Akinwumi Adesina: Nigeria must decisively tackle its debt challenges

Akinwumi Adesina, president of the African Development Bank (AfDB), says Nigeria must “decisively” resolve its debt challenges to ignite economic growth.

In September, the Debt Management Office (DMO) said Nigeria’s total public debt (federal and state governments) climbed to N35.46 trillion at the end of the second quarter of 2021.

Speaking on Monday in Abuja at the opening of a two-day mid-term ministerial performance review retreat, Adesina said Nigeria’s debt service to revenue ratio is high.

The AfDB president, however, acknowledged that the debt-to-GDP ratio remains “moderate”.

Adesina said economic resurgence is possible when Nigeria removes “structural bottlenecks” that limit the revenue-earning potential of non-oil sectors.

“Nigeria must decisively tackle its debt challenges. The issue is not about the debt-to-GDP ratio, as Nigeria’s debt-to-GDP ratio at 35% is still moderate. The big issue is how to service the debt and what that means for resources for domestic investments needed to spur faster economic growth,” he said.

“The debt service to revenue ratio of Nigeria is high at 73%. Things will improve as oil prices recover, but the situation has revealed the vulnerability of Nigeria’s economy. To have an economic resurgence, we need to fix the structure of the economy and address some fundamentals.

“Nigeria’s challenge is revenue concentration, as the oil sector accounts for 75.4 % of export revenue and 50 % of all government revenue.

“What is needed for sustained growth and economic resurgence is to remove the structural bottlenecks that limit the productivity and the revenue earning potential of the huge non-oil sectors.”