Leadership (Abuja)
Raliat Ahmed
18 December 2008
Abuja — Due to the negative implications of both domestic and external debt on the economy of any country, especially Nigeira, the Federal Government has been advised to stop any further taking of loans from developed countries.
This advice was given yesterday by the country Director of Action Aid, Dr. Otive Igbuzor, at a one-day sensitisation workshop on "Debt Audit and the National Development in the face of Poverty", at Denis Hotel, Abuja.
According to Otive, debt naturally enslaves the borrowing growth, as the money is not usually used for economic growth, development or poverty reduction it was meant for due to corruption and mismanagment.
He recalled that in 1978, Nigeria borrowed $15 billion. The sum, he said, rose astronomically in principal and interest such that by 2000, the country had paid back the sum of $32 billion but still had an outstanding debt of $32 billion to pay.
Also, in 2006, the country again paid $16 billion and obtained debt forgiveness of $18 billion with conditionalities which by implication means that Nigeria had paid back #32 billion within six years to London and Paris Clubs, yet Nigeria is still owing billions of dollars.
Dr. Festus Iyayi of the Faculty of Management Sciences, University of Benin, who presented a paper titled: "External Debt and Development In The Third World", said there is a negative relationship between economic growth and borrowing, adding that the more loan a country takes, the more problems the country encounters.
Speaking further, he said while it is acknowleged that these debts comprise both domestic and external debts, the issue of external debt has emerged as being more important because of its obvious implication for development, adding that on account of these debts, a variety of measures, including Structural Adjustment Programme (SAP), were imposed on several of the third world countries.
On the consequences of external debt on third world countries, Nigeria in particular, he said all phases of external debt management have created severe problems for the peoples of the third world ranging from; Massive transfer of resources from third world to developed world; Increase in the size of debt i.e instead of reducing indebtedness, they increase the size of the debt; Negative economic growth, a situation even more true for sub-saharan Africa in general and Nigeria in particular.
Furthermore, huge social, economic and political problems arise as a result of external dents which has exacerbated political and social conflicts, loss of national sovereignity and global instability and insecurity amongst others.
On the way out of the present debt being owed developed countries by some third world countries, Otive suggestd that African countries should stop further re-payment of loans to foreigners as according to him, between 1970 and 2002, Africa received $450 billion and have repaid over $550 billion in principal and interest. But at the end of 2002, Africa's debt still stands at $255 billion.
He argued that instead, the developed countries owe Africa as the loan had been repaid several times over. Several participants at the workshop were of the view that a country as rich as Nigeria should not take further loans, owing to the huge external reserve and the excess crude money of the country.
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