We Should Be Bothered Over Our Foreign And Domestic Debt – Obasanjo

Former President Olusegun Obasanjo has stated that Nigeria is rapidly sinking under the weight of foreign and domestic debts, and this should border us.

Obasanjo said this on Friday while presenting a paper titled ‘Nigeria: The Challenges of Debt and Sustenance of Democracy.’

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“There is a dangerous emerging trend today in Africa, and it is eerily familiar with developments on the continent in the 70s.

“Our political leaders have suddenly developed not just a taste for, but a voracious appetite for debt.

“As usual, most of such debts procured are hardly thought through. Predictably, ability to repay such debts is lacking.

“Unfortunately for us and unlike in the past, the new creditors are less tolerant of our limitations and inadequacies and are now demanding to manage institutions and agencies with a view to recouping their loans.”

He further stated that using debt to finance growth and/or development is a double-edged sword that must be wielded with a high degree of discipline, responsibility, and foresight.

While stating that a well-calibrated debt for infrastructure and other developmental goals could be positive, the former president said the present government is notoriously deficient in serious and adequate discipline and most often lack competence and consistency as well.

Citing an example of Lagos, which borrowed to build a light rail, but the succeeding government abandoned for its full four years even at “65% completion when it should have started paying down the loan, Obasanjo stated that such problem is not limited to states.

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“The federal government built a nice looking extension to the Murtala Mohammed International Airport that looks completed from outside but not in service.

“To rub aboniki on the injury, some clowns are talking of demolishing the main airport and rebuilding from scratch. Where on earth is a poor country wasting resources that way?”, he asked.

Noting that defaulting on debt repayment is very easy and convenient, which also favours the creditor, he said deliquescent behaviour allows the opportunity to impose stipulated sanctions and later appear friendly by offering to restructure your debt.

“At the end of the day, what is done is simply to add to your interest payments and other fees to the principal sum at a high premium.

“So, overnight, a debt of USD$1 million will become $5 million in spite of the fact that you had repaid $1.2 million.

“I say this without fear of contradiction. I have borrowed from banks as a private sector operator and I have borrowed as a political leader, so I believe you would understand my fears and experience about jumbo loans and my agony in getting rid of our external debts and developing a sustainable approach to address our domestic debts.”

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