As the National Assembly prepares to receive the 2025 budget proposal of N47.9 trillion this week, some prominent Nigerians, including Senator Adamu Aliero, wonder why Nigeria still takes loans, despite claims by the Tinubu administration that the nation is earning more.
Since its inception in mid- 2023, the Tinubu government has racked up $6.45 billion loan. And, if it’s any consolation, a fact-check has proven to be a hoax the claim that Mali has paid up all its debts; it paid only a part of it.
In 2023, Nigeria earned N10.143 trillion, a 23.50 per cent increase over the N8.209 trillion earned in 2022. Yet the 2025 budget proposal includes a N9.2 trillion deficit, the financial world’s euphemism for loan!
Senator Aliero observes that “Virtually all the revenue generating agencies have met their targets – the Nigerian Upstream Petroleum Regulatory Commission, the Federal Inland Revenue Service and Nigeria Customs Service… Some have even exceeded it by more than 20 per cent. The issue is, ‘Why do we go borrowing if we have actually met our target?’ What are we doing with (the) excess revenue?”
Contrary to expectations that the removal of subsidy from petrol, electricity and foreign exchange will make more money available for governance, it appears that all the tiers of government are still broke, and therefore need funds from sources other than Nigeria’s earnings from petroleum, gas and taxation.
While accountants may argue that loans are kosher for project financing, if the loans are applied to revenue earning projects, American Marxian economist, Richard Wolff, has a deeply contrary opinion about loans that America is taking from its intense competitor, China, which greedily snaps up its Treasury Bills and Treasury Bonds.
Wolff correctly argues that Americans must find a way to cough out considerable tax in order to service and pay back the $800 billion that Uncle Sam, the world biggest debtor, owes China. The same fate could have awaited Nigerians, except they hardly pay taxes, although some reports claim that Nigeria’s tax receipts increased by 56 per cent in 2023.
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But as Nigeria’s tax liability is absorbed by its immense petro-dollar revenue, good money is diverted from infrastructure that is desperately needed for its social and economic development, probably the way official corruption also took good money away from expenditure on education, healthcare, water and other welfare needs of Nigerian citizens.
Some renowned economists are also concerned about the debt burden and think that too much accumulation of debt, coupled with the drastic devaluation of the naira, may jeopardise Nigeria’s efforts at economic development. Others think this trend can reverse the economic fortunes of Nigeria that is already struggling to maintain its position as Africa’s biggest economy.
This becomes even more accentuated by the huge cache of naira needed to acquire the convertible currency needed to fund Nigeria’s profligate importation of strategic consumer goods and to service and eventually repay the debts that it continues to take from the Bretton Woods institutions and China.
Here’s a question that Nigerians need to ask their public finance managers: “To what purpose are the loans that they keep piling up are put?” It would be suicidal if the loans are taken to finance only workers’ salaries, their allowances and other overheads.
Some Nigerians are wondering aloud if the removal of subsidies is not putting too much money in the hands of profligate politicians at the state and local tiers of governments. Sudden appearances of sleek SUVs in various state houses seem to justify the query.
But the government must address the query of Senator Aliero and other loan skeptics; provide satisfying answers with relevant, verifiable and convincing statistics to explain whether Nigeria’s revenue truly exceeds its budgeted expenditures or there is some “voodoo economics” hidden somewhere.
If Senator Aliero, a usually taciturn individual, a former state governor and prominent member of the ruling All Progressives Congress political party, is openly querying government’s actions, it is necessary to pay more than passing attention to him.
We suggest that the public finance managers should consider sitting down with Senator Aliero, a tax expert, to gain from the insight that he may not have expressed in public. He may have a trick that could close the debt-revenue gaps that he has observed.
