A professor of economics at the Lagos Business School, Bongo Adi, says the $6.9 billion foreign loan sought by President Bola Tinubu’s administration is intended to support poverty alleviation efforts in Nigeria.
Gatekeepers News reports that Adi made the remarks on Wednesday during an appearance on Channels Television’s programme The Morning Brief.
His comments come a day after the National Assembly of Nigeria approved the president’s request for the loan facility, with a provision that 40 per cent of the funds be allocated to capital projects in the 2025 and 2026 budgets. The approval followed the consideration of a report by the Senate Committee on Local and Foreign Debt, which recommended the allocation to ensure the borrowing supports infrastructure and development projects.
“Let’s bring it down to the translation of that borrowing, to raise sector development on poverty alleviation. You will agree that the level of poverty we are currently confronting in Nigeria is at levels we have never seen in our history.
“So what I can see is that this government seems to be supervising the highest level of poverty in our country’s history,” Adi said on the breakfast show.
The economist added that governments, like individuals, act as rational agents seeking to maximise benefits at the lowest possible cost.
“For the government, I think their maximisation problem is to borrow as much as they can. Given their physical situation, they make it seem to speak in their favour.
“You have an external reserve of 50 billion, so everybody, even the creditors, has confidence that this government can repay.”
Adi further argued that interest obligations on loans are often spread across successive administrations, noting that repayment timelines of five to ten years may extend beyond the tenure of the current government.
“So you can see that everything speaks in the direction of more borrowing. You can’t stop it because, given the rationality at play here, I think the rational choice is for the government to borrow,” he said.
He also noted that macroeconomic and fiscal reforms appear to be producing some results, although the benefits have yet to fully reach ordinary Nigerians.
“Given the time lag, again with the collapse of infrastructure, it begins to appear that the time lag keeps retracting, and we begin to see the cascade to the micro level to the ordinary man or woman on the street.
“So this is the challenge that we have, currently the misery of the population is exacerbating, and that’s why people are not so happy when they hear the government is borrowing more money.
“What can you say to that when there is no light and productivity is at an all-time low, even though at the macro front, we seem to be doing well. Most of that is driven by the development in the oil sector, but it is still underperforming,” he added.
However, Adi said many Nigerians are still dealing with the effects of recent economic reforms, including the removal of the petrol subsidy and the harmonisation of the exchange rate.
