African Development Bank President, Dr Akinwumi Adesina has named debt service cost and poor foreign exchange policies as the major setback to the country’s economic growth.
He said these underlying issues call for the need to fix the country’s economic structure.
The AfDB President said these on Monday during the ‘Mid-Term Ministerial Performance Review Retreat’.
Nigeria’s oil sector accounts for about 75 per cent of export revenue and 50 per cent of government revenue, according to the Central Bank of Nigeria.
Nigeria spent N2.89trn, an equivalent of 74 per cent of N3.9trn revenue on debt servicing between January and August 2021, according to the Minister of Finance, Budget and National Planning, Zainab Ahmed.
The development has raised concerns among different stakeholders as the country spent N74 out of every N100 on debt service in the first eight months of the year.
Adesina said, “Nigeria must decisively tackle its debt challenges. The issue is not about debt to GDP ratio as Nigeria’s Debt to GDP ratio at 35 per cent is actually still moderate.
“The big issue is how to service the debt and what that means for resources for domestic investments needed to spur faster economic growth.
“The debt service to revenue for Nigeria is at 73 per cent. Things will of course improve as oil prices recover, but the situation has revealed the vulnerability of the Nigerian economy.
“To have economic resurgence, we need to fix the structure of the economy and address some basic fundamentals. Nigeria’s challenge is revenue concentration.”
“What is needed for sustained growth and economic resurgence is to remove the structural bottlenecks that limit the productivity and revenue earning potentials of the huge non-oil sector,” said the AfDB boss.
Adesina advised that the government should boost productivity in the non-oil sector with the right fiscal and macroeconomic policies.
“Especially with a flexible market-based exchange rate that will enhance international competitiveness,” he added.