Professionals in the Association for Public Policy Analysis (APPA), as well as the U.S.-Nigeria Trade Council (USNTC), asked the Federal Government to stop borrowing to finance the power sector.
They said this on Tuesday in Abuja, where they pointed out that the country cannot afford it and no borrowing should be done until progress is made in the sector.
The Council’s Executive Director/CEO, Titus Olowokere, and Financial Advisor, Joseph Oyediran, said: “We recommend that Nigeria should stop taking new loans as we can’t afford it any longer, due to our national debt, most especially, foreign loans, which have more than tripled over the past four years from $7.5billion to over $25billion.
“Debt Service Cost to Revenue Ratio (DSCR) is almost 70% already; only 30% of FGN revenue is available for capital expenditures and recurrent expenditures due to revenue constraints. At the rate Nigeria is booking new loans, financial crisis may be imminent unless FGN retires at least $10 billion within its debt portfolio, to reduce annual debt service costs.”
Recall that the Minister of Finance, Zainab Ahmed, had revealed that the government’s request for a $3billion World Bank loan to finance the power sector was on the verge of being granted.
The National President of APPA, Princewill Okorie, said that between 2017 and 2018, the Federal Government collected a $1billion loan from the World Bank to fix the power under the Power Sector Recovery Programme (PSRP).
“In our opinion, rather than collect loans, which increase Nigeria’s debt profile and eat up large chunk of the federal budget in debt servicing like the 2020 budget proposal that has appropriated the sum of N2.45 trillion for debt servicing, efforts should be made to encourage the independent electricity distribution networks to function optionally,” Okorie stated.