Nigeria’s debt service to revenue ratio alarming – WTO, urges state governors to prioritse economic development

World Trade Organisation (WTO) has raised the alarm over Nigeria’s debt service to revenue ration, just as it charged state governors in the country to make economic development their priority while in office.

Speaking during the opening ceremony of a three-day induction programme for re-elected and serving governors organised by the Nigeria Governors’ Forum (NGF), in Abuja, Director General of the WTO, Dr Ngozi Okonjo-Iweala, further tasked the state chief executives to embrace economic reforms geared towards boosting the country’s internally generated revenue (IGR).

Dr Okonjo-Iweala, while speaking on the event’s theme; ‘Task of Nation Building,’ also urged the governors to imbibe best practices that would help deliver on their campaign promises to the electorate.

“Nigeria’s gross debt level has climbed from N19.3 trillion in 2015 to N91.6 trillion in 2023. The debt-to-GDP ratio has almost doubled from 20 percent to 39 percent over that time period,” she said.

She stated that while the Debt-to-Gross Domestic product, GDP, ratio may not look alarming and revenues decline, the burden of debt servicing has increased dramatically.

“The debt service to revenue ratio is certainly alarming, at 83.2 per cent in 2021 and 96.3 per cent in 2022, according to the World Bank. This means that at the federal level, after servicing our debt there is little room to pay for recurrent expenditures, let alone investment.

“Even as you invest in infrastructure, education and basic health systems, Please endeavour to pay teachers, health workers and others their salaries,including retirees’ pensions,” the WTO boss said.

On economic issues in the country, Okonjo-Iweala noted that the projection of the International Monetary Fund (IMF) is slightly more positive which would allow for better planning by hem.

“The International Monetary Fund projects 3.2 percent Gross Domestic Product growth this year and 3 percent next year – slightly better than global growth but underperforming the projected growth rates for sub-Saharan Africa as a whole, which are at 3.6 per cent and 4.2 per cent respectively.”

She disclosed that the current GDP growth rates are higher than the very low 1.2 percent average annual growth rate registered between 2015 and 2019, the five years before the pandemic, but well below the 6.4 percent average for the preceding five-year period, from 2010 to 2014.

Relying on World Bank estimates, Okonjo-Iweala noted that the COVID-19 pandemic and the war in Ukraine have pushed as many as 90 million more people into extreme poverty – most of them in South Asia and sub-Saharan Africa.

“In this uncertain global context, Nigeria has to work much harder to avoid falling even further behind.

“Dear governors, I remain convinced that a better future is within our collective grasp. But to move ahead and seize it, we will need political and business leaders at the state and national levels to form a compact in pursuit of pro-growth and pro-development policies.

“Nigeria is a country with no social contract, meaning that Nigerian political leaders have never been able to agree with each other to stick to a common set of principles, values, and policies that consistently deliver for their citizens regardless of ethnic group or political persuasion.

“You have a lot of healing to do – within your States and the citizens.”

She emphasised that through words, deeds, and policies, the governors need to demonstrate to Nigerians that they are equally loved; That they can settle and do business in any part of the country without fear.

On food security, the WTO chief said: “Food insecurity is also on the rise, saying a government-led, UN-supported analysis earlier this year warned that the number of Nigerians at risk of facing hunger could rise from 17 million to nearly 25 million in the lean season between June and August.

“The question for you governors and for Nigeria is: How is the country gearing up to attract businesses that want to diversify their supply chains following the shock experienced by the world during the pandemic of over concentration of supply chains in sectors like pharmaceuticals, semi-conductors etc.

“While we sit inactive, South Africa, Rwanda, Senegal and Ghana are grabbing this opportunity. They are getting investments and will produce and sell to us if your Excellencies do not act,” she cautioned.

Okonjo-Iweala also tasked the governors to take advantage of the digital economy to create jobs and wealth for the people.

 “As you take office or return to your governorships, our 222 million compatriots will be counting on you to rise to the occasion. The states are closest to the people: what you do- or don’t do – directly impacts people across the country.

“In our country, given its size, diversity, and economic development challenges, the scale of the task of nation-building is particularly large,” she stated.