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Air Nigeria, NNPC Limited and Nigeria’s debt resolution

Living with debt, both internal and external, has become part of our lives. I am not sure the thinking in the government circle is complete without checking out the next source of borrowing. Despite the current hardship in servicing and paying due debts, the eagerness to borrow money in the government circle remains evident. When I read in the papers in the past week that Nigeria secured $1.5 billion or over N100 billion US-backed loan to deliver solar power infrastructure to Nigeria, I felt sad that we are yet to learn any lesson on debt overhang. The supporting argument would be that the loan was not for consumption but an investment. If all such loans have been yielding positive results, we should not be in the current mess because it is not all the debts we are currently servicing and repaying that were based on consumption. The efforts are always mismanaged.

The Chief Executive Officer of the company that facilitated the loan, Adam Cortese, explained that it is a government-to-government loan from the US-EXIM bank to the government of Nigeria and it was being done at a concessional rate, repayable over 20 years. The offer is fantastic if it is well managed, but will it? Time will tell. But, let us learn some lessons here. The US government used its institution to finance the production of solar equipment and to push the sales through to other countries thereby sustaining the solar business to continue to contribute to its gross domestic…

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