Nigeria’s Impending Debt Default: A looming African Disaster
In 2018, a BusinessDay editorial sounded the alarm about the prodigious growth of Nigeria’s debt profile at a time when government revenues were either flat or shrinking. In a response very typical of the present administration, the Debt Management Office fired off a dismissive rejoinder questioning BusinessDay’s financial knowledge and insisting that all is well because Nigeria’s 19 percent debt-to-GDP ratio is significantly lower than that of countries like the USA, which owes 104 percent of its GDP.
What the shallow window dressing attempt failed to account for was that in a country like Nigeria whose economy is largely divorced from government revenues courtesy of oil receipts, it makes little sense to base any borrowing decision on the debt-to-GDP ratio. According to data from Heri...
