Nigeria Urged to Prioritize Low-Hanging Revenue Opportunities Over Debt for Economic Prosperity

Introduction: Nigeria is being advised to prioritize low-hanging revenue opportunities over increasing debt to achieve economic prosperity, according to experts surveyed by BusinessDay. The country, Africa’s largest economy, aims to reduce its reliance on borrowing and explore alternative means of revenue generation. Experts argue that focusing on debt may not be sustainable, given the diminishing room for additional borrowing, and suggest that Nigeria should instead adopt disciplined planning, attract foreign investment, and tap into untapped revenue sources.

Key Points:

1. Nigeria’s Finance Minister, Wale Edun, emphasized the need to reduce reliance on borrowing during the scrutiny of the 2024–2026 Medium-Term Expenditure Framework and Fiscal Strategy Paper. The government aims to intercept deficit financing in the 2024 budget.
2. Data from Nigeria’s budget implementation report revealed that, in 2022, the government spent N5.65 trillion on debt servicing, representing 106 percent of the total N5.30 trillion revenue generated within the period.
3. Experts suggest that Nigeria’s rising debt level is a concern, coupled with the possibility that a significant portion of the debt has been allocated to recurrent expenditure and debt servicing.
4. The experts propose exploring equity financing options, including boosting export industrial expansions, attracting foreign direct investment, capitalizing on joint ventures, and unlocking dead capital.
5. Focusing on exports and expanding beyond the small domestic market is highlighted as a strategic move to attract investments and stimulate economic progress.
6. Olisa Agbakoba, a legal expert, points out potential revenue sources, including strategic efforts without acquiring debt. He emphasizes the need for thoughtful planning and strategic thinking in areas like space, finance, maritime, and untapped oil fields.
7. Inactivity in untapped oil fields, with 23 oil blocks failing to produce crude or being inactive, presents an opportunity for Nigeria to leverage its petroleum potential.
8. Nigeria has approximately N180 trillion trapped in dead or idle government assets, mainly in real estate. Experts propose unlocking this capital as a game-changer for a government facing high debt service costs.

Summary: Experts recommend that Nigeria shift its focus from increasing debt to prioritizing low-hanging revenue opportunities for sustainable economic prosperity. The country’s reliance on borrowing is viewed as a less rigorous option compared to exploring revenue sources that require disciplined planning, attracting foreign investment, and unlocking untapped potential in various sectors. The survey highlights the importance of strategic thinking, thoughtful planning, and the need to tap into diverse revenue streams, including exports, untapped oil fields, and dead government assets, to drive economic growth and reduce dependency on debt.