From Uche Usim, Abuja
The Nigerian Economic Summit Group (NESG) through its Debt Management Roundtable (DMR), and Open Society Initiative for West Africa (OSIWA), has recommended an integrated debt, revenue and expenditure strategies in tackling the swelling debt profile of Nigeria and Economic Community Of West Africa States (ECOWAS).
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The recommendation is contained in its report on debt management and sustainability in ECOWAS which was submitted on Thursday to Nigeria’s Debt Management Office (DMO) for possible adoption and implementation.
The presentation was graced by stakeholders from Nigeria’s public and private sectors, including Dr. Abel Essien, ECOWAS Commission; Paul Adeyeye, OSIWA and Zainab Mangga, the International Monetary Fund (IMF) Country Office.
Inaugurated in March 2021, the DMR was tasked with providing viable alternatives and recommendations that the government can apply to ensure public debt is sustainably managed. The urgency of the initiative was in response to growing concerns over rising debt profiles in major countries including Nigeria and possible spill-over effects to other ECOWAS economies if left unchecked.
In her keynote address at the event, the Director-General, DMO, Patience Oniha, said: “The timing of the launch of the report could not have been more appropriate with the global debt levels already rising pre-COVID-19 and still growing since the COVID-19 pandemic started in the year 2020. Concerns around debt sustainability have expectedly been heightened. According to the World Bank’s World Economic Outlook, ‘Globally, sovereign debt grew from 49.1% of GDP in 2014 to 57.9% in 2019, and in sub-Saharan Africa, from 35.1% of GDP in 2014 to 55.4% in 2019.’ The respective figures for 2021 were 66.7% and 60.3%. The indications are that the trend will continue as the economic consequences of COVID-19 may linger for a longer period, coupled with the increased economic pressures in the form of rising inflation from higher food and energy prices caused by the Russia-Ukraine war. The IMF projects in its World Economic Outlook for April 2022 that the average Debt to GDP Ratio in West Africa is expected to rise to 67.2% in 2022 from 56.4% in 2019.”
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In a statement by NESG CEO, Laoye Jaiyeola, he highlighted the depth of research and sub-regional collaboration involved in the production of the report, as well as its significance for sustainable debt management across the region if implemented.
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He said: “At the NESG, our mission is an open, inclusive, sustainable and globally competitive economy. We champion sustainable debt management because unsustainable public debt accumulation is inimical to economic growth, not only in Nigeria but ECOWAS as a whole. Nigeria is a focal point for debt sustainability, considering that the country accounts for 50% and 67% of the region’s total debt and GDP respectively. This behoves us to adopt more sustainable strategies to create the required fiscal space for national development, with positive knock-on effects in other ECOWAS nations.”
The DMR Chairman, Taiwo Oyedele, identified corruption in public spending, insecurity, geopolitical challenges, resource over dependency, and a shallow tax base as some major drivers of unsustainable debt. He added: “The DMR report is holistic and includes workable recommendations that, if adopted, can prevent West Africa from getting into a debt trap. Debt in and of itself is not a bad thing. It is what we do with the debt that really counts. So how can we begin to apply the resources that we make – whether internally generated or money borrowed – in an efficient manner to promote productivity and prosperity for our people? The report provides answers that should help steer Nigeria and other ECOWAS countries towards debt sustainability.”
The report provides some background on the ECOWAS fiscal landscape and public debt portfolio, including several policy recommendations for debt sustainability and key performance indicators. It proposes a 10-Point action plan under an integrated strategy for revenue optimisation, expenditure efficiency and debt management.