The current Federal Government has come under severe attacks in recent times for its alleged penchant for debt, which, at current level , stands at N28.63 trillion, according to the National Bureau of Statistics . The nation’s data body also said that a total of N3.69 trillion was incurred in just one year, representing a 15 per cent increase from the N24.94 trillion it was at the same period last year.
Unfortunately, the international market, which, according to Professor of Economics Sheriffdeen Tella, is “happy doing business with Africa’s love for foreign loans” stands on one leg. This has not only forced government to look inwards, as admitted by the Minister of Finance, Budget and National Planning, Zainab Ahmed, but may also lead to cut-throat offers that will pull the scarce liquidity from other windows and make cost of private-sector borrowing unaffordable.
“So, private investors will not be able to compete with the government. The interest rate will be unaffordable by private sector. Indeed, private and corporate investors consider public investment assets more attractive than those floated by private organisations. For instance, at 11.2 per cent rate, the third Sukuk bond issued amid liquidity crunch offered a negative real interest rate. Still, it was oversubscribed by 446 per cent, even in the face of a liquidity crunch.
“We should not forget that we have the pension fund that runs into several trillion; that can also be tapped,” The professor said. According to him, “The planned national savings scheme is aimed at mobilising trillions of naira. People are even worried about where to keep their assets in the face of the current uncertainty. People are fleeing the stock market because of what is happening. Where would they go? They are going into government security.
He continued: “There is the need to ask for a moratorium on our loans and stop borrowing from abroad. There is money to be borrowed in this country, and it is cheaper. The government has been borrowing from the domestic market. Such borrowing can come from the Central Bank of Nigeria ’s treasury bills, other short-term commercial papers and the capital market. We can create different bonds – five-year, 10-year development, Sukuk and Diaspora – to realise this.
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