Nigeria is a developing nation which is constantly struggling to improve amidst corruption, poor infrastructure and a general lack of belief in its ability to cater to the needs of its citizens. However, despite the oppression and extreme hardship present in our land, many Nigerians are able to still hope for a better future and maintain a tenacious grip on the Nigerian dream. I believe progress/prosperity is inevitable when enough people want it and Nigerians want it. The question is how do we achieve prosperity?
As a people, we want to grow to become an economic powerhouse in the mold of the Chinas and the Brazils of the world and history tells us that to do so we must invest heavily in infrastructure and in our people. However, to achieve such an aggressive and ambitious goal, we must borrow heavily either from our citizens or from foreigners. But Nigerians are fidgety. Despite the fact that we have such lofty ambitions, we are not comfortable or we simply do not have the courage to go a-borrowing again. In fact, even prominent Nigerians are fidgety. Some of us might recall the alarm on the nation’s rising debt profile raised by Mrs. Okonjo-Iweala, the Managing Director of World Bank. She spoke about the fact that the 2010 budget was very aggressive in terms of spending (about 50 percent higher than the 2009 budget) and foresaw that in order to finance that budget, the Nigerian government would have to borrow significantly from the domestic market through treasury bills and other instruments.
On the one hand, this suggestion is a good one and the Nigerian government should be given a lot of credit for creating a thriving domestic bond market that it can tap from. But it is also important to realize that there is only a limited amount of money available in the domestic capital market. Often, excessive borrowing from the local bond market crowds out investment for the private sector. Currently, in Nigeria, the private sector is arguably our main engine for growth so limiting the amount of capital available to private businesses might not necessarily be the best strategy. Therefore, adopting an alternative strategy of borrowing from foreigners might actually do the nation’s economy more good than harm.
Understandably, our history of accumulating a mounting debt burden automatically makes us sensitive to amassing any form of foreign debt. However, to progress from our current position as a low income country to a middle income economy, it is a bullet we must bite but that we must of course, bite prudently.
Can you imagine a poor man buying a house without getting a loan? Such is the dilemma we face. There is nothing wrong with a poor man buying a house with a loan as long as he can afford to pay down the mortgages. As such Nigeria’s focus should not be on not buying a house or tapping foreign debt markets, but should focus more on ensuring that we can pay the mortgage/loan fully as at when due. Obviously, this would require that our Government is responsible and accountable. As such, we should demand for a more responsible Government and not one that shies away from foreign debt.
We deserve to move up to become at least a middle income economy. Domestic markets are not enough. We must borrow. If we truly aspire to become the economic powerhouse that we envision, then we must roll with the punches. No foreign debt, no significant growth.