu's administration must find innovative ways to increase the country's revenue capacity.