Business leaders warn Nigeria against borrowing to fund consumption

As the Federal Government prepares 2022 budget, business leaders and economists have cautioned the Federal Government to ensure the disbursement of billion-dollar loans incurred by the administration to productive ventures.
The stakeholders, who spoke at a webinar organised by the Abuja Chamber of Commerce and Industry (ACCI) on Tuesday, decried the current application of loans to cover recurrent expenditures.
The Webinar, which was convened to review “implementation of 2021 Budget and Appraisal of 2022 proposals” expressed apprehension over the level of debt servicing, which is gulping over 90 per cent of national earnings.
In his presentation, the Statistician General of the Federation, Mr Simon Harry, said stringent measures should be taken against a rent seeking mentality, to curtail volatility in the forex market and eliminate shadow economy of the parallel market.
Represented by his Technical Adviser, Mr Daniel Amba, he said automation of the processes would go a long a way in checking leakages in the system and help save time and curb corruption.
The statistician general added that the consolidation of the Central Bank of Nigeria’s interventions would boost output that could lead to decline in food inflation.
Mr Adeyemi Folorunsho, Director, Manufacturing Association of Nigeria (MAN), stated that the country’s debt profile should be addressed, while a committee should be set up to monitor and evaluate Executive orders.
He also emphasised that the government should pay more attention to manufacturing of local products and reduction of unemployment to drive increase in consumption to further boost the sector.
In the light of the African Continental Free Trade Area (AfCFTA) agreement, he called for the linking of the Agriculture and Mining sectors into value chains, while emphasis should be placed on petrochemicals for economic growth.
Also speaking, an Economist, Dr Lukman Oyelami said debt service revenue ratio was worrisome and the government should look into it and re-strategise to generate more revenue.
“Nigeria needs to be more realistic about revenue projections. It is obvious that government is not generating enough to cover expenditure, but inability to generate enough to cover recurrent expenditure is really a bad omen,” he said.
Dr Ibrahim Ayuba, a faculty member of ACCI BEST Centre also urged the Federal Government to focus on the viability of non-oil sectors such as agriculture, mining and leathers, to have a structured market, improve value chains and increase exportation.
A representative of KPMG, Mr Olusegun Zaccheaus stated that government’s recurrent expenditure continued to rise at a fast pace than revenue, which had impact on the ability of government to deliver on certain fiscal capital project.
He added that the current issues around Value Added Tax would go a long way in affecting the revenue fortunes of the federal Government hence, more attention should to be placed on economic diversification and business friendly policies.