A partner at PricewaterhouseCoopers (PwC), Taiwo Oyedele, has warned that the country’s rising debt service obligations, if not curtailed, could lead into a debt trap.
He also noted that the country’s public debt rose by 21 per cent in five years adding that the nation is poor but filled with the potentials to be rich.
Oyedele disclosed this over the weekend at the 2021 Chartered Institute of Bankers, CIBN’s Fellowship Investiture, in Lagos.
In his presentation on the theme: “Nigeria’s rising debt profile: Issues and implications for sustainable economic development”, Oyedele said: “Our debt profile has risen 21 percent over the past five years and this is somewhere around 156 per cent increase. If you add it up to today it would have increased further. This is just as at end of last year.
“In this same period our GDP has just increased by an average of 0.15 per cent per annum; Our revenue has only expanded by five percent in this same period resulting in our debt service cost ratio to revenue getting close to 100 per cent. This is where we need to start getting concerned.
“Nigeria is a poor country although with the potential to be rich and there are two different things.
“I hold the view that the level of borrowing is not inevitable because our debt is growing faster than GDP. Debt service fee is growing faster than revenue which means that if we do not reverse the trend, we will enter what we call the debt trap which means the point of no return.”