The president of the African Development Bank (AfDB), Akinwumi Adesina, has said Nigeria has a debt service problem amid the Federal Government’s struggle with revenue growth pre-COVID-19 and aftermath of the pandemic.
Adesina stated that while the country’s debt-to-GDP ratio is moderate, Nigeria’s economy vulnerability has been revealed by the debt service, which he described as a “big issue” that needed to be addressed.
He put Nigeria’s debt service to revenue ratio at 73 percent, calling it a high rate, although Ripples Nigeria had previously reported that as of 2020, it was 97 percent, as debt gulped N3.34 trillion from the N3.42 trillion revenue generated last year.
This medium had also reported Fitch projected Nigeria’s debt service to revenue ratio to rise by 1,031 percent in 2022, citing rising debt – which is at N35.46 trillion as of last month of Q2 2021 – and low fiscal revenue.
The AfDB President said Nigeria needs to decisively tackle its debt challenges, and remove bottlenecks that affects resources for domestic investments needed to spur faster economic growth.
He made this known on Monday, at the two-day mid-term ministerial performance review retreat, where he added, “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.” Adesina stated.
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