Date: 08 April 2021
Nigeria’s debt burden is fast becoming unsustainable. Even before the economic impacts of the Covid-19 pandemic hit, the country’s debt already stood at historically high levels having more than doubled from 12.6 trillion Naira in 2015 to 27.1 trillion Naira at the end of 2019. By the end of 2021, this figure is expected to rise to 38.7 trillion Naira. Whilst the debt-to-GDP ratio remains low (estimated at 35% for 2020), debt servicing costs have reached worrisome levels. In 2020, the Federal Government of Nigeria spent the equivalent of 83% of its revenue to service debt. The debt service to revenue ratio rose to as high as 99% in the first quarter of 2020 as revenues dropped due to the collapse in global oil prices.
Presently, the available debt service relief programme put forward by G20 countries under the Debt Service Suspension Initiative (DSSI) only suspends debt service payments for participating countries without reducing the debt stock. Moreover, private and multilateral creditors as well as non-G20 bilateral creditors have not put forward a proposal for debt relief for middle-income countries like Nigeria.
The Heinrich Böll Foundation in collaboration with the Global Development Policy Centre and the Centre for Sustainable Finance at the University of London is seeking debt relief for a green and inclusive recovery. The proposal commits governments receiving debt relief to align their policies and budgets with the 2030 Agenda for Sustainable Development and the Paris Agreement. This does not only make climate sense in a situation where the effects of global warming are becoming more severe but also offers great economic potential as evidence shows that green projects can generate more employment.
In order to present the relief proposal and its mechanisms in more detail and discuss its potential and relevance in the Nigerian context, we would like to invite you to this online session.