THE POLITICS OF DEBT

THE POLITICS OF DEBT
                         By: 
                Nurudeen Dauda
        September 15th, 2021
nurudeendauda24@yahoo.com
nurudeendauda24@gmail.com
nurudeendauda.blogspot.com

To begin with, economically speaking, debt or loan in itself is not necessarily “bad” what you use the loan for makes it is“good”or "bad". At governmental level, It is a sound economics to borrow for infrastructural development, but to borrow for the susteinance of ostentatious life style or financing of over bloated bureaucracy is "bad". 

At individual level, to borrow and build a “house”or starts up a viable business is a sound economics , but to borrow and “get married”or“remarry” is“reckless".

The United States of America is the most indebted country in the world yet the number one economy in the world. Lagos state is the most indebted state in Nigeria yet the most developed state economy. Dangote group is the most indebted group in Africa yet the richest. Brazil is the most indebted country in Latin America yet the number one economy in the zone. Japan is the most indebted country in Asia yet the second biggest economy in Asia and the third in the world. South Africa is the most indebted country in Africa yet the second biggest economy in Africa. Germany is the 4th most indebted country in the world yet the biggest economy in Europe.

We have an infrastructural deficits of over 30 trillions naira in the country. In my thought, we need a judicious usage of loans, but strictly on "infrastructures"; such as: roads, rails, electricity, housing, airports , seaports, hospitals, bridges, schools, agric mechanization, and dams for irrigation, water supply, and security equipment etc., which is capable of attracting both local and foreign investors in order to set up businesses or companies that will create jobs and generate taxes to the government for repayments .

To borrow for the financing of capital projects is a sound economics , but for recurrent expenditures is a bad economics. I support loans for capital projects, but not for recurrent expenditures. Capital projects are the gateways to industrialazation, jobs creation , economic growth and development. 

In my observation, for us to rapidly develop, there must be tremendous reduction of our cost of governance. The ratio of our recurrent expenditures which is at about 70% or more to capital expenditures which is at about 30% or less is to too much . If we must rapidly develop, our capital budget should be at least at about 60% or more while the recurrent budget should be at about 40% or less of our annual budget.

Ideally, all government borrowings are supposed to be for “capital expenditures” not consumption. Our debt should and or must be strictly on capital spending. 

May God bless Nigeria!

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