G20: When Nigeria Goes Fishing, by Fredrick Nwabufo

There seems to be a transition. A metamorphosis from the quotidian loan-driven articulations to investment-tailored pursuits and commitments. Nigeria has over successive administrations hypostasised borrowing in its bucket of foreign economic interests. These borrowings have over time put a cosmic strain on government revenue. Nigeria’s external debt stands at over N49.85 trillion, and about 73 percent of its earnings are used for debt servicing.

In June, the Debt Management Office (DMO) described Nigeria’s debt service-to-revenue ratio of 73.5 percent as ‘’unsustainable and a threat’’. The DMO said: “The country’s debt stock remains sustainable under these criteria, space has been reduced when compared to Nigeria’s self-imposed debt limit of 40 percent set in the medium-term debt management strategy (MTDS), 2020-2023. On the other hand, the debt service-to-revenue ratio at 73.5 percent in 2023 exceeds the recommended threshold of 50 percent due to low revenue, which means that there is a need to significantly increase government revenue. Under the alternative scenario, the total public debt-to-GDP ratio at 45.4 percent in 2023 exceeds Nigeria’s self-imposed debt limit of 40 percent. “

In May, KPMG warned that Nigeria might spend over 100 percent of its revenue on debt servicing. Clearly, a shift from this status quo has not only become necessary but also critical for the survival of the nation.

Nigeria has a revenue challenge, but with unchecked borrowing, this problem becomes compounded. So, the government has to come up with innovative measures of driving revenue as well as enchanting investment while weaning itself off prodigious borrowing.

In August, President Bola Tinubu said his administration was committed to breaking the cycle of overreliance on borrowing for public spending which results in the burden of debt servicing. The direness and exigency of the time demands this forward-thinking, innovation, and discipline. Borrowing has its edge, but when unmitigated and without financial discipline, it becomes an encumbrance of growth.

Nigeria has played a good hand at the G20 summit in India. The country went fishing for investments, and partnerships, — and not for loans. This is a diametrical shift from the status quo. As it is today, it is much more prudent and decent to go fishing for opportunities for the country than to go borrowing.

According to correspondence from the presidency, Indian investors made financial pledges amounting to $14 billion during the Nigeria-India Presidential Roundtable and Conference in New Delhi, India. These investors are said to include — Indorama Petrochemical Limited which pledged a new investment of $8 billion in the expansion of its fertilizer production and petrochemical facility in Eleme, Rivers State, and Jindal Steel and Power Limited, one of India’s largest private steel producers, which committed to investing $3 billion in Nigeria, following discussions with President Tinubu on the sidelines of the G20 Summit.

Also, the President of SkipperSeil Limited, Mr. Jitender Sachdeva was said to have announced that, following President Tinubu’s personal intervention, he was investing $1.6 billion in the establishment of 20 100MW power generation plants across the states of northern Nigeria, amounting to 2,000MW of new power within the next four years.

Bharti Enterprises, a major first-generation corporation in India with interests in telecom, space communications, digital solutions, insurance, processed foods, real estate, and hospitality, was said to have expressed its commitment to invest an additional $700 million in Nigeria — with work set to begin immediately.

The President was said to have approved the finalization of a new $1 billion agreement to bring the Defence Industries Corporation of Nigeria (DICON) to 40% self-sufficiency in local manufacturing and production of defense equipment in-country by 2027 through a comprehensive new partnership with the Managing Arm of the Military-Industrial Complex of the Indian Government.

A third MoU on Infrastructure Development was said to have been signed between the Infrastructure Corporation of Nigeria Limited (InfraCorp) and Invest India, the National Investment Promotion, and Facilitation Agency of India.

Going by the reports from India, it has been a fruitful outing for Nigeria — if not the most rewarding from a single event. The leadership has shown capacity and facility for private capital attraction, and it is essential that this shift to innovativeness is sustained.

However, it is important that the business environment is made conducive for investors. It is one thing to attract private capital, and it is another to retain it. Nigeria is currently ranked 131 out of 190 economies on ease of doing business. The business environment, today, is not very friendly. From tremulous infrastructure, poor power supply, asphyxiating taxes, insecurity, bureaucracy, and corruption, to an undisciplined civil service – all these contribute to making the business environment precarious.

Already, the government is beginning to address the constraints to business as regards taxes; I believe it will look into other factors.

To go fishing is a more intelligent approach than to go borrowing unchecked.

By Fredrick Nwabufo, Nwabufo aka Mr One-Nigeria is a media executive.