By Oluseye Temitope
The news about Nigeria overtaking South Africa as the biggest economy in African due to our recent $47bn reserves as against South Africa’s $45bn reserve. This feat according to our expert is not worth a pinch of salt as Nigeria is currently battling with 23% of our 2018 budget total expenditure on budget deficit and it’s most likely the deficit is going to be a debt.
Our debt servicing alone is N2.234tn if adding about N220bn (three per cent of the overall vote) for the retirement of maturing bonds the total will be 33.81% of the overall vote. This is above one quarter of the expenditure; also the capital expenditure of 5 key and strategic ministries i.e the Ministries of Education, Health, Power, Works and Housing, Defence and the North-East Intervention Fund as a percentage of debt service is 96.18 per cent.Thus, we have been spending and will likely spend more on debt service than on capital expenditure in 2018 and subsequent years.What if at the end of the day, there is a crash in prices of crude oil (though we are currently enjoying the increase in prices due to Venezuela’s reduction in output) but we must have at the back of our mind that a shortfall in revenue, salaries and overheads will be drawn down, debts will be serviced and paid whilst capital projects suffer. At 26 per cent of overall expenditure, the debt service is high. By borrowing, we are further increasing the stock of public resources that will be laid out for debt service in subsequent years. The trajectory of debt service and capital budget implementation over the years speaks to the challenge. Nigeria’s currently battling infrastructural deficit, insecurity and other social vices; of what benefit would having a huge reserve be to the ordinary man on the street who’s not had a good meal and electricity in his house for days? Though, it’s a good thing to always save for the dry season but of what benefit would saving of monies be to a man with little or no hope of where or when his next meal is coming?