Abuja, June, 22, 2023: A don, Prof. Jonah Onuoha, has advised the Federal Government to review its foreign loan regime to ensure sustainable debt management.
Onuoha, a Professor of International Relations and Head of Political Science Department, University of Nigeria, Nsukka, gave the advice on Wednesday in Abuja.
The don, also Director, Centre for American Studies and pioneer President of Abia Forum Nsukka (AFN), said debt incurred by past administrations contributed to the persistent inflation being experienced in the country.
According to him, increase in debt can impact negatively on the purchasing power of citizens as well as the interest rates which is the cost of borrowing.
“Collecting loan is not a problem, as far the loans are used for something very important and have a way to pay.
“There is no country that is above collecting loans, the central thing is can you pay back and can the loan generate benefits?
“The true position is that the amount taken out as loan does not get anywhere, but is diverted to private pockets.
“If the loan is taken for infrastructural development like railways, it can generate money for repayment, so there is nothing wrong with collecting loan.
“The problem is we collect loans, but do not see what the loans are used for; therefore, there is the need for government to review its loan regime,” he counselled.
He expressed displeasure in the practice whereby previous administrations incurred foreign loans without proper review, saying “such contributed to the nation’s economic problem and positioned Nigeria as one of the biggest debtors globally”.
He reiterated that strategic measures need to be taken to reduce intake of foreign loans.
Onuoha said instead of relying on foreign loans government should rather boost revenue generation mechanism in order to achieve meaningful economic growth for the country.
“The new government administration should only collect loans when the need arises, but it should utilise such loans appropriately.
“The past administration over borrowed, it borrowed so much that it incurred the need for internal re-organisation and internal productivity,” he advised.
He said although a country could utilise loans received from a foreign lender to meet various expenditures, a lot should be done to tackle challenges that come with such.
Onuoha identified such challenges often posed by foreign debts to include slow economic growth, financial market difficulties, rise in human rights abuses and reduction in business investment.
“There should be focus on raising revenues, not just to service loans and to forestall borrowing.
“Borrowing money is not a good thing, but you borrow when it is necessary.
“You borrow to put streetlights, you can borrow to construct roads, build schools, but borrowing to put in your pocket is corruption and that should not continue,” he cautioned.
