Nwani: Nigeria’s debt-to-GDP likely to hit 100% by 2030

Nigeria, a country in West Africa, is currently facing a looming debt crisis, with its debt-to-GDP ratio rapidly approaching the 100 per cent mark by 2030. Vincent Nwani, the Strategy Leader for West Africa at Safrik Investment Group, has raised concerns about Nigeria's increasing debt burden and the need for a specific fiscal framework to ensure financial stability in the future. Nigeria's debt trajectory is alarming, with total debt soaring from 12 trillion to over 100 trillion in the past nine years, representing a staggering growth of over 800 per cent. While the government has implemented various reforms, such as subsidy cuts and tariff increases, the country's debt-to-GDP ratio has surged from 20 per cent to 52 per cent. At the current rate of growth, Nigeria is projected to reach a debt-to-GDP ratio of 100 per cent by 2030. One of the major concerns raised by Nwani is the lack of tangible outcomes from the borrowed funds. He emphasizes the importance of investing borrowed money in projects that benefit future generations and generate revenue to repay the debt. With Nigeria's revenue-to-GDP ratio at 75 per cent, a significant portion of the country's income is already allocated to debt servicing, raising fears of a potential debt trap or default. The interview also delves into potential solutions to Nigeria's debt crisis, including selling national assets, attracting private investments, and fostering strategic partnerships with emerging markets. Nwani highlights the importance of setting borrowing thresholds and fiscal incentives to stimulate economic growth and ease the debt burden. In response to recent fiscal incentives introduced by the government, such as VAT modifications and tax relief for specific projects, Nwani acknowledges the efforts but emphasizes the need for effective implementation and monitoring. He calls for better coordination within the economic team to ensure that policies translate into tangible results. Looking ahead, Nwani forecasts a GDP growth rate of around 3 to 3.5 per cent for the last quarter of the year, emphasizing the importance of realizing the desired outcomes of recent reforms. As Nigeria navigates its debt challenges, the focus remains on achieving financial stability and sustainable economic growth to avert a potential debt default. In conclusion, Nigeria stands at a critical juncture where strategic fiscal decisions will determine its economic trajectory in the coming years. With proactive measures and effective governance, Nigeria can chart a course towards financial stability and sustainable debt management by 2030.