Buhari seeks Senate’s approval for fresh loans

Nigeria's President Muhammadu Buhari is seeking approval from the House of Representatives for fresh external borrowings amounting to $5.513 billion. This move comes at a time when the country is grappling with both local and global economic challenges, raising concerns about Nigeria's ability to sustain additional debt. To shed light on the situation, Winston Osuchukwu, Co-founder of Trans-Sahara Incorporated, joined CNBC Africa for a discussion on the economic implications of the president's loan request. As Nigeria marks Buhari's five years in office, questions loom over the performance of the economy during his tenure. Osuchukwu acknowledges the tough times Nigeria has faced, including low oil prices and the unprecedented impact of the coronavirus pandemic. Despite these hurdles, he gives the government a modest rating of a 'C-plus' for its efforts in maintaining economic stability. However, the conversation swiftly shifts to Nigeria's mounting debt levels, prompting Osuchukwu to express concerns over the use of borrowed funds for consumption rather than investment in revenue-generating assets. He cautions that Nigeria must carefully monitor its debt-to-GDP ratio, especially as a significant portion of the debt is denominated in foreign currencies like the US dollar. This raises fears about debt sustainability in the long run. The discussion gains momentum as Osuchukwu delves into the specifics of Buhari's proposed external loans. He suggests that if the funds are channeled towards reviving the economy post-COVID-19, it could help Nigeria regain its footing in the global market. With a marginal downward revision in the 2020 budget, Osuchukwu emphasizes the lack of room for budget cuts due to the high proportion of recurrent expenditure and debt servicing. Any reductions in spending could hinder economic growth and jeopardize debt repayment capabilities. As Buhari's loan request aims to address both federal and state-level needs, Osuchukwu stresses the urgency for states to enhance their internally generated revenue to lessen the burden on the federal government. With diminishing oil revenues, states must innovate and strengthen their economies to withstand future financial shocks. Reflecting on the government's interventions amid the pandemic and oil price crash, Osuchukwu commends the Central Bank's efforts while acknowledging the constraints faced by the government in providing sufficient shock absorbers for the economy. He underscores the importance of collaborative efforts among governmental bodies to mitigate the economic downturn and minimize the impact on the population. As Nigeria navigates the complexities of seeking additional loans to support its economy, the spotlight remains on the prudent management of funds, debt sustainability, and the imperative for states to enhance their revenue streams. The road ahead poses challenges, but with strategic planning and concerted efforts, Nigeria may weather the storm and emerge resilient in the face of economic uncertainties.