The World Bank has assessed the level and quality of infrastructure in Nigeria as being low, despite the Federal Government’s assertions that it has borrowed money to construct infrastructure.Information Guide Nigeria
In its evaluation of Nigeria’s public finances, the World Bank estimated that Nigeria’s physical infrastructure deficit would exceed $3 trillion over the next three decades.
The report read, “The level and quality of Nigeria’s infrastructure quality is low, with the country ranked 132 out of 137 countries for infrastructure in the 2018 Global Competitive Index. Nigeria’s physical infrastructure gap is estimated to reach $3tn over the next 30 years.”
It was also said that Nigeria’s development outcomes were among the lowest in the world, indicating the necessity for substantial public spending.
The Washington-based bank also estimated that it would take Nigeria 300 years to repair its infrastructure gap, at an annual cost of 4% of its GDP.
The report read, “At the current rate of expenditure allocation, it would take 300 years to close the country’s current infrastructure gap. Closing Nigeria’s infrastructure gap would cost at least four per cent of GDP growth per year.”
The Minister of Information and Culture, Lai Mohammed, stated in September 2021 that the Federal Government was borrowing to construct world-class infrastructure and not for recurring expenses.NYSC portal
This was stated by the minister during a town hall meeting organized by his ministry to discuss the destruction of Borno State’s telecommunications and electrical infrastructure.
Recently in October, President Major General Muhammadu Buhari (ret.) justified his government’s borrowing, calling it as an essential move to develop the infrastructure that would boost chances for economic growth in Nigeria.
Buhari said, “We have also continued to accelerate our infrastructure development through serviceable and transparent borrowing, improved capital inflow and increased revenue generation by expanding the tax bases and prudent management of investment proceeds in the Sovereign Wealth Fund.”
Currently, Nigeria owes around N66.61tn, which includes N23.77tn owed to the CBN and N42.84tn owed to domestic and foreign creditors.
According to figures issued by the Debt Management Office, the country’s debt increased by N30.72tn between July 2015 and June 2022, as reported by The PUNCH.
According to DMO figures, Nigeria’s overall debt amounted at N12.12tn as of June 30, 2015. By June 30, 2022, the amount had increased to N42.84tn, a 253.47 percent increase. Despite the significant increase in debt over time, the government expects to borrow N8.4 trillion in 2023.JAMB portal
In ten months, the Federal Government borrowed N6.31 trillion from the Central Bank of Nigeria through Ways and Means Advances, according to The PUNCH.
This caused the Federal Government’s borrowing from the CBN to increase from N17.46 trillion in December 2021 to N23.77 trillion in October 2022.
Ways & Means Advances is a borrowing mechanism through which the CBN finances government budget deficits.
The Federal Government’s N23.77tn debt to the central bank is not included in the country’s total public debt, which stood at N42.84tn as of June 2022.
In November 2021, the World Bank cautioned the Nigerian government against funding deficits by borrowing from the Central Bank of Nigeria (CBN) through the Ways and Means Advances, citing budgetary pressures on the country’s spending.
In spite of experts’ and organizations’ warnings, the Federal Government continued to borrow from the CBN to finance budget deficits.
An economist specializing in economic growth, Dr. Aliyu Ilias, criticized the administration for its unhealthy dependence on borrowing.
Instead of continually borrowing from the central bank, he advised the government to pursue alternative revenue-generating methods.