Nigeria’s national debt has ballooned to N134 trillion, with an average debt burden of N619,501 weighing on each Nigerian. This significant debt level has raised widespread concerns about the country’s fiscal sustainability, especially as interest payments consume a substantial portion of government revenue. According to Dr. Tofunmi Ogunronbi, an advocate for Sustainable Development Goals and former gubernatorial candidate, Nigeria’s approach to handling its debt and reliance on foreign loans is akin to a business on the brink of bankruptcy. For Nigeria to avoid this economic downfall, Dr. Ogunronbi stresses that the nation must prioritize internal growth strategies and focus on achieving self-sufficiency to build a stable economic future.
1. Shift from Foreign Loans to Private-Sector Partnerships
Over the past two decades, Nigeria has heavily relied on foreign loans to fund critical infrastructure and social programs. While these loans have supported short-term growth, the high-interest repayments are now limiting Nigeria’s ability to allocate funds to necessary services and development projects. Dr. Ogunronbi suggests that Nigeria can mitigate its reliance on foreign debt by expanding partnerships with the private sector to fund infrastructure, healthcare, and education. By enabling the private sector to take a leading role in essential projects, Nigeria can reduce debt exposure, unlock entrepreneurial resources, and improve service delivery in ways that are both innovative and financially sustainable.
2. Overhaul the Diaspora Investment Fund to Maximize Contribution to Nigeria’s Development
Nigeria’s large diaspora population contributes billions in remittances annually, yet much of this money is directed toward personal expenses rather than developmental projects. Dr. Ogunronbi advocates for a thorough overhaul of the Diaspora Investment Fund to ensure it functions effectively according to its mandate of contributing to Nigeria’s development. This fund, when fully operational and effectively managed, can enable Nigerians abroad to invest directly in impactful national projects across infrastructure, energy, and technology. Through increased transparency, attractive returns, and clear governance, the fund can attract significant diaspora capital, thus driving economic growth without additional foreign loans.
3. Localizing Mineral Resource Processing
Nigeria is rich in mineral resources, including gold, limestone, and iron ore. Despite this, the country primarily exports raw minerals, only to later import the finished products at significantly higher prices. Dr. Ogunronbi calls for the establishment of domestic industries that can process these resources into value-added products. By processing minerals domestically, Nigeria would retain more of the economic value within its borders, create jobs, and increase tax revenue. Furthermore, this approach would position Nigeria as a competitive player in the global value chain, bringing in foreign exchange that could go toward reducing the national debt.
4. Diversifying Beyond Oil and Encouraging Agricultural Development
Nigeria’s dependence on oil for over 90% of its export earnings makes the economy extremely vulnerable to oil price fluctuations. To counter this, Dr. Ogunronbi emphasizes the urgent need for economic diversification, particularly in agriculture. By investing in agricultural technology, Nigeria could significantly boost productivity, turning the country into a major global exporter of food and agricultural products. Investments in agricultural processing industries, such as food packaging and storage, could further enhance Nigeria’s position in international markets. This not only reduces dependency on oil but also builds a robust economic sector that can help mitigate the debt burden.
5. Fostering a Culture of Fiscal Responsibility and Transparency
Reducing Nigeria’s debt requires a firm commitment to fiscal responsibility and transparency. Dr. Ogunronbi stresses that every loan must have clear objectives, measurable outcomes, and be used solely for productive purposes. By creating oversight mechanisms, Nigeria can improve accountability, ensuring that public funds are used efficiently. Additionally, curbing corruption would significantly reduce the economic leakages that exacerbate debt. Fiscal responsibility also involves curtailing excessive government spending on non-essential items, which could free up resources to pay down debt and invest in areas that drive growth.
6. Promoting Export-Oriented Manufacturing
To improve its debt situation, Nigeria needs to increase its foreign exchange earnings through a well-structured export-oriented manufacturing sector. Dr. Ogunronbi believes that Nigeria has untapped potential in industries such as textiles, electronics, and furniture manufacturing. By establishing special economic zones with favorable business conditions, the government could encourage investment in these industries. A thriving manufacturing sector would not only create jobs but also generate valuable foreign exchange that could be directed toward debt servicing and economic development.
7. Developing Renewable Energy for Long-Term Savings
Energy costs account for a significant portion of the government’s expenses. Nigeria’s natural endowments in solar, wind, and hydro energy resources offer a sustainable pathway to reduce energy costs and reliance on imported fuels. By investing in renewable energy infrastructure, Nigeria can generate significant savings in the long run, which could be redirected toward paying down debt. A renewable energy sector would also attract green investments from international organizations, reducing Nigeria’s need for conventional loans.
8. Promoting Responsible Borrowing and Ensuring Productive Debt Use
Finally, Dr. Ogunronbi calls for a strategic approach to borrowing, where loans are taken only for high-impact projects with clear, measurable returns. This disciplined approach to debt management would involve robust project evaluations, ensuring that every dollar borrowed contributes directly to economic growth. Such a framework could prevent wasteful projects and eliminate instances where borrowed funds fail to yield tangible benefits.
Reducing Nigeria’s national debt is challenging but achievable through comprehensive reforms and strategic initiatives. From developing local industries and diversifying the economy to engaging the Nigerian diaspora and ensuring fiscal discipline, Nigeria has numerous avenues to reduce its debt burden. Dr. Ogunronbi’s insights offer a path toward a more sustainable and prosperous Nigeria. By focusing on internal growth strategies, promoting economic diversification, and upholding transparency, Nigeria can chart a course toward fiscal independence and long-term economic stability.
