Despite the Federal Government’s claim of borrowing to finance infrastructure, the World Bank has rated the level and quality of infrastructure in Nigeria as low.
World Bank had in its Nigeria public finance review report said that Nigeria’s physical infrastructure gap would likely reach $3trillion in the next 30 years.
The report said: “The level and quality of Nigeria’s infrastructure quality is low, with the country ranked 132 out of 137 countries for infrastructure in the 2018 Global Competitive Index. Nigeria’s physical infrastructure gap is estimated to reach $3trillionn over the next 30 years.”
It added that Nigeria’s development outcomes were among the lowest globally, which indicated high public spending needs.
The Washington-based bank also noted that it would take Nigeria 300 years to close infrastructure gap, which would cost the country four per cent of its GDP yearly.
“At the current rate of expenditure allocation, it would take 300 years to close the country’s current infrastructure gap. Closing Nigeria’s infrastructure gap would cost at least four per cent of GDP growth per year,” the report added.
In September 2021, the Minister of Information and Culture, Lai Mohammed, said the Federal Government was borrowing to build world-class infrastructure and not for recurrent expenditure.
The minister made the statement at the town hall meeting organised by his ministry on the destruction of telecommunications and power infrastructure in Borno State
Similarly, the President, Major General Muhammadu Buhari (retd.), in October defended his government’s borrowing, describing it as a necessary step to provide the infrastructure that would expand opportunities for the growth of the Nigerian economy.
Buhari said: “We have also continued to accelerate our infrastructure development through serviceable and transparent borrowing, improved capital inflow and increased revenue generation by expanding the tax bases and prudent management of investment proceeds in the Sovereign Wealth Fund.”
Nigeria currently has a debt burden of about N66.61trillion, which includes N23.77trillion from the Central Bank of Nigeria (CBN) and N42.84trillion from domestic and foreign creditors.
The PUNCH recently reported that the country’s debt rose by N30.72trillion between July 2015 and June 2022, according to data released by the Debt Management Office.
According to the DMO statistics, Nigeria’s total debt as of June 30, 2015, stood at N12.12trillion. By June 30, 2022, the figure had risen to N42.84trillion, which showed an increase of 253.47 per cent. Despite the high increase in debt over the years, the government still plans to borrow N8.4trillion in 2023.
The PUNCH also reported that the Federal Government had borrowed N6.31trillion from the Central Bank of Nigeria through Ways and Means Advances in 10 months.
This pushed the Federal Government’s borrowing from the CBN from N17.46trillion in December 2021 to N23.77trillion in October 2022.
Ways and Means Advances is a loan facility through which the CBN finances the shortfalls in the government’s budget.
The N23.77trillion owed to the apex bank by the Federal Government is not part of the country’s total public debt stock, which stood at N42.84trillion as of June 2022.
The World Bank had, in November 2021, warned the Nigerian government against financing deficits by borrowing from the CBN through the Ways and Means Advances, saying this put fiscal pressures on the country’s expenditures.
Despite warnings from experts and organisations, the Federal Government had kept borrowing from the CBN to fund budget deficits.
A development economist, Dr Aliyu Ilias, criticised the government for its constant reliance on borrowing, which was unhealthy for the economy.
He urged the government to seek better ways of generating revenue rather than persistently borrowing from the apex bank.
